MONDAY: 30 August 2021. Time Allowed: 3 hours.
Answer ALL questions. Marks allocated to each question are shown at the end of the question.
QUESTION ONE
1. Describe the term credit risk based lending. (3 marks)
Summarise five main objectives of an effective credit risk review system. (5 marks)
2. Suggest four types of information that credit department might require from sales department. (4 marks)
3. Explain the following payment methods used in consumer credit business:
Matching payment dates with income. (2 marks)
Standing orders. (2 marks)
Credit and charge cards. (2 marks)
Cheques and cash. (2 marks)
(Total: 20 marks)
QUESTION TWO
1. Highlight eight most common debt collection errors. (8 marks)
2. Outline six major uses of sales ledger. (6 marks)
3. Suggest three techniques that could be applied to make customer statements more effective. (6 marks)
(Total: 20 marks)
QUESTION THREE
1. Enumerate four documents that could be required from a borrower who is a limited company. (4 marks)
2. Discuss three measures that should be undertaken when accepting personal cheques as a mode of payment. (6 marks)
3. Analyse five conditions that should be fulfilled in an export credit contract. (10 marks)
(Total: 20 marks)
QUESTION FOUR
1. Describe three types of credit insurance policies. (6 marks)
2. Credit department is the heart of finance in any organisation.
Required:
Distinguish between “centralised structure” and “decentralised structure” types of credit departments. (4 marks)
Highlight three advantages of centralised structure. (3 marks)
3. Summarise seven factors to consider when designing a credit policy. (7 marks)
(Total: 20 marks)
QUESTION FIVE
1. Discuss five effects of Covid-19 pandemic on accounts receivable management. (10 marks)
2. Describe five sources of appraisal information for a loan applicant. (10 marks)
(Total: 20 marks)
