You need to extend credit to grow your business but do it prudently

You must employ a suitable strategy to limit exposure

- By Mzwandile kaBizokwakhe

In a challenging economic climate where sales are hard-won, many South African businesses are leaning even heavier on credit to keep revenue flowing, but this essential growth lever is often pulled without the necessary safeguards, exposing companies to significant risk.

The key to success, according to a leading expert, lies not in restricting credit but in managing it with a disciplined, modern, and collaborative approach.

CEO of credit management firm Debtsource, Frank Knight, has offered a pragmatic roadmap for businesses to navigate this tightrope. “The role of a credit department is not to stop business but to ensure it is done safely, while risk management is about balance, not barriers.”

For businesses wary of new clients with thin credit files, Knight advocates a starter-limit strategy. Instead of an outright decline, which blocks a potential long-term partnership, he suggests offering a small, manageable limit.