[by Roger Munitich, General Manager Marketing and R&D,
Credit Guarantee Insurance Corporation]

With the economic downturn both locally as well as internationally, there can be no doubt that the emphasis now for any company should be focused on collecting money from debtors rather than chasing after sales.

This is the time when company directors can literally say that their credit management staff are “worth their weight in gold”.  It does not matter how many sales are made – they are not worth a cent until the money is in your bank.

The sales staff have reaped their commissions and bonuses during the boom up to end of 2007, perhaps a lot less in 2008, but perhaps consideration should now be given to paying commissions to staff on collections made and bonuses if the debtors department is able to keep the ‘debtors days outstanding’ to a pre-determined agreed number. How contentious would this be in some companies?

2009 will be a watershed year for many companies and survival will depend on a number of factors, the most important of which, as far as I am concerned, will be the maturity with which the credit management function is conducted.  There is, of course, that other issue of whether directors and officers will be prepared to cut back on the ‘lifestyles’ to which they have become accustomed during the past boom and keep money in the company.

Of course, natural loss of turnover due to the downturn is a factor that is generally out of your control, so it is imperative to take a hard dispassionate look at every facet of the company, right down to stationery orders and the like. You might have to make some unpleasant decisions in the process, but keep in the back of your mind that the company must keep up a steady cash flow and this can only happen with a sound credit management philosophy.

If a new sales strategy is called for, involve the credit manager and if necessary the senior debtors staff in the decision making process; you might be surprised at the value of their input. Now consider tools to aid the collection of your debtors – the most effective of which is ‘credit insurance’, better termed ‘debtors insurance’.  Who would allow their drivers to navigate around any city centre, highway or suburban road without being insured? The probability of the vehicle being involved in an accident; heist; hijacking etc has never been higher and so too is the probability that one or more of your debtors will default on payment!  Bang goes your cash flow.

Insuring against bad debt does not replace the need for a good credit management system, it strengthens it and when debtors go bad, having the benefit of being indemnified against the loss, cannot be easily surpassed.  Of course, for companies that have already insured their debtors against non-payment, everyone will be justifiably patting themselves on the back.

Issued on behalf of:
Credit Guarantee Insurance Corporation of Africa Limited
Contact: Roger Munitich, General Manager - Marketing and R&D
Tel  (011) 889-7327
Fax (011) 686-9627
e-mail: This e-mail address is being protected from spambots. You need JavaScript enabled to view it

For further information:
Corporate Communications Consultants (Pty) Limited
Contact: Loraine Harris
Tel: (011) 783 8926 or 084 244 0510

About Credit Guarantee:
Credit Guarantee Insurance Corporation of Africa Limited, registered in 1956, is the largest (by premium income) and leading (80% market share) South African underwriting company operating in the field of debtors insurance.  Credit Guarantee is a subsidiary of listed company, Mutual & Federal which owns 51% of the company, ultimately making it part of the Old Mutual Group.

Credit Guarantee's major business is the insurance of domestic (local) and export payment risks where its client companies sell to other companies on credit terms.

Credit Guarantee’s unique strength lies in its ability to secure a vast store of confidential information and market intelligence from a network of contacts and to interpret this data to support the business of its clients - in both local and international markets.

It is ISO 9001/2000 compliant across all aspects of its operations and sports an AA+ (double ‘A’ plus) rating from Global Credit Ratings Company.