SMEs: Precautions in Credit Sales

The crisis has rapidly increased the levels of delinquencies, and getting paid on time and in form may be vital for an SME.

Monday, April 20, 2009

Maintaining liquidity has become a golden rule for businesses and one way to keep cash on hand is to simply stop paying suppliers. Of course, those who suffer most are companies that do not have bargaining power due to their size to recover unpaid debts and to devote resources to an adequate analysis of the risks of extending credit to each buyer.

The analysis of this problem done by Solange Monteiro in her article in Americaeconomía.com is a good guide to avoid the risks of sales under an installment plan.

More on this topic

Rate Hike Worries Banks in Costa Rica

May 2012

A passive base rate in excess of 12% would be problematic, affecting the behavior of borrowers and is likely to cause an increase in defaults.

The Passive Base Rate (PBR) reached 10% on May 9, a level not seen since October 2009. The banks set their interest rate according to the PBR and charge an additional margin.

Loan Payment Defaults Still Rising

August 2011

There have now been seven consecutive months during which the default rate of borrowers from the Banco Nacional de Costa Rica has increased, having exceeded the normal limit of 3% over the past three months.

The increase in defaults is due mainly to problems with real estate projects in Puntarenas and Guanacaste, said Bernardo Alfaro, deputy general manager of the bank’s risk management office.

Mortgage Delinquency Increases by 6.6% in Panama

April 2009

The delinquent mortgage portfolio reached $1.032 billion on January 31, 35% of all delinquencies in the system.

An analysis on mortgages by Equilibrium risk rating revealed that the financial system’s mortgage portfolio amounts to $22.4 billion or about 24.9% of all loans. Where late payments are concerned, mortgages have a much greater weight in the system, reaching 35% of all delinquent loans.

Panama: Defaults Increase in the Banking Credit System

February 2009

In the month of June of 2008, past due accounts and defaults represented 2.4% of the credit accounts receivable; in September, 2.7%; and in December, 3.4%.

Prensa.com publishes in its website: "Commercial banks should maintain defaults under control and make other provisions to assure stability."

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