Credit Management is under siege – possibly now more so than at any other time in our modern financial history. In South Africa the introduction of the National Credit Act in June 2007 saw a massive re-think of the principles of credit management, and government basically achieved what the Credit Management fraternity could not
– to regulate and control ruthless and indiscriminate credit extenders.
Simultaneously, throughout the entire western world financial markets are on the brink of collapse with the underlying cause most notably pointed at the US sub-prime mortgage chaos, essentially as result of indiscriminate lending practices - or differently put as a result of inadequate credit management principles.

At a time which is thus considered by many to be a crossroads in the profession it seems appropriate for the Institute of Credit Management to introduce a handbook for business managers; credit professionals; small business owners; and students in credit management that will serve as a guide to effectively implement and managing credit
extension. With the ever reducing levels of stock holding in most organizations, coupled to more effective cash management techniques, accounts receivable has quickly become the largest asset on the balance sheet. The central theme of this handbook is therefore as much about effective asset management as it is about credit management – effective asset management without which companies and seemingly even giant economies can ill afford to do without.

With the spectacular failure or near failure over the past few years of giant corporations such as Enron, Parmalat, MG Rover or on the local front entities as such as Saambou Bank, one has to ask whether any industry or business sector is excused from implementing effective credit risk management and the associated good corporate governance. For this very reason the Institute bravely decided to produce a handbook
that would be useful to almost every facet of credit risk management including trade credit; export credit; banking and consumer credit.

Moreover, the handbook has been produced not only with professionals from the credit disciplines in mind, but indeed takes the additional and perhaps unique approach of serving as a reference guide to business managers and particularly smaller business owners. This is quite literally a massive undertaking as anyone with a deeper understanding of the various legs of credit management will tell you, yet the Institute simply felt that the information and sources provided would be as meaningful
to the credit professional as it would be to say a small business owner.

Interestingly - business owners point out that the assistance provided in this handbook could be the difference between business survival or not, as it may only take one bad debt or bad credit risk management decision to wipe out the company.
A further purpose of the Institute in the collation of this handbook is to provide the market with an improved understanding of the depth and the quality of resources available to the risk manager in South Africa. Often the entities that provide services in this field of credit risk are highly specialized and fall outside the mainstream marketing
or advertising mediums. This handbook is therefore an attempt by the Institute to provide access to these unique resources for all required managers – complete with contact information and objective commentary on the solutions offered. The Institute emphasizes though that the handbook is not to be perceived as an absolute or definitive work on the profession, but instead prefers to provide the reader with those key elements that should be required in order to make an informed decision, and then to point the reader to the relevant provider/s where further information may be sought or where products and services may be solicited. Indeed in many instances advertisers contributed significantly to the editorial provided in these pages, however in all cases this has been edited to ensure a balanced and constructive view of the subject matter under discussion.
Finally, no introduction would be complete without a word on the credentials of the Institute of Credit Management. Started in 1953 it is the only non-profit organization of its kind in South Africa.

The Institute’s sole focus is to promote the profession of credit management throughout all the credit disciplines and it attempts to doso in an environment which is unbiased and without providing favour to a particular grouping or organization. The Institute is unselfishly supported and owned by hundreds of volunteer individuals with a passion for the profession and the reader is therefore assured not only of an unbiased viewpoint, but also of a compilation which is steeped in genuine knowledge on the subject matter.

I wish to thank every reader of this handbook for their interest and hope that it will serve as a real business guide to making more informed credit decisions. For all those who gave so freely of their labors towards the success of this publication I would like to thank personally – on your hands the future generations of credit professionals will surely
prosper. In particular I would like to thank the Executive Editing team consisting of Mrs Cheryl-Ann Carr (a long standing risk manager at Consol Glass (Pty) Ltd; Mrs Sharon McManus (CEO of Credit Skills and Management (Pty) Ltd - a credit management training company) and Mr Frank Knight (CEO of Debtsource (Pty) Ltd - a specialist commercial credit management outsource company). Without their valuable support the compilation of this massive undertaking would not have been possible.