The annual spike in debtor defaults that tends to occur in March each year is due to collections not being properly managed in December to January, international credit insurer Coface South Africa said on Wednesday.
This was because in these months companies mostly operated with a smaller staff complement and credit control was sometimes relaxed, the company said in a statement.
“Customers exceed their credit limit because the limits are not being properly monitored,” operations director Jacqui Jooste said.
“The likelihood of a customer obtaining credit through fraudulent means is also increased. During this period credit applications may not be as strictly controlled as would be normally,” she said.
More suppliers were also realising in the current economic climate that giving credit was in effect lending money to enable their customers to trade.
“We believe that companies need to be more selective in providing credit. Credit is still at the discretion of the supplier and companies are not obliged to give credit,” said Jooste.