This training is designed for people who wish to gain an understanding of the principles and practices of controlling credit and managing debt in commercial organizations.

The aim of this course is to provide participants with practical sessions and tools to manage their accounts receivable and improve their cash and working capital.

What are the Credit Management Tools and Techniques? Credit Management is a wide-ranging general term, which covers the entire processes, systems, methods, and actions that you use in your business in order to manage the Credit you provide to your clients/customers.

Without effective and operational credit management tools and processes in place, the chances are your business will run out of cash, and ultimately fail.

Who should attend?

The course is designed for people in an administrative, business or finance role which includes responsibilities for managing and credit accounts, and ensuring that debt is managed promptly and efficiently.

Course Objective:

• Use some of the best methods and techniques when communicating with debtors
• Appreciate the relevance and importance of credit policy in defining the objectives, function and responsibilities of the credit department to get maximum profitability
• Understand the need of credit assessment due to selective risk-taking in the interests of increasing overall profitability
• Establish a Collection Policy that ensures recovery of debts and also provides follow up procedures in monitoring and collection of debt
• collecting overdue customer invoices more effectively
• Debtors Ledger Questionnaire to assess office procedures and identify gaps in the system
• Strategy to reduce the current customer debt and making decisions on old outstanding invoices.
• contact customers in a systematic way using the overdue invoice strategy
• knowing when to make the first phone call or send the right letter out to the customer
• Use a phone script and have knowledge of all the questions to ask an overdue invoice customer

Course content

Module 1: Introduction to Credit Management

· What is Credit Management?

· Importance of Credit Management

· Credit Department’s Responsibility

· The 6 Cs of Credit

Module 2: Credit Risk Assessment

· Financial Factors Affecting Credit Decision (Financial Statements: What to Look for) Probability of Default, Exposure at Default, Loss given Default, Expected Loss

· Borrowing Need and Capacity Assessment

· Leverage and Coverage Ratios

· Liquidity, Profitability and Activity Ratios

· Cash Flow Analysis and Projections

· The Z Score

· Credit VaR

Module 3: Non-Financial Factors Affecting Credit Decision

· Business Environment and Industry Status

· Company Vulnerability

· Management Integrity, Skill & Execution

· Exercises and Cases

Module 4: Mitigating Risk Assessment

· Setting the Credit Limit

· Review New Accounts

· Re-Evaluate Existing Account

Module 5: Loan Structuring

· Credit Enhancements and LTV limits

· Loan Covenants

· Loan Pricing and Negotiating

· Problem Loans and Restructuring

· Credit Derivatives (Credit Default Swap, Total Return Swap, Credit Spreads etc.)

· Exercises and Cases

Module 6: Collection Performance and Efficiency

· Aging of Accounts Receivable and Bad Debt Reserves Analysis

· Accounts Receivable Turnover and Days Sales Outstanding

· Collection Effectiveness Index

· Analysing Operating and Cash Cycles

· Improving Working Capital Health

· Bad Debt Collection

· Factoring

· Overdue Ratio Calculation

· Discount & Prepayments

Module 7: What-If Analysis and Decision Strategies for Credit Efficiency

· Scenario Manager

· Goal Seek

· Data Table (Sensitivity Analysis)

· Solver Technique

· Exercises and Cases

· Cash flow problems