Bad debt is plaguing the South African equipment rentals sector with one company forced to chase outstanding amounts totalling R1.3m in March. Another company records that 30% of its clients are in arrears by a few months. Others have also been victims of money laundering and fraud by unscrupulous producers. The resulting cash-flow problems have severe repercussions not only for the companies concerned but for the future well-being of the production industry.
In the face of big budget deficits, rentals companies are not able to commit to securing up-to-date camera, lighting and sound equipment necessary for film, television and commercial production. "We have to contend with the burden of cash-flow management which in turn hampers decision making and purchasing decisions," says Henk Germishuysen, Puma Video.
"Bad debt places us in a very precarious position," says Jannie van Wyk, Media Film Service. "We are not only directly at risk but our ongoing contribution to the industry in terms of training, upskilling, etc. is also jeopardised. Furthermore, instead of investing in new gear and skills, we find ourselves bankrolling clients who have not paid."
Gavin McCulla, The Cameraman Broadcast Services, concurs. "Loss of revenue means we are not able to buy new equipment and even pay salaries. Also, debt collection involves extra costs. In some cases we have to contend with gear that has been cross-hired or non-payment by clients who have used lots of consumables, such as tape stock."
Read more in the April 2010 issue of Screen Africa