WEDNESDAY: 15 December 2021. Time Allowed: 3 hours.
Answer any FIVE questions. All questions carry equal marks.
QUESTION ONE
1. Explain three qualities of an effective debt collection officer. (6 marks)
2. Enumerate four benefits of trade credit insurance to a seller. (8 marks)
3. Analyse three factors that a credit manager should consider when selecting a credit management information system. (6 marks)
(Total: 20 marks)
QUESTION TWO
1. State five benefits of accurate invoicing in credit management. (5 marks)
2. Describe four reports used to measure the performance of a credit department. (8 marks)
3. Enumerate seven ways of improving the relationship between the sales department and the credit department. (7 marks)
(Total: 20 marks)
QUESTION THREE
1. Providing credit to customers can offer some major benefits to a business.
With reference to the above statement, analyse five advantages of offering credit to a seller. (10 marks)
2. Discuss three challenges faced by the credit reference bureaus (CRBs) in your country. (6 marks)
3. List four documents used in export credit. (4 marks)
(Total: 20 marks)
QUESTION FOUR
1. Discuss five risks associated with export credit. (10 marks)
2. Describe the following types of invoices as used in trade credit:
Proforma invoice. (2 marks)
Interim invoice. (2 marks)
Collective invoice. (2 marks)
3. Explain two advantages of open credit terms to a borrower. (4 marks)
(Total: 20 marks)
QUESTION FIVE
1. Discuss three benefits of financial technology (Fintech)-driven payments for global businesses. (6 marks)
2. Explain the term “sales ledger”. (2 marks)
List four contents of a sales ledger. (4 marks)
3. Analyse four advantages of factoring as a source of finance. (8 marks)
(Total: 20 marks)
QUESTION SIX
1. List six warnings that could predict a bad debt. (6 marks)
2. Sales terms and conditions play an essential role in protecting a business and ensuring that both the business and customers are aware of each other’s rights, roles and responsibilities.
With reference to the above statement, explain three classes that you should include in your terms and conditions. (6 marks)
3. Differentiate between “consumer credit’ and “corporate credit”. (4 marks)
4. Describe four areas of responsibility that are covered by international communication terms (IncoTerms). (4 marks)
(Total: 20 marks)
QUESTION SEVEN
1. Explain five factors that have hindered the growth of trade credit insurance in your country. (10 marks)
2. Describe six characteristics of an effective savings and credit cooperative societies (SACCOS) member of the credit committee. (6 marks)
3. Differentiate between “secured loan” and “unsecured loan”. (4 marks)
(Total: 20 marks)
