9 September 2008
Nedbank has created a specialised credit risk management unit to help South African small business owners manage their debt better in an environment characterised by high interest rates, double-digit inflation and elevated fuel prices.
“We realised that the rapidly changing economic environment was having enormous impact on small business owners who are particularly vulnerable to fluctuations in the market conditions, and we decided to do something about it,” Nedbank small business services MD Sibongiseni Ngundze said in a statement this week.
Meeting financial obligations
The unit identifies clients who may be experiencing difficulty in meeting their financial obligations. Once the client’s financial information has been analysed, the team will assess the particular needs of the client and find a tailor-made solution.
“Depending on the needs of the client, we design a plan that will hopefully return them to a more stable financial position. This may involve restructuring their existing loans or credit facilities or simply increasing access to funding for a particular period of time,” Ngundze said.
The unit will undertake to manage the relationship with the client until such a time their financial situation has normalised, which is anticipated to be about three months, at which point the client will return to dealing with their original branch.
“The benefit of managing clients in a specialised unit is the specific and relevant attention from staff members already familiar with their particular details and needs as well as the process,” Ngundze said.
“Nedbank also derives value from this arrangement as we are able to actively and effectively manage risk and ensure that fewer clients default.”
Constrained economic environment
In the face of a constrained economic environment, Nedbank is encouraging its small business services clients to exercise the greatest caution in managing their cash flow, which is always the biggest challenge for small and medium enterprises.
“Cash flow management remains an issue for small business owners and, as such, this topic has remained a priority at our free small business management seminars held bi-annually, with the next session scheduled to take place from 6-21 October countrywide,” Ngundze said.
Nedbank believes that the initiative is another way of delivering on the promise of great value banking as, just as with the seminars, the service is free.
“We understand the complexities associated with running one’s own business and the special attention that it requires, hence the establishment of this particular unit and other interventions such as mentorship and free financial training for franchisees.”
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