Certificate in CREDIT MANAGEMENT

Report
Certificate in
CREDIT MANAGEMENT
PART FOUR
COPYRIGHT
Credit skills & Management Pty Limited
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Copyright(c) 2011
CONGRATULATIONS!
• WELCOME BACK!
• Credit Two & Three were
challenging.......BUT YOU MADE IT!
• Credit Four will be interesting – but you
can’t afford to miss any lectures!
LECTURE DATES
FEBRUARY
MARCH
APRIL
MAY
NATIONAL EXAMINATION 2nd June 2012 INCLUDES AN ICM ASSIGNMENT
COMPULSORY CLASS ASSESSMENTS:
PLAN YOUR STUDIES ACCORDINGLY!
Credit Four CONTENT
• Refer Intro Pack for full ICM syllabus
• OVERVIEW OF SYLLABUS:
– Human Resource management
– Introduction to Statistics
– Business Legal Environment
– Overview of Economics
EXAMINATION
• CONSISTS OF:
– 3 hour Examination PLUS
– Home assignment – SET BY ICM
– EXAM = 80%
– Assignment = 20%
BUT
- MUST SCORE minimum of 50% in exam PLUS
have an overall mark over 50% in order to PASS!
RECOMMENDED additional
references
•
•
•
•
Blue Book of South Africa
Internet
Employment and the Law
Business Management
MODULE ONE
• EMPLOYMENT and the LAW
Learning Outcomes
• Explain, discuss, draft and/or evaluate:
– Contribution of human resource management to the
business
– Theories of employee motivation
– Objectives and elements of KPA’s, job descriptions,
performance measurements
– Mentoring/counselling, training and discipline
– Legal compliance in employment
– Managing by objective
• Cash flow projections and targets
Who is considered to be an
employee?
In terms of law: Employees
Rights
• Permanent staff
• Part Time staff
……………………………………..
• Contract worker
Long Terms
Contract =
EMPLOYEE
Short term renewed
frequently = EMPLOYEE
Short term contract –
renewed maybe once –
NOT NECESSARILY AN
EMPLOYEE
NOT SURE if you are considered
an employee under the Act?
• EARNING MORE THAN R140736? - can
then apply to the CCMA for them to
determine whether or not you are
considered an employee – and therefore
whether employee rights apply to you.
• IF you earn more than this – then
Sections 9 – 18 of the Act do not apply to
you
What are these sections?
•
•
•
•
•
•
•
•
•
•
Section 9 – relates to STANDARD HOURS OF WORK
Section 10 - relates to OVERTIME PAY
Section 11 – relates to COMPRESSED WOEKING WEEKS
Section 12 – relates to AVERAGE HOURS OF WEEK
Section 13 – relates to the DETERMINATION of HOURS OF WORK
Section 14 – Relates to MEAL INTERVALS
Section 15 – Relates to DAILY AND WEEKLY REST PERIODS
Section 16 – relates to PAY FOR WORK ON SUNDAY
Section 17 – relates to NIGHT WORK
Section 18 – relates to PUBLIC HOLIDAYS
Discussion
• What do you think the common law duties
of an EMPLOYER and an EMPLOYEE
are?
Employers must:
•
•
•
•
Appoint an employee into service
Pay the agreed wage
Ensure safe working conditions
Conform to the Labour Relations Act
Employees
• Have a duty to work
• Work in the manner required by the
employer (reasonable and lawful)
• Respect the employers authority
• Work with diligence and in good faith
(looking after the interests of the
employer)
• Not compete with the employer or reveal
trade secrets
Does an employer….
• Have a general duty to provide
work for an employee?
BASIC CONDITIONS OF
EMPLOYMENT ACT
• PURPOSE / OBJECTIVE
• CONTENT
• EMPLOYMENT CONTRACTS
BCEA
OBJECTIVE OF THE ACT
• THE BCEA Regulates
– Acceptable minimum standards and rules of
employment
• Employer can offer better terms and conditions than
the Act stipulates – but not worse ones – by
agreement) OR
• A collective agreement entered into with unions or
bargaining councils can result in standards and rules
being different to the BCEA
• The Minister can change the BCEA from time to time
Content of the Act
• The Act dictates – amongst other
things - that:
– Every employee must have a written
employment contract in place
– Standard working conditions (hours)
Employment Contract
This is:
– A legally enforceable contract between 2
parties – wherein one party places his
services at the disposal of , and under
the control of, another party – for an
indefinite or determined period – in
exchange for a fixed or ascertainable
wage.
Elements of an employment
contract (ie to make it valid)
•
•
•
•
•
A time agreement must exist
It must be permissible by law
The parties must have legal capacity
There must be intention by both parties
The employer must have the power to
control and the employee must place
his/her services at the employers disposal
(possible to perform)
• There must be agreement between both
parties
• Both parties must enter into the agreement
of their own free will
CONTENT OF AN
EMPLOYMENT CONTRACT
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Full name and address of the employer
Name and address of the employee
Title of the position
Brief description of the work
Place of work
Date work to commence
Normal hours of work
Rate of pay for normal time
Rate of pay for overtime
Any other cash payments the employee will get
Frequency of payment
Deductions to be made from pay
Leave entitled to
Termination rules and periods
Details of any councils that govern the employer
List of any other company documentation relevant with details of where copies
can be found
ACTIVITY
DRAFT A STANDARD EMPLOYMENT CONTRACT FOR:
Susan Malophi who has recently been employed as a call centre
debt collection agent for an international debt Collection Agency
called BINDINI COLLECTIONS PTY Limited
HAND IT IN TO YOUR LECTURER FOR MARKING
Employment contracts
• Must be in writing and signed
• Any subsequent changes must be in writing
• Employer must retain a copy of employment
contracts for a period of 3 YEARS after
termination of the employment agreement!
