TUESDAY: 5 December 2023. 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. Outline SIX options available to the defendant upon being served with a claim. (6 marks)
2. Describe THREE risks excluded in a trade credit insurance policy. (6 marks)
3. Evaluate FOUR strategies banks could undertake to address the problem of non-performing assets. (8 marks)
(Total: 20 marks)
QUESTION TWO
1. State SIX best practices in dispute management. (6 marks)
2. Assess THREE parameters used to segment customers for purposes of debt collection. (6 marks)
3. Identify FOUR strategies managers use to motivate their debt collection teams. (8 marks)
(Total: 20 marks)
QUESTION THREE
1. Summarise THREE limitations of exercising retention of title rights. (6 marks)
2. Examine THREE indicators that could point a problem with company’s collection practices. (6 marks)
3. Discuss FOUR clauses of a debt collection contract. (8 marks)
(Total: 20 marks)
QUESTION FOUR
1. Enumerate FOUR objectives of prudential guidelines in debt classification. (4 marks) \
2.Analyse FOUR types of costs incurred in the management of bad debts. (8 marks)
3. Distinguish between the following legal terms as used in debt recovery suits:
“Pleadings” and “Locus standi”. (4 marks)
Explain TWO ingredients of Locus standi. (4 marks)
(Total: 20 marks)
QUESTION FIVE
1. Identify SIX areas in which credit staff could enhance their relationships with sales department. (6 marks)
2. Discuss THREE benefits of aged receivables report. (6 marks)
3. The following information was extracted from the statements of Wendo Ltd. for the month of April 2023:
Balances and activities for April:
• Debtor balance on March 31 Sh.1,000,000
• April credit sales Sh.250,000
• Payments received on April debtors Sh.200,000
• Payments received for outstanding receivables Sh.500,000
Required:
Calculate the collection effectiveness index (CEI). (8 marks)
(Total: 20 marks)
