Over recent years, there have been many changes to the National Credit Act which have passed a series of clear rules and regulations associated with the granting and marketing of credit. An important legislation, the Act aims to protect consumers and credit providers and ensures that all parties benefit from a transparent, fair and responsible credit environment. But how does the Act work for businesses that specialise in non-interest bearing 30 day accounts?
Whilst Incidental Credit Agreements would largely be excluded from the implications of the Act, it still needs to be considered when dealing with credit policies, credit granting, collection and legal processes. “Offering these type of credit facilities means that the regulatory burden has been placed on the shoulders of credit providers, increasing their duties, responsibilities and documentation,” explains Dorothy Greyling, Credit Manager at Rand-Air, market leaders in portable compressed air and power generation rental.
“As a rental company, we understand that the Act is an important piece of legislation, not only for us, our customers and the broader economy. With the Act, came an introduction to new forms of protection and a number of requirements that needed to be met by the credit provider, the most noteworthy being the duty to prevent the granting of reckless credit. With the heavy penalties associated with non-compliance, we as an organisation and companies in similar situations need to ensure that the right controls are in place to avoid these challenges,” Greyling adds.
To increase sales revenue as well as to minimise the risk of loss, it is important to have an accounts receivable department who play a significant role in contributing to the company’s subsistence. “Credit extension is a critical factor in facilitating economic growth and development. Identifying the right prospects for a business depends heavily on the availability of comprehensive and up to date data. Components such as credit applications, credit assessments from outside sources as well as establishing credit limits based on a customer’s credit worthiness need to be taken into account when informing these types of decisions,” she continues.
“Towards the end of 2016, we will be welcoming the Protection of Personal Information Act (POPI). Our main aim as an organisation is to respect our customers and therefore we will be embracing this legislation. We want to ensure that all private information is treated with the respect that it deserves,” she concludes.
