Module 5

Question 1

Type of debtors

Answer 1

1. Cooperative debtor
2. Chronic complainer
3. Politician type
4. Uncooperative & indifferent
5. paranoiac
6. belligerent/pugnacious
7. The elusive type

Question 2

According to paying habits

Answer 2

1. Prompt payers
2. Delinquent debtors
   -Fair credit
   -Slow credit
   -No good credit

Question 3

is an entity that owes a debt to another entity. The entity may be an
individual, a firm, a government, a company or other legal person. The counterparty is
called a creditor. When the counterpart of this debt arrangement is a
bank, the debtor is more often referred to as a borrower.

Answer 3

debtor

Question 4

is a document that includes “clear,
written guidelines that set the terms and conditions for supplying
goods on credit, customer qualification criteria, procedure for
making collections, and steps to be taken in case of customer
delinquency”

Answer 4

credit collections policy

Question 5

Customers occasionally overreact to a decision
by a creditor company to place orders on credit hold. However, most debtors
understand the collection process that creditors use, and understand the risk
they face when they delay payment. Occasionally, the penalty for delaying
payments to creditors involves a credit hold.`

Answer 5

collection and credit holds

Question 6

Most collection problems and bad debts result from a flawed or inadequate initial credit investigation. It may be helpful to think of credit extension as making a loan to an applicant. We know that a bank would not make a loan without a completed and signed application, and without a detailed understanding of the creditworthiness and financial worth of the applicant. The care that banks take in approving loans should not be lost on trade creditors. A creditor should not approve open account terms until there is sufficient documentation to show the applicant is creditworthy.

Answer 6

collections and credit risk management