StatsSA recently released their quarterly update on insolvencies in South Africa. Despite GDP trending down for the past two years, insolvencies continue to bounce around pre 2009 levels.

However this year has shown an increase. It is evident that some companies can only hang around in this tight economic environment for so long. It’s time to tighten up those internal controls and look to see what options are available. Protecting your business from bad debt with a credit insurance policy is a simple and effective tool.

If you’d like to know more or discuss your options please contact Marc at info@kplassociates.co.za or call me on +27 81 720 5133.

All data courtesy of StatsSA. For simplicity I had added their reported insolvencies and liquidations in to a combined number

Insolvencies vs GDP growth 2014-2016

Insolvencies vs GDP growth 2000-2016

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• Timing of a bad debt
• Opportunity to save
• Information on debtors
• Confidence to grow your business

Timing of bad debt

A bad debt can occur at any time and could result in a sizeable fund being built up and set aside to ensure

that the business can cope. This money could have rather been put to a more constructive use such as new investment or growth strategies. A credit insurance policy can put in the right level of protection straight away.

Opportunity to save

There is never a great time to save and if there are funds available they will often be used for operational expenses in the hope that customers remain honourable and solvent. In contrast, a modest monthly credit insurance premium is similar to a ‘forced’ saving that provides you with sizeable protection, and can be easily budgeted for.

Information on debtors

The only information you have on your customers is your trading history with them. While they might be paying you timeously they may be struggling with honouring their commitments to other suppliers. With a credit insurance policy you gain access to the credit insurer’s information which is analysed, monitored and updated on a regular basis by a host of professionals.

Confidence to grow your business 

During these uncertain economic times and with some insurers expecting insolvencies to increase by 10% in 2016, going after new business comes with its risks. However, by ensuring you have strong internal controls and complement these with some form of protection, like credit insurance, you are more likely to succeed where your competitors have faltered.

If you would like to minimise the risk of bad debt for your business and have aspirations for it to take on new business and grow, credit insurance could indeed help you turn your goals into reality. For more information contact the team at KPL & Associates on t. 031 5642 135.

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