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Cash Flow

Who Should You Give Credit To?

In the course of business it’s easy to extend credit without really knowing and properly assessing your customer. Protect your business from creditors who don’t pay up.





When more money flows out of a business than in, it can signal disaster – particularly for small and mid-size companies. To prevent your cash flow from drying up, it’s vital to set up and maintain an effective debtor system.

Vetting your client

What should you do to protect your business before you sell products or render a service to a commercial customer?

In the course of business it’s easy to extend credit without really knowing and properly assessing your customer. Brett Bentley of credit management and debt collection company, Bentley Credit Control, offers some expert advice on how to go about it.

Three simple steps to improve protection against bad debt are:

1. Have a credit policy which determines who you will extend credit to, the credit limits and the procedures for granting credit and debt collecting. Once that is in place, set up effective credit control structures and administration to carry out that policy (preferably with staff who have some form of training in credit control).

2. The basis of any sound business relationship between a business extending credit and a customer, is a credit application form incorporating standard terms and conditions of trade. The most important functions of this document are to:

  • enable you to properly assess who your potential customer is, before you start trading with them
  • incorporate securities such as suretyships, so you are protected in the event of your customer defaulting
  • set out with certainty your trading terms, payment periods and the consequences of non-payment
  • limit your liability in the event of you or your service or product’s failure to perform
  • assist and facilitate debt recovery in the event of non-payment by the customer

3. Ensure that you credit vet the customer properly, in accordance with your credit policy.

How Do You Vet a Commercial Client?

Credit vetting involves assessing the creditworthiness of the potential customer. “This usually involves the use of established commercial credit bureaus like Experian, KreditInform and Transunion Credit Bureau, which have records of all South African businesses’ credit histories, including poor payment reports, judgments and other relevant information to assist you in assessing your prospective customer,” says Bentley. “In addition, there are bank references and checks, other trade references (always remember a potential customer is only going to give you their best paid creditors as references), and using industry groups to see if the potential customer has come to you because your competitor will not extend any further credit  to them.”

Credit Information Online

KreditOnline is a web-based credit information service from KreditInform, which operates one of the most comprehensive and up-to-date commercial information databases in South Africa.  There are no costs per report, so you can use your subscription to the system to obtain as much information as you need to make better decisions. A hard copy of the report is available immediately.

This allows you to gather and verify information on clients, assess the level of risk they represent, establish credit limits and terms based on that information, and compile detailed customer files.

The KreditOnline system consolidates five databases:

  1. the KreditInform File displays all information available in KreditInform’s credit reports, including a credit assessment
  2. the Judgment File includes all public record information available, such as judgments and liquidations
  3. the Registrar’s File includes information on all registered companies in South Africa
  4. the Listed Companies File allows subscribers to cross-reference shareholding relationships and directorship;
  5. KreditCheque allows online users to display and input negative information about cheque payments

Contact: + 27 11 777 2700,;

Verify Client Details

An online CIPRO search on the company registration number is free of charge and a good way to verify information.  This will also confirm the correct spelling of the client and their trading details.