According to the National Credit Regulator (NCR), an entity is only considered to be a credit provider in terms of the National Credit Act if it is any of the following:
(a) the party who supplies goods or services under a discount transaction,
incidental credit agreement, or instalment agreement;
(b) the party who advances money or credit under a pawn transaction;
(c) the party who extends credit under a credit facility;
(d) the mortgagee under a mortgage agreement;
(e) the lender under a secured loan;
(f) the lessor under a lease;
(g) the party to whom an assurance or promise is made under a credit guarantee;
(h) the party who advances money or credit to another under any other credit
- any other person who acquires the rights of a credit provider under a credit
agreement after it has been entered into;
If we examine the various conditions above, we will see that the only condition that may potentially apply to the private ambulance industry is condition a), but what is a discount transaction, incidental credit agreement, or instalment agreement?
A discount transaction is defined by the National Credit Act as payment for goods or services which are provided over a certain period of time, and where more than one price is quoted for the goods and services – usually one price if the quote is paid one or before a certain date, and another, higher price if the goods and services are paid after that date. These types of transactions are regulated by the National Credit Act.
It needs to be noted that a discount transaction and a settlement discount are separate types of transactions. A settlement discount applies when one single price for goods or services is quoted, but a subsequent discount is then offered if payment is made prior to the arrival of the due date. A settlement discount is not regulated by the National Credit Act.
Incidental Credit is defined by the National Credit Act as credit that is granted when goods or services are provided to a customer and payment of the account is due on an agreed upon date, subsequent to the provision of good and services. For example, an ambulance service provides treatment to a patient on the 1st of the month. Payment of the account is subsequently due within 30 days from the date of invoice. This is referred to as incidental credit. Should payment of the outstanding account still remain outstanding after the due date for payment, the ambulance service provider shall also be entitled to apply interest to the outstanding amount from the due date onwards. Interest that only becomes applicable after an account is not settled by a stipulated due date is also included in the definition of incidental credit.
While the National Credit Act does require specific types of incidental credit agreement providers to be registered as credit providers, the types of incidental credit agreements that are associated with the ambulance industry and other healthcare practices do not require the provider to be registered as a credit provider.
The National Credit Regulator has assessed the account practices of the private ambulance industry, and has provided assurance to SAPAESA that private ambulance services that invoice patients after the provision of goods or services and allow a specified time frame for the payment of the respective ambulance account are not required to be registered as credit providers in terms of the Act.