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on a regular basis to ensure proper
management of clients in each region, so
as to provide an alternative structure to
the operating outlets to resolve issues of
a general nature that relate to movements
into arrears.
Delinquent debtors who fail to honour
their commitments are handed over for
collection to the wholly-owned collections
company, Dart Credit Management
(“DCM”), which not only specialises in
mining-related collections but also closely
administers and audits payments due
from attorney firms that manage the
affairs of clients whom they have assisted
in being placed under administration.
African Bank Commercial
Vehicle Finance
African Bank Commercial Vehicle Finance
is a niche player in the asset based
finance sector providing finance primarily
to taxi owners. Lease agreements do not
exceed 36 months at present.
Developments in the Taxi recapitalisation
process are closely monitored and
should the need arise, terms will be
further restricted.
A cash deposit is required in each
instance and each application undergoes
a strict credit vetting process, especially
first time applicants. Credit life insurance,
short-term insurance and the fitment of
an approved tracking device on the
vehicle is mandatory.
Credit vetting of all deals is done
centrally. The financial status/position of
each applicant is analysed to establish
the gearing capacity of the owner and its
income/cash flow should be supported
by a valid taxi permit. The entire process
can be accomplished in one day and the
vehicle delivered on that day.
The division uses a tried and tested
finance debtors system supported by
homegrown systems that have been
tailored to support the unique debtor
maintenance requirements of the industry.
Collection of instalments is done via
debit order deductions, direct payments
and cash collections at company offices.
Any account in arrears is followed-up on
a daily basis with regular verbal
communication. The mandatory
insurance ensures that vehicles are
always well maintained and that an
adequate resale value is obtained in
those circumstances where vehicles have
to be repossessed. The vehicle tracking
device also assists with the recovery of
stolen or highjacked vehicles thereby
minimising potential losses.
As the business is still in its infancy, a
conservative bad debt provision policy is
in place. All doubtful accounts are fully
provided for.
ABCommerce
The business model that has been
adopted by ABCommerce is based on
the foundation that performance risk has
to be moved from the “borrower” to the
ultimate debtor of the borrower.
Factoring or invoice discounting is the
methodology used to achieve this.
ABCommerce has undertaken a
comprehensive study and developed an
intimate understanding of the unique
dynamics inherent to the financing needs
of the SMME market and furthermore
employed SMME finance specialists,
exceptional systems, experienced staff as
well as a customised risk analysis model
in order to cater for the intricacies of
this market.
The credit policy evolved with a clear
distinction between the parties who
would sell certain products or render a
service in the SMME market and those
who purchase such products or services
and ultimately make payment therefore.
In simple terms, a difference is drawn
between the client, supplier or service
provider and its debtor. It allows for a
paradigm shift in the analysis of risk, since
a typical SMME client is by default falling
short of the security comfort a traditional
financier expects. Should the financier be
able to secure the income stream from
the debtors to the supplier (by taking
control and possession of the income
stream), then the profile of the debtor is
evaluated rather than that of the supplier
or borrower.
Credit and default risk is managed as
follows:
It is imperative to have full
knowledge of all the details of every
debtor’s book. This is achieved by
the linking of debtor administration
to the collections of the individual
books and ABCommerce directly
collects the proceeds.
A margin is retained according to the
risk assessment of each transaction
and the remainder of the collectable
value is paid upfront.
The balance of the purchase price is
suspended until payment of the full
invoice has been received.
Another mitigating aspect is that
most transactions are insured by
Credit Guarantee Insurance
Corporation (“CGIC”). Additional
comfort is derived from the internal
credit vetting processes of CGIC.
The control over the cash flow of
invoices, a retained margin of the value
of the invoice and CGIC insurance has
resulted in no bad debts in the portfolio.
Focus is maintained on systems and
controls to ensure adequate control over
collections of the various debtor books.
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African Bank Investments Limited