'Excellence is not a matter of chance but of choice'

Intermediate Credit Risk Analysis Workshop

Intended for credit control professionals. Basic financial awareness ideal but not essential. A vitally important workshop for those who are new to risk assessment and need to be involved in the setting of credit limits. The course also serves as a useful refresher for those specialists who need to brush up their financial awareness skills.

FINANCIAL ANAYSIS - 2 day WORKSHOP

Introduction and Objectives

• Introductions & 'icebreaker'


• An opportunity to share your current level of financial ‘credit risk’ experience and knowledge and to look at key individual objectives for each day


• Course objectives outlined and individual expectations explored

The Need to Identify and Control Credit Risk

• The consequences of neglect; erosion of profits through overdue accounts and bad debts; effect on cash flow

What Information is Needed and What is Available

• Identifying the customer; types of business organisation; parent subsidiary problems; credit application forms; using the sales team; references; credit reports; on-line information; the credit ‘grapevine’; the press; credit visits; financial information

Key Financial Data

• Pointers to financial health; ratios and trends; the way forward to understanding the elements and extent of financial risk

The Balance Sheet

• What is a Balance Sheet - destroying the myths


• How and why does it balance?
  

The Profit and Loss Statement

• What does the statement tell us? What is its purpose? Operational results - from Balance Sheet to P & L.
• Understanding key margins - Gross Profit, Operating Profit, Profit Before Tax (PBT, PAT, EBIT) etc.

Risk Assessment

• Simple but effective assessment procedures - What to look for and what are the key features


• Appreciation and understanding of working capital and liquidity


• Understanding the key financial ratios and what they can tell us about the business


• The decision making process - toward setting a Credit Line

Case Study Analysis - Part One

• Reviewing financial information and setting a credit limit using information from Companies Registry + other sources etc.
  

Trends

• Being aware of the larger financial picture beyond the figures - noting, questioning and analysing changes on year to year results
• Exploring and analysing trends and their use in predicting future growth (potential success) or declining results (potential failure)
• Danger signals - What to watch for.

Non Financial Considerations and Credit Decisions

• The product; the market; the margins; the future; high risk and high profit?; the time problem!

Case Study Analysis - Part Two

• Setting a credit limit and supporting the decision by an assessment of the financial information available - using ratio analysis, and other analytical techniques

Financial Check List

• Discuss the benefit and application of a simple check list to validate financial data for all credit limit assessments

Managing the Risk

• Importance of close liaison with sales; setting and using risk categories and credit limits; special payment terms; guarantees; retention of title; credit insurance; collections strategies and priorities; payment behaviours; bad debt provisions

Danger Signals

• Pro-active risk management techniques; limiting the damage; maintaining control of your higher risk portfolio
  

Closing Session

• Recap on events of the course and on meeting individual expectations.


• Action Plans


• Completion of course appraisal forms


• Course close