STANDARD WORKING
CONDITIONS
•
•
•
•
•
•
Hours of work
Overtime hours
Leave pay
Sick pay
Maternity pay
Family responsibility leave
Standard hours or work
• Not more than 45 hours per week
• Not more than 9 hours per day in a
standard 5 day (or less) working
week
• Not more than 8 hours per day in a
week which is longer than 5 days
By Agreement between the parties:
These hours can be extended by 15 minutes per day (but not more
than 60 minutes per week) – where the employer’s business deals
with the public after normal working hours)
OVERTIME
Does NOT apply to:
• Senior managerial staff
• Sales staff who travel to customers
and regulate their own hours
• Employees who work less than 24
hours per month for the employer
Over time hours
• Over time must have been agreed
between the parties
• No more than 10 hours overtime a
week (except where there is a
collective agreement in place)
• Where there is a collective
agreement – no more than 15
hours overtime a week is allowed
What is a collective
agreement?
• Agreement with a group of people
– like a trade union
Example:
A Trade Union may agree with an
employer that their members will
work a maximum of 13 hours
overtime per week
Overtime agreement &
rates
• Overtime agreement must be
entered into on commencement of
employment – or within 3 months of
starting
• Rates are time and a half on
Saturdays – double time on
Sundays and public holidays
Exempt for overtime
• In terms of the Act – some
employees may not be entitled to
payment for overtime.
Standard Leave pay
• The BCEA states:
– Full time employees are entitled to a
MINIMUM 21 consecutive days paid
leave (ie 15 working days) after every
12 months of continuous employment
OR
– By agreement – 1 day for every 17
days worked OR
– By agreement 1 hour for every 17
hours worked
Annual Leave continued
• Annual leave must be granted not
later than 6 months after end of
leave cycle
• Employer must not allow annual
leave to be taken
– during notice of termination of
employment
– During any other leave (such as sick
leave)
SICK LEAVE
• Sick Leave cycle is 36 months
• Employee entitled to paid sick
leave every cycle - equal to number
of days he would normally work in
a 6 week period
Example:
5 days a week worker:
30 WORKING days every cycle (36
months / 3 years)
SICK LEAVE
• Restriction of sick leave:
– During the first 6 months of
employment – only allowed 1 day for
every 26 days worked
Sick Leave rules
• Sick for 2 or more consecutive
days – employer entitled to ask for
a medical certificate OR
• Sick for 2 or more consecutive
days on 2 or more occasions in a 8
week period – employer can
request a medical certificate
Family responsibility Leave
• This refers to paid leave to deal with family
issues related to:
– Death
– Birth
– Illness
Direct family members:
Child / Spouse/ parent / sibling/
grand parent / adoptive child /
grandchild
MATERNITY LEAVE – entitled to:
• PRIOR TO THE BIRTH
– 4 weeks (1 month) unless
otherwise agreed or doctor
note
• AFTER THE BIRTH
– 3 months
• TOTAL
– 4 months
Paid maternity leave
• NO legal requirement for the employer to
pay the employee whilst on maternity
leave
• Employee can claim benefits from UIF
(Unemployment Insurance Fund) – if they
contribute to the fund monthly.
Miscarriage and Still births
• If in 3rd trimester of
pregnancy – or if still
born:
– Entitled to 6 weeks
leave after the sad
event
LEAVE NOT UTILISED IN THE
PERIOD
• Annual Leave – can be carried to the next
period
• ..................................................
• Sick Leave
FALLS AWAY and a
• Family responsibility leave
NEW CYCLE BEGINS
• Maternity leave
DEDUCTIONS
• The employee must agree in writing OR
• The employer must have been served a
court order OR
• Deduction is as per a collective agreement
or arbitration decision
WHAT HAPPENS IF...
• The Company OVERPAYS you .... And
wants to deduct it off your salary?
Termination
• Termination of the employment contract
must be:
– in writing
– In accordance with the termination conditions
in the contract unless otherwise agreed by
both parties
Termination Rules as per BCEA
Within the first 6 weeks of employment
1 week notice period
After 6 weeks employment period – but
less than 12 months
2 weeks notice period
After 1 years employment period
4 weeks notice period
Termination Certificate
• The employee is entitled to receive this – stating:
–
–
–
–
–
–
–
–
Employers full name and address
Employees full name
Description of any relevant council or sector
Start date
Termination date
Salary at termination
Job title
Reason for termination (optional – employee can
decide if they want this shown or not)
Labour Relations Act (LRA)
• This current labour law came about after
consultation between:
– Organised labour (trade unions)
– Government
– Employers
PURPOSE of the Act
• The ensure that social justice, peaceful
employment, work place democracy are
adhered to – resulting in economic growth
Participants in labour relations
EMPLOYEES
(Represented by
TRADE UNIONS)
EMPLOYERS
(Represented by
MANAGEMENT)
THE STATE
(Government)
EXCLUDED FROM THE ACT
• Members of:
– SA Defence Force
– National Intelligence Agency
– SA Secret Service
The Act includes rules /
processes on:
•
•
•
•
•
•
•
•
•
•
•
•
•
Grievance Procedures
Disciplinary Procedures
Freedom of Association
Organisational Rights
Bargaining Councils
Statutory Councils
CCMA
Labour Courts
Strikes and Lockouts
Collective Agreements
Agency Shop Agreements
Closed Shop Agreements
Workplace Forums
We need to study each of these
in depth together LETS REFER TO
YOUR NOTES... Pages 19 – 46
plus assignment to be done on
page 22
EMPLOYMENT EQUITY ACT
• PURPOSE OF THE ACT :
– Eliminate unfair discrimination (direct/indirect)
against any employee AND
– Apply affirmative action measures – to ensure
the correct / fair balance of employment from
within designated groups
Designated Employers must:
• Prepare and implement an Employment
Equity plan – which shows how they
intend to bring about change to the
demographics of their work force – over
the next few years (1 – 5 years)– in order
to have the correct balance of designated
employees
DESIGNATED EMPLPYERS are:
• Employers that:
– Employee 50 or more people OR
– Employee less than 50 people – but have a
turnover that exceeds a certain amount as
laid out in Section 4 of the Act
• (varies industry to industry – refer to page 47 of
your notes for levels)
Designated Employees
•
•
•
•
•
•
Black
Indian
Coloured
Chinese
Woman
People with disabilities
The Employment Equity Plan
(EEP)
• This plan must state:
– Objective to be achieved each year
– Affirmative action measures intended to be taken
– Numerical goal in order to achieve the correct
balance
– Time table for the plan for each year
– Period of the plan (not more than 5 years)
– Procedures that are going to be used to monitor
progress of the plan
– Internal dispute resolution methods in terms of
disputes within the planning committee
– Name of person responsible for the plan
Submission
• The employers must submit a progress
report to the Department of Labour
– Annually on the 01st October for companies
having more than 150 employees
– Every 2 years on the 01st October for
companies with employees of less than 150
SKILLS DEVELOPMENT LEVY
ACT
• OVERALL PURPOSE
– To encourage business to
become involved in the
skills development and
training of employees –
and to contribute to the
training and development
of unemployed individuals
through a skills levy / tax /
rebate scheme
• CONTENT
– Companies must pay a
monthly skills levy / tax to
the Government based on
1% of their employees
salary and wages total (not
deductable from
employees)
– Companies that train staff
can claim back part of this
levy
– Government gives training
grants to various
companies from the levies
they have received
Break down on the
objectives of the Act
• Develop the skills of SA workforce
• Increase levels of investment in education
and training by companies
• Use the workplace as an active learning
environment
• To provide employment / work experience
• To ensure the quality of training in the
workplace
• To provide opportunities for the jobless to find
work
• To provide and regulate employment services
Do you think that this
Act has achieved it’s
objectives?
