Credit crunch hits SA firms

Credit insurer Coface South Africa says in line with this, there are a growing number of companies requesting extended payment terms.

"As a credit insurer, we have noticed established companies requesting extended terms to 60 or even 90 days. At the same time, debtor defaults are increasing," says CEO Garth de Klerk.

"To decide whether or not to give credit or extend credit terms, businesses need accurate information on the financial status of their customer."

"But this information is not always easily accessible. (New credit) legislation for example, has limited the access to some

"And the slowing economic environment means that financial figures that were accurate a few months ago may no longer be valid."

"In the current economic climate, company financials can change overnight. A business that may have had a stable balance sheet a month ago could today be experiencing difficulties."

"Because these decisions often need to be made quickly, they should be based on valid information. Otherwise, the credit manager could be putting their organisation at risk," he says.

"Businesses not using credit insurance need to make these decisions on their own. They need to deal with debtor defaults themselves and manage the legal processes to collect overdue accounts."

"This is not an easy task. Collecting from a debtor locally is difficult enough, but internationally, it can be complex and time-consuming."

"Our message is that companies need to be especially careful in giving credit or extending credit terms. In the export market companies need to exercise extra care. Credit managers must do thorough credit checks and be especially careful before giving credit to overseas companies.

"With the worldwide economic downturn, the risk of not getting paid on exports is high."

- I-Net Bridge