Tuesday, June 25, 2024
Reliable Credit Scoring Data Drives Growth for Trade Credit Providers and Their SME Customers

Johannesburg, 07 December 2023 – Information and insights company TransUnion South Africa and Digital Credit Systems (DCS) are helping to address and solve the constraints faced by trade credit providers and SMEs in South Africa with their ‘My Credit Manager for Business’ solution.


‘My Credit Manager for Business’ leverages TransUnion’s rich credit data, scoring, and alerts to provide risk solutions that are robust and reliable, integrating real-time data with internal policies and business-specific requirements to produce intelligent, informed credit risk decisions that support enhanced, consistent, digital decision-making.


The solution improves risk predictions by 25%, boosts revenue by up to 10%, and cuts costs by up to 20%[1], via an easy stand-alone plug-and-play system that can be seamlessly integrated into businesses of all sizes. It is a data-rich, compliant, future-ready credit risk mitigation solution that is positioned to enable sustainable growth for businesses of all sizes.


“Our ongoing partnership with DCS to support the ‘My Credit Manager for Business’ solution is a key driver for economic growth by facilitating the financial inclusion of more consumers,” said Lee Naik, CEO of TransUnion Africa. “The consequences of poor credit decision-making can be even more costly than operational inefficiency, and this solution helps mitigate risk and promotes stability in these sectors.”


Greg Nosworthy, Managing Director at DCS, said that ‘My Credit Manager for Business’ blends top-tier trade credit expertise with TransUnion’s carefully stewarded traditional and alternative data resources to offer a robust credit risk management solution that is purpose-built for South Africa’s current challenges.


“Our solution, supported by TransUnion’s deep, reliable and robust insights, actively drives financial inclusion and uplifts credit-dependent enterprises and their SME trade partners by combining traditional credit scores with alternative data and providing real-time decisioning and reporting,” he added.


Driving digital and financial inclusion

SMEs in our market are relatively unknown and unquantified and represent elevated risk and higher cost of acquisition. Trade credit can be a vital catalyst for the growth of a small business. Imagine a scenario where an established local supplier extends favourable trade credit terms to an SME, allowing them to procure essential building materials without immediate cash outlay. This flexibility enables the business to take on more projects, meet client demands promptly, and bid competitively for larger contracts. With improved cash flow, the SME can invest in advanced equipment, hire skilled labour, and expand its footprint in the market. Trade credit acts as a financial bridge, empowering the small business to navigate the challenges of growth in the dynamic construction industry.


Historically, the biggest barrier to SME growth and sustainability in South Africa is access to financing[2], which is further compounded by the current high interest rate, high inflation environment. At first glance, the SME sector appears to be thriving, boasting a contribution to South Africa’s GDP of 34%[3]. However, after adjusting for inflation, per capita terms GDP is at the same level today as in 20072 and five out of seven SMEs don’t survive past their first year1.


Knowing that revenue is the lifeblood of any business, and that growth is critical for sustainable success, ‘My Credit Manager for Business’ is designed to facilitate a fast, profitable revenue stream for trade credit providers. Businesses that provide trade credit to SMEs need access to tried and tested credit scoring solutions – but the solution doesn’t only lie in simple trade credit management.


“Current trading conditions demand smart solutions for trade credit providers, which are tailored to address the many challenges of the modern economy, including digital transformation and improving business efficiency to reduce operational costs and boost revenue,” said Nosworthy.


Business efficiency does not always mean doing more with less; it can mean doing more with what the business already has.


“Business owners can reduce their operational costs by automating and streamlining existing processes, and credit partnerships can be enhanced by digitising a fast-tracked assessment process to reduce the approval time on low-risk customers,” said Naik. “In a world where credit applicants have more options than ever before, making the shift to a digital solution is not just an operational decision; it is a strategic move to unburden a business’s resources and unleash its full potential.”