• YES – in part – more people are
getting trained
• NO – in part – as it has not resulted
in a vastly improved / increase in skills based, employable work force
Assignment
• Discuss page 49 – Exemptions to
the Act?
EXEMPTION
• Who do you think is exempt from
paying this Skills Development
Levy?
– Any company whose annual salaries
and wages are less than R250 000
– Any company declared exempt by the
Commissioner of SARS
UNEMPLOYMENT INSURANCE
ACT 63 of 2001
UIA
• PURPOSE OF THE ACT
– To provide a mechanism of short term
financial relief for people who were are ready
and able to work – but who are unable to get
work / work for whatever reason
– To provide a mechanism for short term
financial relief for people who may be
temporarily unable to work for a specific
reason (example pregnancy)
How it works...
• Employees contribute 1% of their
gross income (up to a maximum
amount of R12478) per month
• Employers meet this contribution
(ie the employer also contributes
1%
• This 2% is paid over to the Dept of
Labour – via SARS – every month
The employer:
• Must advise the Dept of labour of
the names, addresses ,ID and
salary levels of all employees
• Pay over the unemployment levy
(the 2%) within 7 days of each
month end
How it works
• Jane Smith earns R 10 000 per
month UIF deduction will be R100
• Peter Malopi earns R15 000 per
month UIF deduction will be
R124.78
– Maximum salary for UIF deduction is R12478.00
TOTAL DEDUCTIONS = R 224.78
COMPANY MUST PAY OVER R224.78 X 2 = R 449.56
WHAT BENEFITS CAN BE
CLAIMED?
•
•
•
•
Unemployment benefits
Illness benefits
Maternity or adoption benefits
Dependents benefits
UNEMPLOYMENT Benefits
• Unemployment period of 14
days or more
• Unemployed because of:
– Termination of contract
– Dismissal
– Insolvency of employer
• Must be capable and available
for work
• Must register at the UIF offices
How much can I claim?
• Contributing 4 years
or more?
– Will be calculated
based on a sliding
scale of between 38%
– 58% of your last
monthly salary – (if
salary under R12 478)
OR between 38% 58% of R12 478 if your
salary is greater than
that amount
• Contributing less than
4 years?
– Calculation will be
based on 1 day for
every 6 days worked
whilst contributing
ILLNESS benefits
• Can be claimed if the period of
illness is:
– 14 days or more
AND
- The employee cannot perform
specifically because of this illness
- AND
- The employee meets any prescribed
requirements in terms of the illness
MATERNITY / ADOPTION
benefits
• Up to 17 weeks worth of benefits
can be claimed for maternity
• Up to 6 weeks if a miscarriage
occurs
• One parent can claim benefits if
leave work to look after an adopted
child under the age of 2
Dependent benefits
• Payable to a surviving spouse, life
partner or dependent child
• Claim must be submitted within 6
months of a contributors death
REMEMBER
• Cannot claim if:
– Receiving a pension from the state
– Receiving payment from a compensation
Fund for injuries that caused the
unemployment
– Receiving payment from any other fund
under the LRA
– The employee RESIGNED
– The employee fails to conform to
requirements
– The employee is working again
CLASS ACTIVITY
• Calculate how much would be paid
over to the UIF each month based
on the following:
– J Smith earns R17500 per month
– S Clote earns R12000 per month
– F Jones earns R5600 per month
– A Liven earns R10000 per month
(see example on page54)
Working it out
• DEDUCTIONS from each employee
would be:
– J Smith earns R17500 per month
Deduction based on R12478 = R124.78
– S Clote earns R12000 per month
Deduction = R120.00
– F Jones earns R5600 per month
Deduction = R56.00
– A Liven earns R10000 per month
Deduction = R100.00
TOTAL DEDUCTION = R400.78
Answer
• Deductions would be R 400.78
• Company contribution would be
R400.78
TOTAL Amount to pay over: R 801.56
HOMEWORK
• Write a memo to your staff members
– identifying the following in terms of
the unemployment Insurance Act:
–
–
–
–
–
–
–
Key purpose
Responsibilities of the Employer
Rights of the Employees
Who should contribute
When can a claim be submitted
Who should it be submitted to
Who is exempt from this Act
INTERNAL HUMAN RESOURCE
ACTIVITIES
REMEMBER CREDIT 3?
