CREDIT MANAGEMENT APRIL 2023 PAST PAPER

MONDAY: 24 April 2023.  Morning Paper.                                                                      Time Allowed: 3 hours.

Answer any FIVE questions.  ALL questions carry equal marks.  Do NOT write anything on this paper.

QUESTION ONE

1. Describe the following financial technology (fintech) terms:

Digital banking.                             (2 marks)

Crowdfunding.                             (2 marks)

Fintech balance sheet lending.                             (2 marks)

2.          Explain THREE benefits of undertaking credit risk rating.              (6 marks)

3.         Summarise FOUR factors a credit manager should consider when negotiating payment terms with customers. (8 marks)

(Total: 20 marks)

QUESTION TWO

1.          List FOUR reasons that might necessitate the issuance of a debit note by a seller.  (4 marks)

2.         Describe FOUR stakeholders of credit reference bureaus. (8 marks)

3.         Identify FOUR methods adopted by digital lenders that could assist in improving the lending process. (8 marks)

(Total: 20 marks)

QUESTION THREE

1.         Highlight FOUR factors that a credit manager should consider when designing payment terms for an importer. (4 marks)

2         Explain FOUR advantages of centralised lending.              (8 marks)

3.        Examine FOUR methods of debt collection.              (8 marks)

(Total: 20 marks)

QUESTION FOUR

1.           Distinguish between “Financial guarantee” and “Performance guarantee”.  (4 marks)

2.           Describe FOUR methods for reviewing the quality of account receivables.  (8 marks)

3.           Explain TWO advantages of using a letter of credit (LC) to each of the following:

The buyer. (4 marks)

The seller.   (4 marks)

(Total: 20 marks)

QUESTION FIVE

1.           State THREE conditions that should be met before credit is granted.    (3 marks)

2.          Outline FIVE features a credit manager should consider when selecting a credit information system.  (5 marks)

3.          Explain the elements of PARSER as a model of credit assessment.   (12 marks)

(Total: 20 marks)

 

QUESTION SIX

1.          Enumerate FOUR disadvantages of setting credit limits.    (4 marks)

2.          Explain SIX causes of loan arrears.   (6 marks)

3.         Summarise FIVE reports used to measure performance of a credit department.   (10 marks)

(Total: 20 marks)

QUESTION SEVEN

1.          Highlight SIX contents of a trade credit insurance contract.   (6 marks)

2.         Differentiate the following types of credit terms:

“Net 7” and “Net 7 prox”.     (4 marks)

“Net monthly” and “stage payments”.     (4 marks)

3.         Identify SIX benefits of using credit cards.   (6 marks)

(Total: 20 marks)

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