TUESDAY: 2 August 2022. Morning paper. Time Allowed: 3 hours.
Answer ALL questions. Marks allocated to each question are shown at the end of the question. Do NOT write anything on this paper.
QUESTION ONE
1. In relation to Debt Re-arrangement Schemes, explain the following terms:
Debt Review. (2 marks)
Standstill Agreements. (2 marks)
Voluntary Debt Restructuring. (2 marks)
2. Evaluate four company practices that make receivables difficult to collect. (8 marks)
3. Examine three aspects that a credit manager should consider when designing an incentive plan for a dispute resolution team. (6 marks)
(Total: 20 marks)
QUESTION TWO
1. Describe three approaches of estimating the allowance/provision of uncollectable accounts receivables. (6 marks)
2. Highlight six business challenges that insurers face when they expand their trade credit insurance products to small and micro enterprises. (6 marks)
3. Examine four reasons why consumers prefer a specific collection model. (8 marks)
(Total: 20 marks)
QUESTION THREE
1. Explain the following employee performance measurements as used in credit department:
Active Debtor Accounts per employee. (3 marks)
Operating Cost per Employee. (3 marks)
Transaction Turnover per Employee (3 marks)
2. Discuss three costs incurred in legal debt collection process. (6 marks)
3. Outline five reasons why lenders are moving to outsourcing some of their debt collection. (5 marks)
(Total: 20 marks)
QUESTION FOUR
1. Outline six mistakes that could delay debt collection. (6 marks)
2. Assess six areas that a credit manager should educate sales people on in order to improve collection of debts. (6 marks)
3. Propose four credit control practices that a credit manager should avoid in order to achieve efficiency in debt collections. (8 marks)
(Total: 20 marks)
QUESTION FIVE
1. Mara Moja Ltd. manufactures medical products and sells them directly to hospitals. The company has been experiencing a rapidly growing receivables asset with a severe aging profile and substantial exposure to bad debts loss.
Required:
As a credit professional, propose five solutions that could help the management increase their cash flow and reduce the high exposure to bad debt loss. (5 marks)
2. Explain five guidelines that a debt collector could apply when collecting debts from a government agency. (5 marks)
3. Highlight four characteristics of a collection activity plan. (4 marks)
4. Propose three practices of excellent debt dispute management in an organisation. (6 marks)
(Total: 20 marks)