• Management responsibilities:
– Plan
– Lead
– Organise
– Control
Factors influencing HR Planning
•
•
•
•
•
•
Type of work to be done
Available financial resources
Company policies
Companies strategy
Available level of skills
Economic growth of the business
PROCESS OF MANAGING
•
•
•
•
•
•
•
•
Conduct a job analysis
Transform this into a job description
Set goals
Motivate employees
Measure performance
Train
Coach /Counsel
Discipline / Motivate
TYPE OF WORK TO BE DONE
• JOB ANALYSIS
– Conducted by internal personnel OR
– Through an external consultant
– Need to
• COLLECT INFORMATION
• ANALYSE AND GROUP THE INFORMATION
• DESIGN A JOB ANALYSIS REPORT FROM
WHICH A JOB DESCRIPTION CAN BE DONE
JOB DESCRIPTION
• WHAT PURPOSE does a job description
fulfil?
– Can be used for recruiting of new people
– Sets guidelines for a new employee
– Can be used to train, coach or counsel an
employee
– Can be used to assist in the evaluation of an
employees performance
– Can be used to determine salary levels
Content of job description
• Title of the job (ie credit controller)
• Reporting structure (centralised / decentralised & chain of
command) – revise credit 2 for organisational structures
• Overall objective of the job
EXAMPLES
– (primary objective of a credit control position (divisional) =
maximise profitable sales whilst minimising bad debts and slow
payments)
– (primary objective of a call centre debt collector = collect as much
money as soon as possible and rehabilitate the debtor)
– (primary objective of a third party debt collection agent is to collect
as much as soon as possible – in the most cost effective manner
possible)
Content of job description
continued
• Main duties
– Examples: (provide details under each heading)
•
•
•
•
•
New Account Assessments
Reconciling of payments to remittance advices
Allocation and capturing of debtor payments
Account reconcilliation
Current and arrear debt collection
• Job specifications
– Skills
– Knowledge
– Ability
Job specifications
• SKILLS required
– Competency based activities
• Analyse credit information to form a decision
• Capture within a set time period
• Conduct a telephone collection call
Job specifications
• KNOWLEDGE required
– Subject matter knowledge on:
• Securing an account
• Rules of the National Credit Act / Consumer Protection
Act (which ever is relevant to the industry)
• Credit principles
QUALIFICATIONS required
Job specifications
• ABILITY
– Task related:
• Ability to work on a specific computer program
– Excel
– SAP
• Ability to calculate:
– DSO calculations
– Trade discount percentages
IMPORTANT NOTE
A job description is drawn up based on the
JOB to be done .... And NOT on the ability
/ skills etc of the person already in the
position
Job specifications
• SKILLS required
– Competency based activities
• Analyse credit information to form a decision
• Capture within a set time period
• Conduct a telephone collection call
Job specifications
• KNOWLEDGE required
– Subject matter knowledge on:
• Securing an account
• Rules of the National Credit Act / Consumer Protection
Act (which ever is relevant to the industry)
• Credit principles
QUALIFICATIONS required
Job specifications
• ABILITY
– Task related:
• Ability to work on a specific computer program
– Excel
– SAP
• Ability to calculate:
– DSO calculations
– Trade discount percentages
STAFF Motivation
• What motivates YOU to work well?
Definition of “motivation”
• An persons internal desire to satisfy an
unsatisfied need
– Therefore – each persons internal desire may
differ from the next person’s – making it very
difficult for managers to motivate each person
on their team
Motivational Theories
• There are a number of theories that have
been documented about the motivation of
staff members:
– Authors of FORMAL Motivation Theories
include:
•
•
•
•
Maslow
Hertzberg
McClelland
Alderfer
HIERACHY of NEEDS
All based on:
• A basis that human needs need to be met – in order for employees to
be motivated......... And they all debate the order of importance of
these needs – and they group them differently to each other
• Human Needs include:
–
–
–
–
–
Fair return for efforts (money)
Safe and comfortable work environment
Social acceptance
Recognition of efforts
Recognition of skills and ability levels
What else would you identify as a human need in the work
environment?
Each of the theories believes:
Employees have needs
These needs have to be met in order to
have motivated staff members
These theories differ in:
• how these needs are grouped / identified
• the order of that these needs have to be
met
Your lecturer will
• Go through the theories briefly.
• You aree required to investigate them
further – make your own notes – and then
do the assignment on page 60
MASLOWS THEORY
Self actualisation needs
Esteem needs
Social needs
Security(safety) needs
Physiological needs
Starts here
Alderfs ERG THEORY
Growth needs
Relatedness needs
Existence needs
Starts here
Hertzberg THEORY
BOTH MUST EXIST
Motivational
(growth factors)
Maintenance
(not motivational –
but essential)
McClelland’s THEORY
Need for affiliation
Need for power
Need for
achievement
HOME ASSIGNMENT
• Examine the 4 different theories provided in
your text book
• Compare each theory and provide a report
that:
– Explains each one in your own words
– Identify the theory that YOU personally believe
would best suit YOUR motivational needs in the
workplace – and justify your answer
IN SUMMARY
• Motivation is greatly based on many of the
aspects of these theories PLUS support
from management in the following
instances:
– Clearly defined structures / expectations
– Environment
– Reward and recognition
– Communication / feedback
– Counselling / Coaching and training
Previously you studied:
• Job descriptions / KPA’s and goals (DSO)
PERFORMANCE Appraisals
• These can ONLY be done if clear goals /
expectations / targets were originally set –
and communicated to the employee
• Must be done regularly (same month/s
each year)
• Be done when it is due (no delays)
• Employees must be treated with respect
Performance Appraisals
•
•
•
•
•
Purpose
Advantages
Disadvantages
Common types of appraisals
Preparation for implementing appraisals
Purpose
• Estimate the
of work
• Open up
skills between
manager and employee
employee to perform or exceed
required standards
• IDENTIFY
for employee
growth and development / improved results
• Determine
• Determine
levels
Advantages to using Appraisals
•
•
•
•
•
•
•
•
•
Can increase loyalty in staff member
Eliminates discrimination
Assists in making promotional decisions
Assists in salary levels
Encourages communication
Identifies correction needs (coaching / counselling / training/ discipline)
Opportunity to communicate company vision and strategies
Opportunity to communicate employee’s role in the strategy
Protects company from needless litigation
Disadvantages
• None... If done correctly and fairly!
