Credit Management notes





The paper is intended to introduce the candidate to the credit profession, equip the candidate with practical skills and knowledge required to manage the credit cycle for trade credit providers and financial institutions.


A candidate who passes this paper should be able to:

  • Assess and evaluate credit/lending proposals and advise credit applicants on various credit products
  • Create, maintain and update debtors’ profiles and keep proper records in the credit function
  • Implement credit guidelines and procedures for the complete credit cycle
  • Monitor outstanding debts for conformity with the set-out terms and conditions
  • Analyse credit extension various providers; banks, saccos, microfinance institutions, insurance companies and non-financial entities (locally and internationally)



  1. Introduction to credit management

1.1       History of credit Management

1.2       Definition of credit

1.3       The credit cycle

1.4       Why businesses extend credit

1.5       Types of credit;Consumer Credit, Trade Creditand Export Credit

1.6       Financial effects of credit on; Cost of credit, overdue on profitliquidity and Cash flow

1.7       Merits and Demerits of credit

1.8       The role of credit and its importance in the economy

  1. Consumer Credit

2.1       Players in consumer credit- Savings and Credit Cooperative Societies(SACCOs), Microfinance Institutions (MFI’s), Banks, Financial Technology (FinTechs)

2.2       Types and features of consumer credit agreements/products- Hire purchase, auto loans, personal loans, credit card,Personal lines of Credit (PLOCS), Overdraft limits

2.3       Classification and characteristics of consumer credit products

      2.3.1    Classification the Tenure/Repayment mode      Revolving Credit      Installments      Open Credit

2.3.2    Classification Target Market      Consumer Credit      Corporate credit      Small and Medium enterprise loans


2.3.3    Types of Loans repayment mode and Security      Secured versus Unsecured      Amortisingversus Non-Amortising      Payment terms and methods      Consumer credit documentation

  1. Trade Credit

3.1       Players in trade credit

3.2       Types of credit products/accounts

3.3       Payments terms and methods used in trade credit

3.4       Trade credit documentations- invoices, credit notes, debit notes, statements etc.


  1. Export Credit

4.1       Terms and conditions of sale in export

4.2       Payment terms and methods

4.3       Challenges and risks associated with export credit

4.4       Export credit documentation

4.5       International Communication Terms (Incoterms)

4.6       Players in export trade- agents, distributors, del Credere


  1. The credit department

5.1       Roles of a credit department

5.2       Organisational structure of a credit department-financial and non-financial institution

5.3       Expected qualities of a good credit officer/manager

5.4       Duties/responsibilities/qualification of a credit officer/manager

5.5       Departmental relationships- Finance & Sales


  1. Fundamentals of Credit Assessment and Analysis

6.1       Types of borrowers

6.2       Introduction to credit analysis, appraisal and assessment

6.3       Sources of credit risk information for assessment

6.4       Introduction to credit risk and common business risks

6.5       Categories of customers in credit analysis and their credit risk factors

6.5.1    Sole proprietorship

6.5.2    Partnership

6.5.3    Private and public limited companies

6.5.4    Clubs, societies & Schools

6.5.5    Local bodies, statutory bodies and corporations

6.6       Techniques and models for risk assessment- 5C’s, CAMPARI, PARSER, CCPARTS

6.7       Role of financial statements as a tool for risk assessment

6.8       Factors to consider when assessing credit risks- financial and non-financial factors

6.9       Hedging tools against risks- bank guarantees, Securities and collaterals


  1. Introduction to Debt Collection

7.1       Introduction to collections- trade, consumer and export

7.2       Nature of credit customers/debtors

7.3       Qualities of an effective collection officer

7.4       Identifying Early warning signs

7.5       Application of Pareto rule (80/20) in collection.

7.6       Collections tools- telephone, letters, SMS, emails etc.

7.7       Collections techniques

7.8       Collection performance measurement and reporting

7.9       Provisioning norms and write-off of bad debts – IFRS9


  1. Information Sharing

8.1       Introduction to information sharing and industry players

8.2       Role of credit Reference Bureau (CRB)in information sharing

8.3       CRB reports and clearance certificate

8.4       Benefits of CRB to lenders and borrowers

8.5       Role of CRB in the economy

8.6       Accessing and interpretation of a credit report


  1. Information Technology and Credit management

Customer recruitment and risk assessment

Customer Masterfile

Billing and lending

Sales Ledger management and controls

Contents and role of a sales ledger

Types of sales ledgers

Automated Collection support

Online Lending platforms

Advantages & disadvantages of Fintech lending


  1. Credit Functions Outsourcing

10.1     Credit scoring and rating

10.2     Collection call centers and Debt Recovery Agencies

10.2.1  Credit Insurance

10.2.2  Features of credit insurance policies

10.2.3  Types of credit insurance policies

10.2.4  Benefits of credit insurance

10.3     Factoring and invoice discounting

            10.3.1  Types of Factoring

10.3.2  Advantages and disadvantages of factoring & Invoice Discounting

            10.3.3  Difference between invoice discounting and factoring

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