Practice of Credit Management – KASNEB DCM Syllabus

PAPER NO. 12 PRACTICE OF CREDIT MANAGEMENT

GENERAL OBJECTIVE

This paper is intended to equip the candidate with the knowledge, skills and attitudes required for the application of principles, concepts, techniques and models of credit management in practical scenarios.

LEARNING OUTCOMES

A candidate who passes this paper should be able to:

Demonstrate sound technical knowledge in credit management in various scenarios
Present appropriate alternate solutions in credit management and make effective judgment in a logical and rational manner
Communicate effectively with realistic recommendations in a concise and logical manner
Prepare a credit

CONTENT

Introduction to risk

Definition of risk
Types of risks
Risk preferences
Risk management process
Importance of risk management

Credit risk

Credit risk defined
Forms of credit risk
Distinction between credit management and risk management
Common causes of credit risk situations
Goals of credit risk management
Role of senior management and Board of directors in risk management
Best practices in credit risk management

Credit policy

Definition of credit policy
Types of credit policies
Factors considered in developing a credit policy
Formulation and implementation of a credit policy
Credit policies for different sectors (SACCOs; MFIs; Government entities, others)
Illustrative practical development of a credit policy

Trade credit

Definition of trade credit
Players in trade credit market in Kenya
Benefits of trade credit
Trade credit documentation
Trade credit proposal assessment and evaluation
Illustrative case studies on trade credit

Export credit

Definition of export credit
International Commercial Terms (INCOTERMS)
Export credit documentation
Export credit assessment and evaluation
Export credit payment methods
Risks involved in export credit
Methods of hedging against export credit risks
Financing export credit
Foreign receivables management
Foreign exchange risk and sovereign risk
Illustrative case studies on export credit

Collections management

In-house collections strategies
Factoring and forfaiting
Outsourcing organisation collection function
Legal recovery process
Collection through alternative dispute resolutions (ADR) mechanisms
Provisioning and write-off of debts
Collection performance management
Illustrative case studies on collection management

Credit information sharing

Credit reference bureaus; Regulations and Act
Role of regulatory authorities
The structure of information sharing in Kenya
Players in credit information sharing
Benefits of CIS
Types of credit reports
Credit rating and credit scoring
Using credit reports in credit decision making
Services provided by credit bureaus