• BUT – if NOT done correctly and fairly:
– Could result in expensive legal consequences
for the Company
– De-motivation of employee
Common Types of Appraisals
•
•
•
•
•
•
•
Self appraisals
“Check the box” appraisals
Competency based appraisals
Comprehensive performance review
Peer to Peer /360 degree appraisals
Continuous feedback
Using Management by Objectives
Common Types of Appraisals
• Self appraisals
– Company provides a pre drafted form that the
employee fills in - based on the employee’s own
performance
– The manager is given the same form to fill in –
based on his opinion of the employees
performance
– The employee and manager then meet to
compare and discuss – and come to an
agreement on the quality and level of
– The employees activities
Common Types of Appraisals
• Check the box appraisals
– The company produces a pre printed
document that has a list of activities to be
measured – and the manager then “rates” the
employee’s performance using a sliding scale
of numbers
EXAMPLE
1 = Below acceptable standards
2 = Acceptable standard achieved
3 = Above expected standard )
Danger of Check the Box
• The manager may not be fair
• The manager may impose his own
prejudices
• Could de motivate employee
Common types of appraisals
• Competency Based Appraisal
– Best used in jobs that have outcomes that are
easily identified and measured
Examples from the credit departments:
 captures new application details accurately
Captures payments correctly and on time
Follows credit policy authority levels
Files documents accurately
Common types of appraisals
• Comprehensive Performance review
– Define expectations
– Define additional areas to be evaluated
Your opinions
• Class Discussion
• DIVIDE INTO GROUPS
– Discuss your opinions with your group on the
Advantages and Disadvantages of this type of
appraisal
– Present your thoughts to the class for
discussion and the class must come up then
with am overview of the advantages and
disadvantages
Did you include the following:
• Advantages:
– Clearly states what the employee is going to
measured against (no surprises)
– Varied duties – better chance of higher score than
if just being measure on one thing
• Disadvantages
– Score achieved depends on the managers
“opinion” in some instances
– Any problems with co-workers – whether
employees fault or not – will result in a lower
score
Types of appraisals
• Peer to Peer
– The employees colleagues in the same
department actually do the appraisal on the
employee based on their opinion on the
employee’s:
•
•
•
•
•
teamwork
Work quality
Communication skills
Work ethics
Strengths and area of development
Types of appraisals
• 360 degree appraisal
– Very similar to “peer to peer” appraisal –
except that other departments are also
involved
Examples:
- sales department
- claims department
- payment allocation data capturers
Discuss
• What is the main problem that you can
identify in using either or these 2 appraisal
methods?
Type of Performance appraisal
• Continuous feedback
– Very informal
– Coaching and counselling sessions held to
discuss short term performance levels
Type of Performance appraisal
•
Appraising (Managing) by Objective
– Set a goal to be achieved by the employee
• Make sure the goal is SMART
– Specific
– Measureable
– Achievable
– Realistic
– Time frame
– After the set period – identify to the employee what has been
achieved
– Compare this to the goal set
– Analyse any differences between results and expectations
– Discuss causes for this difference
– Report on it
– Correct the problem through counselling / coaching / discipline or
training / education
Combinations
• A company can decide which type they
wish to make use of – or they may
combine a number of them
• IMPORTANT –
– that generally all employees are measured
using the SAME type of appraisal
– That preparations are complete before
appraisal system implemented
Preparation must take the form
of:
• Ensuring that there is a job description in place and that the
employee has a copy
• Ensuring that any goals or objective that are set are
achievable
• Ensuring that there is open communication between the
manager and the employee
• Ensuring that the Company’s expectations are CLEARLY
identified for the employee
• Ensuring that the purpose and expectations of reviews are
clearly communiciated to the employee
• Ensuring conformance to all labour laws / legislation
• Ensuring that the Company has a clear strategy and mission
– and that this is communicated to the employee
REMEMBER............
What is measured in the credit
environment?
• Some differences between measurements
in:
– Divisional credit structure
• Usually commercial / trade credit
– Functional credit structure
• Retail credit / consumer credit
• Commercial call centre collection environment
Functional structure
measurements
Measurement
New Accounts Dept
Customer Service
(Inbound)
Debt Collection
PRODUCTIVITY
LEVELS
Number of applications
captured
Number of calls
answered in a set
amount of time
Number of calls made
within a set period of
time
WORK QUALITY
LEVELS
Accuracy of
information captured
Number of queries
resolved and time taken
to resolve
Taped call audits to
determine service levels
when collecting
WORK
EFFECTIVENESS
LEVELS
Number of Promise to
pay (PTP) received
Number of PTP met
Rand value collected
Divisional structure
measurements
PRIMARY measurements
• Rand value collected
• Days Sales Outstanding
• Percentage of debtors overdue
– Total
– Per age
• Number of overdue accounts
Secondary performance
measurements
• Accuracy of capturing payments
• Correctness of allocation of payments (open
item specific)
• Time taken to resolve queries
• Filing and safe keeping of proof of delivery
documents
• Maintenance of master files
• Management of credit limits
• Relationship with sales staff
DAYS SALES OUTSTANDING
• Are you confident in calculating this from
information provided?
Setting monthly targets
• If using DSO to measure performance –
targets could be set with a view to reduce the
n=following months DSO by a set number of
days:
( no more than 2 – 3 days reduction per month
is generally considered the norm)
BUT:Credit controllers need to have a RAND value
target derived from these reduction day
requirements
In other words:
• Need to have a target of reducing DSO by
2 days AND need to say how much RAND
VALUE must be collected in order to reach
this 2 day reduction target!
– We will now study the process of setting this
RAND value target:
Rand Value target calculation
• PROCESS:
– Calculate DSO at month end
– Decide how many days to be reduced in following month
– Work out which months these days will refer to (remember
to include current months days)
– Work out how much money can still be left
OUTSTANDING on the debtors book at the coming month
end to make up the DSO anticipated above
– Deduct this amount from the debtors balance of last month
end
– BALANCE IS COLLECTABLE
See examples in your manual pages 73/74
CLASS ACTIVITY
See page 75.
