WEDNESDAY: 3 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. Explain the following terms as used in credit management:
Overtrading. (2 marks)
Arrears. (2 marks)
2. Enumerate six benefits that accrue to an individual or organisation as a result of measuring the performance of its debt collection unit. (6 marks)
3. Describe five benefits of visiting customers at their place of business during debt collection. (10 marks)
(Total: 20 marks)
QUESTION TWO
1. Outline four importance of a debt verification letter to a borrower. (4 marks)
2. Discuss four types of delay tactics used by debtors. (8 marks)
3. Discuss four factors to consider when communicating to customers about payment plans. (8 marks)
(Total: 20 marks)
QUESTION THREE
1. Explain three types of bad debt reserve policies. (6 marks)
2. Summarise six contents of a ‘collection instruction’ as used in documentary collection. (6 marks)
3. State four features of a final warning collection letter. (4 marks)
4. Highlight four strategies that could improve first expression experience with debtors. (4 marks)
(Total: 20 marks)
QUESTION FOUR
1. Enumerate six ways through which computer systems could improve debt collection in a firm. (6 marks)
2. With reference to risks associated with debt collection, explain the following terms:
Asset concealment. (2 marks)
Identity theft. (2 marks)
3. Business credit professionals should pledge themselves to the highest professional standards and principles in guarding and securing in confidence, information obtained for the sole purpose of analysing and extending commercial credit.
With reference to the above statement, explain five ethical principles that every credit professional should pledge to uphold. (5 marks)
4. Highlight five prohibited debt collection practices under Deposit Taking Sacco’s Regulations. (5 marks)
(Total: 20 marks)
QUESTION FIVE
1. Discuss four principles of debt collection. (8 marks)
2. Identify four situations that could prompt a debt collector to call small balance debtors. (4 marks)
3. Explain four advantages of using telephone as a collection tool. (4 marks)
4. Summarise four requirements to be fulfilled in writing between the debtor and creditor before a loan re-scheduling is accepted. (4 marks)
(Total: 20 marks)
