Credit Management – KASNEB Syllabus CCP



This paper is intended to equip the candidate with the knowledge, skills and attitude for the application of the concepts and techniques of credit management.


A candidate who passes this paper should be able to:

  • Apply the principles of credit in a business environment
  • Analyse the effects of cost of credit to the business and economy as a whole
  • Perform debt collections activities
  • Organise and supervise a credit


Introduction to credit

  • Definition of credit
  • History of credit
  • Reason for and benefits of extending credit
  • Effect of credit to the business
  • Three major categories of credit (consumer; trade and export credit)

Credit department structure and responsibilities

  • Organisational structure of a credit department
  • Role of the credit department within an organisation
  • Reporting lines of a credit department within an organisation
  • Reporting performance of a credit department
  • Credit department staff recruitment and retention
  • Promoting interdepartmental relationship (sales and Marketing; accounts and finance; risk and internal audit; procurement; operations departments)

The credit policy

  • Definition of a credit policy
  • Objectives of a credit policy
  • Types of credit policy
  • Features of a credit policy
  • Advantages of a credit policy
  • Contents of a credit policy
  • Formulation and implementation of a credit policy
  • Operating principles of a credit policy
  • Factors to consider when designing a credit policy

Credit risk management

  • Credit risk defined
  • Forms of credit risk
  • Distinction between credit management and risk management
  • Common causes of credit risk situations
  • Objectives of credit risk management
  • Role of senior management and Board of directors in risk management
  • Best practices in credit risk management
    • Credit scoring
    • Methods against credit risk hedging
    • Credit culture

Creditworthiness assessment

Definition of credit worthiness

  • The credit appraisal process
  • Sources of information used in credit appraisal
  • Use of financial statements in credit appraisal and evaluation
  • Qualitative information used in credit assessment
  • Techniques and models used in credit assessment
  • Market risk assessment in granting credit
  • Individual and company credit application assessment

Sales ledger administration

  • Definition of sales ledger
  • Sales ledger format and contents
  • Statements and reports
  • Sales ledger control
  • Importance and interpretation of a sales ledger

Credit terms

  • Definition of credit terms
  • Factors affecting determination of credit terms
  • Types of credit terms
  • Effects of credit terms on working capital management

 Payment methods

  • Definition of a payment method
  • Factors to consider in choosing a payment method
  • Types of payment methods
  • Advantages and disadvantages of various payment methods

Collection management

  • Overview of collections
  • Establishing targets
  • Collection planning
  • Collection cycle
  • 80/20 principle application in collections
  • Collection tools and methods
  • Computer aids to collection
  • Communication with defaulters
  • Restructuring of debts
  • Rules for effective collection practices
  • Mistakes made during collection
  • Reasons for delays in payments
  • Third party collectors
  • Collection through alternative dispute resolutions(ADR)
  • Legal process for debt recovery

Credit insurance

  • Definition of credit insurance
  • Characteristics of a good credit insurance cover
  • Basic principles of domestic credit insurance
  • Financing of credit insurance premiums
  • Benefits of credit insurance to an organisation
  • Types of credit insurance policies
  • Advantages and disadvantages of credit insurance

Automation of credit function

  • Process of automation of credit function
  • Benefits of automating of credit operations
  • Types of credit management information software
  • Customer master file
  • Online credit management
  • Billing management system

Emerging issues and trends

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