Training & developing your staff
ON THE JOB (Internal)
OR
OFF THE JOB (External)
TYPES OF TRAINING
PROGRAMS
FUTURE OPPORTUNITY
TRAINING
TOP UP TRAINING
TASK RELATED TRAINING
OPERATIONAL TRAINING
OPERATIONAL TRAINING
• Should be for ALL Employees
– Covers company policies
• Employment policy
• Disciplinary and code of ethics policy
• Credit policy
TASK RELATED TRAINING
• Specific to the employee’s job function
(activity / skills)
– Reconciliation of customer accounts training
– Capturing and allocation of deposits training
– Telephone skills training
TOP UP TRAINING
• Relates to the job function – but more to
the KNOWLEDGE about the function
being performed
– Credit management 1 – 4
– Legal process training
Future Training
• Training that prepares the employee for
future positions
– Supervisory skills training
– Management training
Other tools used to manage staff
• COUNSELLING
– Assisting staff member through discussion – to
identify and solve a problem themselves
• COACHING
– Identifying area of non performance and giving
solution to the problem
• MENTORING
– Acting as an advisor to employees engaged in further
or top up training (mentors are experienced people
who have already followed the process and have
succeeded therin)
Training related
assistance
Coaching
Counselling
Development
related
assistance
Mentoring
SUMMARY of HR Management in
the Credit Department
•
•
•
•
•
•
•
•
Identify tasks to be done
Plan the resources required
Compile job descriptions and objectives
Provide the necessary training
Provide performance feedback
Reward / train / coach / counsel / discipline
Encourage further self development
Conform to all Labour Legislation!
SELF STUDY
• Use the questions on pages 79-81 to
assist you to revise this section and to
prepare for the examination
• Ask your lecturer if you are unsure of any
answers
MODULE 2
Introduction to Statistics
Learning Outcome of this
Module
• Understand and extract
meaningful credit
statistics
• Analyse these statistics
• Provide relevant charts
and graphs to
management
14
12
10
90+
8
60
6
30
4
2
0
CC1
CC2
CC3
CC4
INTRODUCTION TO CREDIT
STATISTICS
•
•
•
•
Definition
Sources of data
Data Collection methods
Credit data
– Analysing
– Trend Analysis
– Presentation of the data
INFORMATION GATHERED
MUST BE:
•
•
•
•
•
Timely (up to date)
Accurate
Relevant
Adequate
Available when it is needed (easily
available)
Information (Data)
• Information / Data can be gathered – but
without analysis – it is generally meaningless
• Information / data must be:
– Gathered from relevant sources
– Relate to the objective / outcome that is being
considered
– Summarised
– Analysed
– Presented in a meaningful manner
EXAMPLE
• Imagine management is asking about the number of
credit notes passed in your company each month and
wants to put in a plan to reduce these
• You provide them with the Information / data gathered
that states:
– 580 credit notes are passed monthly
Although this tells management how many are passed – it
doesn’t help them solve the problem on how to REDUCE
them. Further ANALYSIS of the REASONS behind these
must be obtained.
You should gather the information now that will assist you
to analyse these.
SELF STUDY:
•
•
•
•
External Data Sources
Primary data sources
Secondary data sources
Data collection methods
CREDIT DATA
• EXAMPLES
– Rand value of credit notes passed
– Number of credit notes passed
– Rand value of bad debts
– Number of accounts that have gone bad
– Rand value collected
– Rand value of overdue accounts
– Number of overdue account
– Days sales outstanding
EXAMPLES
• Page 91-93
• COMPARE THE OUTCOMES TO
ESTABLISH A TREND OVER THE PAST
PERIODS!
• Will then be able to see if the results have
improved or declined over the past periods
TABLES, CHARTS AND
GRAPHS
TABLES
• Refer example on page 95-96
– Used to present a combination of information/
data
– Often a CHART is used to plot the data before
putting into a graph format
CHARTS – refer page 97 & 98
• Most common chart used
is a PIE CHART
Collected
Jan
Feb
Mar
April
Pie Charts
• Good to use for
showing:
– Reasons for credit
notes being passed
– Ageing of the total age
analysis
– Comparison between
applications approved
and applications
rejected
– Rand collected per
month
RAND Collected
Jan
Feb
Mar
April
GRAPHS
• Commonly used graphs include:
– Line graphs
– Bar graphs
• Simple bar graph
• Multiple bar graph
• Stacking bar graph
Line Graphs
Accounts Approved per month
90
80
70
60
50
Series 1
40
30
20
10
0
Jan
Feb
March
Apri;l
Line Graphs
DSO Achieved
90
80
70
60
50
DSO
40
30
20
10
0
Jan
Feb
March
April
Line Graphs
DSO Achieved
160
140
120
100
80
DSO Target
60
DSO Actual
40
20
0
Jan
Feb
March
April
Line Graphs
Rand value collected
300000
250000
200000
TARGET
150000
COLLECTED
100000
50000
0
Jan
Feb
March
April
BAR GRAPHS
• SIMPLE
• MULTIPLE
• STACKING
SIMPLE BAR GRAPH
APPLICATIONS APPROVED
90%
80%
70%
60%
50%
APPROVED
40%
30%
20%
10%
0%
JAN
FEB
MARCH
APRIL
MULTIPLE BAR GRAPH
120000
100000
80000
PROCESSED
60000
APPROVED
40000
20000
0
JAN
FEB
MARCH
APRIL
Multiple Bar Chart
• Easiest to first put the relevant data into a
table
• Discuss when percentages should be
used: REFER PAGE 101
STACKING BAR CHART
• Information is
STACKED on top of
each other (maximum
100% when using
percentages)
120%
100%
80%
Goods
returned
60%
Incorrect
Prices
40%
Admin
errors
20%
0%
April
Stacking bar Chart example
• Using the NUMBER
of credit notes instead
of the percentage:(top of graph is 120 =
total credits passed)
140
120
100
80
Goods
returned
60
Incorrect
prices
40
Admin
Errors
20
0
April
Multiple Stacking bar Chart
example
• More than one
column
140
120
100
80
Goods
returned
60
Incorrect
prices
40
Admin
Errors
20
0
April May
ACTIVITIES
• REFER TO PAGE 104 - 107
MARKED Assignment 3
• Complete this assignment
• Compare your answers to your
lecturers responses
• Were you correct?
