Service Credit – How Does it Work?

Service Credit – How Does It Work?


  1. Deferred Payment for Services: Pay later for services received today.
  2. Integral in Nigeria: Common in both formal and informal sectors.
  3. Access and Risk: Facilitates immediate service access but carries non-payment risks.
  4. Responsible Use: Important for both consumers and providers to manage effectively.
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Service credit, though not often highlighted, is an integral part of the credit landscape, especially in economies like Nigeria where services play a crucial role in the daily life and economy.

What is Service Credit?

Service credit refers to arrangements where services are provided with the understanding that payment will be made at a later date. This type of credit is common in service-oriented sectors like telecommunications, utilities, and even in professional services like legal or consulting work. It’s based on the provider’s trust that the client will honor the payment terms as agreed upon.

Service Credit in the Nigerian Context

In Nigeria, service credit is a reflection of the interplay between modern economic systems and traditional values of trust and community. It’s not just about utility bills or professional fees; it often extends to everyday services like tailoring, mechanics, or personal grooming services offered on credit with the trust of later payment.

Benefits and Challenges

The benefit of service credit is that it allows consumers to access essential or beneficial services immediately, even when funds are not immediately available. For businesses, offering service credit can attract and retain customers. However, the challenge lies in the risk of non-payment, which can impact the service provider’s cash flow and financial stability.

Managing Service Credit

For consumers, it’s vital to use service credit responsibly, ensuring that future payments are within their financial capacity. For service providers, assessing the creditworthiness of clients and setting clear terms and conditions can mitigate the risks associated with service credit.

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