Trade credit-risk management in South Africa needs to move beyond static, backward-looking assessments, business intelligence company Trade Shield asserted as it unveiled its new industry index, in Johannesburg, on September 9.

The index provides businesses with a more frequent view of payment behaviour, credit risk and trends across 14 industries, including agriculture, construction and fast moving consumer goods (FMCG).

Trade Shield COO Rahil Jularr noted said the index offered clear standards for how specific market segments are trading, paying and managing credit.

“South African businesses have been reading trade credit risk from static credit reports and yearly financial statements that are often out of date. The yearly view is not only slow but also smoothed in a way that can conceal what you need to know.

“We built [our] index to give the industry an evidence-based view of its own credit health, monitored monthly and released quarterly, so that any credit manager can put their own book alongside their industry and act on the difference,” Jularr explained.

The index is based on data from more than 250 000 businesses that are monitored daily, with 4.6-million trade lines received over the past 12 months, with Jularr adding that the dataset included about R130-billion worth of ageing data for June.

Further, the inaugural index covers the period from July 2025 to June this year and tracks indicators including overdue debt, weighted days sales outstanding (DSO) and protracted default.

Jularr highlighted the limitations of relying on yearly averages, noting that payment behaviour can change significantly during the year as businesses respond to seasonal and macroeconomic pressures.

The data showed an average DSO of 44 days across the period, while protracted default increased from 4.3% in August to 5.6% at the end of June, representing a 25% increase over the period.

Agriculture recorded an increase in DSO from 67 days at the end of the previous year to 78 days in June this year. By contrast, automotive and parts, energy and fuel, retail and wholesale, and plastics recorded decreases of about five days.

Construction also emerged as an area requiring closer monitoring, with protracted defaults increasing from 4.2% to 8.9%.

Meanwhile, Trade Shield CTO Marius Vorster stressed the importance of businesses practicing good financial discipline as a way of overcoming the volatility that is commonly associated with South Africa’s macroeconomic environment and geopolitics.

“Businesses need to be more resilient than ever. Significant macroeconomic shifts, specialised supply chains and industry constraints are forcing companies to become more efficient and intentional with their execution. The pressure is on to do more with less,” he noted.

Vorster added that businesses could use the index as a strategic tool during quarterly reviews by comparing their own performance against that of industry peers and identifying areas that require improvement.

He added that more frequent information could enable companies to make more dynamic decisions around credit exposure rather than relying on conservative assumptions that remain in place for one or two years.

The breakfast also highlighted the importance of integrating credit and collections functions with sales and operations.

DHL Middle East and Africa (MEA) global forwarding credit and collections head Tanja Shackleton said credit teams needed to move beyond simply managing bad debt and instead use data to support broader business objectives.

“As a Trade Shield user, I’ve seen how the platform supports our risk analysis, helps us understand credit use and identify our best-paying customers. That insight can then be shared with sales to identify opportunities for growth,” she said.

Echoing some of Vorster’s insights, Shackleton also noted that geopolitical developments, tariffs, currency volatility, transportation constraints and changing customer demand were increasingly influencing credit risk, particularly across Africa.

She also emphasised the need for finance, sales and operations teams to work more closely together to identify changes in customer behaviour before they translate into significant financial exposure.

The Trade Shield Industry Index will be updated monthly and released quarterly, with Trade Shield intending to provide businesses with industry-specific insights against which they can benchmark their own credit performance.

The objective remains to enable businesses to trade with greater confidence by identifying deteriorating payment behaviour earlier, while also finding opportunities to grow existing customer relationships.