Revisiting the legal
environment
• Revise all Acts from Credit 3 – SPECIFICALLY
– Insolvency Act
– Companies Act (We will revisit this)
• We will examine:
–
–
–
–
–
–
–
–
–
–
–
SA Constitution
National Small Business Act
Non Profit Organisations Act
Protected Disclosures Act
Financial Intelligence Act
Value Added Tax act
Business names Act
Promotion to access Information Act
Electronic Communications Act
Consumer Affairs Act –(Consumer Protection Act)
CORPORATE GOVERNANCE
Constitution of South
Africa
• A Constitution is:
– A written record of fundamental
principles or established precedents
according to which a state or other
organization is acknowledged to be
governed.
Objective of SA’s
Constitution
•
•
•
•
Heal the divisions of the past
Establish a democratic society
Protect all citizens equally
Improve quality of life for all
HUMAN RIGHTS under the
Constitution include:
• Right to:
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Equality and protection from discrimination
Human dignity
Life
Freedom and security of person
Privacy in body, home and relationships
Freedom of conscience, religion, belief and opinion
Freedom of expression
Freedom of assembly, demonstration and picket
Freedom of association
Political freedom
Freedom of movement and residence
Freedom of trade, occupation and profession
Healthcare, education and housing
Access information
Constitutional Court
• CONSTITUTIONAL COURT is the
highest court of the land – that can
over rule all other courts where the
protection of human rights is
involved
NATIONAL SMALL
BUSINESS ACT
• What challenges do you think are
faced by small business in South
Africa today?
Challenges faced include;
•
•
•
•
•
Lack of funding opportunities
Economic challenges
Lack of adequate infrastructure
Lack of guidance and mentors
Legislation compliance
Objective of the Act
Promote small business
Set up an agency that assists small
business to expand and monitoring
in the form of:
Training
Advice counselling
Non financial services
Non Profit Organisations
Act
• Who registers under this Act?
– Non Profit ORGANISATIONS such as
Fund raisers
– Optional that Section 21 Companies
may also register (as well as under the
Companies Act rules)
– Trusts (although must still register with
the Master of High Court)
– Voluntary Associations
Objective of the Act
• To provide an environment where
such associations can flourish
• To establish the framework under
which these associations can
conduct their affairs (rules)
• To provide tax benefits to such
associations
Protected Disclosures Act
• (Commonly referred to as the
Whistle Blowers Act)
Objective
• Make provision for:
– PROCEDURES to be
followed by employees
wishing to make a disclosure
regarding information of
unlawful and irregular conduct
by employers or other
employees
– PROTECTION for employees
who make a disclosure
FINANCIAL INTELLIGENCE ACT
(FICA)
Money Laundering processes
Objective of the Act
• To establish a Financial Intelligence Centre
and a money laundering Advisory Council to
minimise money laundering by criminals
• To impose certain duties / activities on
institutions who may be used for money
laundering
• To amend the Prevention of Organised Crime
and the Promotion to Access Information Act
Institutions that must comply
include:
• Attorneys – as defined by the Attorneys Act
53 of 1979
• An Estate Agent
• A Bank
• Long Term Insurers
• Foreign Exchange dealers
• Investment advisors
• Approved investment managers
• A Board of Executors or a Trust company
(under the Trust Property Control Act)
What must these Institutions do?
• Establish and verify:
– the identity of the client
– The legal residence of the client
– The authority to act on some ones behalf
where relevant
• Where acting on some one else behalf – establish
and verify the identity and the residence of that
person/ business
Value Added Tax Act (VAT)
• Purpose of this Act
– To regulate how the government will collect
VALUE ADDED taxes on the sale of goods or
services within South Africa
• Exemptions:
– Certain food stuffs
– Goods that are exported directly from the supplier to the
customer
VAT Act requirements include:
•
•
•
•
Registration‘
Tax invoices
Returns
Rate
Registration of trading entities
• Compulsory registration
– Where turn over exceeds R1000 000 per annum
• Choice registration
– Where turnover is between R50 00 and R999 999
per annum
• No registration
– Where turnover is less than R50 000
Tax Invoices
• Where a company is registered for tax – it
is required to ensure that it issues an
original tax invoice:
– Invoice must show both the SELLER’s and
the BUYER’s (if applicable) tax number
RETURNS
• Those registered need to do TAX RETURNS on a
regular basis
– Regularity of returns depends on type of business /
turnover level (example – every 3rd month)
• Must declare the OUTPUT and the INPUT tax –
and the difference between the two
– OUTPUT TAX = the tax charged by a seller
– INPUT TAX = the tax paid by the seller to his
suppliers
• ‘Must pay over this difference to the Receiver
• Penalties and interest apply if returns not done
and paid
Returns
• Small business may apply to have all their
taxes (ie VAT and profit tax) combined –
called TURNOVER TAX
– Their turnover must be less than R1 million
per annum
Business Names Act
• Objective:
– To regulate business names (make sure that
they are not offensive)
– Provide protection for business to ensure no
one else uses their name
– The following is prohibited from being used in
business names:
• Government
• State
• United Nations
PROMOTION TO ACCESS
INFORMATION ACT
• Regulates
– Individuals rights to access information held by the State and
other companies (public and private)
– When access to information can legally be refused
– Legal remedies in cases where information is illegally withheld
• Registration required
– Companies must register with the Human Rights Commission
and provide standard information about themselves (excludes
financial information)
• Objective of the Act
– To promote transparency in the spirit of the Constitution (ie for
the intention of protection of human rights)
See additional notes emailed
ELECTRONIC
COMMUNICATIONS ACT
• To provide for the facilitation and regulation of
electronic communications and transactions;
to provide for the development of a national
e-strategy for the Republic; to promote
universal access to electronic
communications and transactions and the
use of electronic transactions by SMMEs; to
provide for human resource development in
electronic transactions; to prevent abuse of
information systems; to encourage the use of
e-government services; and to provide for
matters connected therewith. –
Consumer Affairs Act
• Protect consumers from UNFAIR
BUSINESS PRACTICES
– Example: negative marketing
CORPORATE GOVERNANCE
• The King reports were drafted to outlay the
basic moral and the rules that all business
should comply with (not a law – known as
Code of Ethics)
– Listed companies HAD to comply’
– other companies were given the recommendation
that they should comply
• Some of these “rules” have now been
incorporated into the new Companies Act
These rules are based on
• Responsibility and accountability of
Directors
• Sound Risk management
• Internal Audits
• Integrated, sustainable reporting
• Account and external auditing rules
• Compliance
• Enforcement
The 7 fundamental rules of GOOD
CORPORATE GOVERNANCE
•
•
•
•
•
•
•
Management discipline
Management independence
Management transparency
Management accountability
Management responsibility
Fairness of activities
Social responsibility
Remaining info
• Module Four
– Introduction to Business Economics
• Definitions
• Economic systems
– Free market
– Command (Communism)
– Socialism
• Economic Cycle
• 3 main sectors
– Monetary
– Public
– Foreign
• Macro & Micro
• Labour market & Trade Unions
– The Labour Market
– Trade Unions
» Craft Unions
» Industrial Unions
What is Economics all
about?
