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'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?
  • Understanding Assets - Current, Fixed, Intangible etc.

  • Understanding Liabilities - Current, Long Term etc.

  • Constructing a Balance Sheet for your fictional business
  • 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