Course description
The purpose of credit control is to maximize sales of a company’s products or services by establishing and enforcing policies regarding the granting of credit to customers. These policies include credit limits, discounts for early payment, payment terms, credit quality standards, and debt collection procedures. If a business offers flexible payment plans to its clients, it is exercising credit control. Increased sales and profitability are possible with proper debt management.
How does credit control work?
Credit Control, also known as credit policy, refers to the mechanisms companies and businesses adopt to boost sales of goods and services by extending credits to clients and customers. Businesses generally tend to extend credits to clients with good credit potential while lowering credits for those with weak credit value. Credit Control typically operates by customers applying for credits from businesses by presenting attractive payment terms. The receiving company then enquires into the client’s credit history to determine their creditworthiness before accepting or declining the request.
Suitability - Who should attend?
Who Should Attend?
The Credit Control and Debt Management Course by Rcademy are designed for professionals within the finance industry and every other person looking to enhance their credit control and debt management interests. The following individuals should attend this course:
- Sales managers:responsible for hiring and leading high-performing sales teams to generate and exceed revenue forecasts
- Credit Controllers:tasked with conducting regular credit checks on customers and highlighting potential debtor problems
- Account receivable officers:responsible for ensuring companies receive payments for products and services and recording such transactions
- Finance experts:tasked with providing financial advice, designing financial models, and evaluating financial risks
- Financial Planners:responsible for meeting the short-term and long-term financial needs of clients
- Auditors:responsible for reviewing and verifying the financial records and expenses of a company
- Budgets Managers:charged with ensuring that the expenses of the accounts they manage do not exceed the budget units allocated
- Debt managers:tasked with the collection of debts from customers on time
- Chief Accounting Officers:responsible for overseeing the accounting functions of a company
- Business owners/managers:tasked with leading and monitoring the operations of their company and implementing viable business strategies for productivity
- Any other personinterested in gaining professional insight into the subject matter
Outcome / Qualification etc.
The Credit Control and Debt Management Course by Rcademy is produced to help attendees achieve the following outcomes:
- Understand the various principles and methods of Credit Control
- Design a debt recovery policy that facilitates the smooth recovery of debts and provides follow-up mechanisms in the supervision and collection of debts
- Develop strategies for debt reduction
- Recognize the roles of courts and Debt Management agencies in a debt recovery procedure
- Evaluate the techniques involved in debt collection by telephone and letter
- Understand debtor delay tactics employed by debtors during debt avoidance
- Recognize insolvency signs and proper techniques to manage such conditions
- Learn about the different effective negotiation and reconciliation techniques
- Understand how to utilize a phone script and knowledge of vital questions to place before an overdue invoice customer
- Learn how to boost cash flow through effective Credit Control management
Training Course Content
Module 1: Introduction to Credit Control
- Definition of Credit Control/management
- Types of Credit Control
- Quantitative control
- Qualitative Credit Control
- Benefits of Credit Control
- Principles of Credit Control – Liquidity – Diversity – Safety – Profitability – Stability
- Duties of the Department of credit management
- Basics of the 6cs of credit
- Types of credit
- Cutting down on credit
- Bad credits
- Sales discount
Module 2: Credit Risk Evaluation
- Introduction
- Financial factors affecting credit decisions – Financial statements – Expected loss – Loss gave default – Probability of default – Exposure at default
- Analysis and projection of cash flow
- Activity and profitability ratios
- Evaluation of capacity and borrowing needs
- Credit VaR
- Liquidity ratio
- The Z scores
Module 3: Fundamentals of Debt Management
- Introduction and definition of terms
- Types of Debt Management Plans
- Factors affecting customers’ debt repayment
- Cost of running a ledger
- Customer excuses
- Payments and reports
- Principles of Debt Management
Module 4: Determining Customers’ Creditworthiness
- Credit insurance
- Trade references
- Credit application forms
- Banker’s reference
- Credit Control routines
- Interest
- Terms and conditions of sale
- Debt turn and aged debt analysis
- Invoices
- Credit history
Module 5: Collection Performance and Efficiency
- Overview
- Collection of effectiveness index
- Evaluating operating and cash cycles
- Bad debt reserve analysis
- Aging of accounting receivables
- Bad debt collection
- Prepayments and discount
- Factoring
- Improving working capital health
- Overdue ratio calculations
Module 6: Communication
- Essentials of communication
- Negotiation skills for debt recovery
- Telephone skills
- Managing demanding clients and controlling anger
- Written communication
- When to opt for written communication
Module 7: Loan Structuring
- Introduction
- Types of loans
- Loan pricing and negotiating
- Credit derivatives – Credit spreads – Credit default swap – Total return swap
- Restructuring and problem loans
- Loan covenants
- Loan-to-Value Ratio (LTV) limits and credit enhancements
Module 8: What-If Analysis and Decision Techniques for Credit Efficiency
- Data table/sensitivity analysis
- Setting goals
- Scenario manager
- Cash flow challenges
- Solver techniques
Module 9: Debt Recovery Mechanisms
- Introduction
- The courts and their powers of debt collection
- Statutory demands
- Insolvency
- Bankruptcy
- The 3-track system
- Winding up petitions
- Administration orders
- Tax relief
- Voluntary arrangements
Module 10: Debt Management Agencies
- Credit checking agencies
- Data provided by credit management agencies
- Factoring companies
- Services rendered by factoring companies
- Specialist legal services
- Debt collection agents – Private debt collection agents – Sheriffs – Bailiffs
- Legal Procedures for debt recovery
- Understanding debtor’s evasion tactics
- Dealing with disputed debt
Module 11: Mitigating Risk Assessments
- Setting a credit limit
- Re-evaluating existing accounts
- Reviewing new accounts
- Business environment and industry status
- Management integrity, skills, and execution
- Company vulnerability
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