• As studied briefly before:
– Need to Balance the SUPPLY of
money, goods and services within a
country – to the DEMAND by the
people of the country - for those
goods, services and money
Economics is the study of all the
activities that impact on the supply
and demand of these commodities
KEY Terminology
(revision)
• GDP (Gross Domestic Product)
– Measure the productivity levels of a
country – and the country is “graded”
according to productivity levels by the
rest of the World. This will affect
foreign investment – the more
productive a country is – the more
attractive it is for investors
Methods of calculating
GDP
• Value added method
• Incomes earned method
• Expenditure method
Key terminology
• Income per Capita
– Calculated by dividing GDP by the
number of people of working age in a
country
• Inflation
– The increase in price of goods due to
influencing factors – without there being
an increase in the value of those goods
• (ie paying more for a loaf of bread this week
than you did last week)
Economic systems
• methods of controlling the
production activities within a
country
– FREE MARKET (Capitalism)
– COMMAND
– SOCIALISM
Current protestors in
England and across the
world – AGAINST a
Capitalism system
Free Market (Capitalism)
• The citizens of the country are free to do business
and to gather personal wealth
• Most of the products that are needed by the
population are provided by privately owned
companies
• Most of the key product areas – such as mining/
forestry / agriculture etc are privately owned
• THEORETICALLY:– Benefit of this system is that people are in
control of their own wealth and they can
accumulate wealth for themselves
– Disadvantage of this system – can have very
rice people and also very poor people in the
country
COMMAND Economy
(Communism)
• This type of economy places the control firmly in the
hands of the STATE (Government)
• THEY decided WHAT products need to be produced –
and they CONTROL the production of all products and
services including banks
• The INTENTION of this type of system is to make
everyone equal in wealth – BUT generally it results in
making everyone equally poor!
• THEORETICALLY
– Benefit is that everyone would have access to the necessities
of life
– Disadvantage is that no-one can accumulate their own wealth
– can only have what the State provides for them – at the
price the State decides. This encourages the development of a
black market- where goods can be obtained – for a high price
– under the radar of the Government
SOCIALISM
• This type of system puts all the essential products and
services – such as mining, transport, agriculture etc
under the ownership and control of the State – but then
allows the people to trade on other goods and still
accumulate wealth for themselves (almost a mixture
between free market and command economies)
• Theoretically
– The benefits of this system are that the cstizens will always
have access to the key products and services – at a fair price
– The disadvantage of this system is that mismanagement,
corruption and self interest often plays a large role in the
state’s activities with these resources – leaving the people with
little or inadequate resources in the end. Therefore – this
system in theory is a good one – if all were honest and
experienced in managing the countries assets and activities
South African System
• Free market / socialism mix
– More on the Free market side – with
some key products owned by the
State (Trans Net)
Where are we headed?
???
Economic Cycle
• Refer to notes
3 main sectors of the
economy
Public
Foreign
Monetary
Labour Market
• People in the workplace
– Have already studied the labour laws
of South Africa – intended for the
protection of the rights of employees
– TRADE UNIONs represent
employees
• CRAFT Unions
• INDUSTRIAL Unions
Craft Unions
• Are formed for the benefit of a
group of people who perform the
same activity – such as
PLUMBERS
INDUSTRIAL UNIONS
• Are formed for the benefit of a
group of employees who are all
employed within the same
INDUSTRY
– Clothing & textile industry
– Steel Industry
RECAP ON TRADE
UNIONS
• Rights
• Obligations
– Freedom of Association
– Closed shop agreements
– Agency shop agreements
REVISION FOR THE EXAM!
KEY AREAS OF STUDY
LEGLISLATION
•
•
•
•
•
•
•
•
•
BCEA
LABOUR RELATIONS ACT
EMPLOYMENT EQUITY ACT
SKILLS DEVELOPMENT ACT
UNEMPLOYMENT INSURANCE ACT
FICA
PROTECTED DISCLOSURES ACT
Review of THE INSOLVENCY ACT
VALUE ADDED TAX ACT
You need to be able to give
information on:
• Purpose of the Acts
• Content
• Comparisons between the Acts
Managing the Credit Team
• Plan, Lead, Organise (provide practical
examples from the work place)
– Performance measurements – identify, explain,
compare and give practical work related
examples
– Include motivational theories that must be
explained and compared – and have practical
examples from the work environment
– DSO targets KNOW how to calculate a target for
the reduction of days sales outstanding
– Methods of measuring performance in
consumer / retail and commercial environment –
compare these
Managing the Credit Team
• Control
– Assess what has been achieved (using
performance appraisals)
– Compare it against targets set / effectiveness/
quality/ etc
– Analyse the results
– REPORT results using various types of graphs!
• Learn the type of graphs – and practical examples
of when they can be used to portray information
from the credit environment
– Coaching/ Counselling / Training (types) and
Mentoring
• Explain , compare and give examples from the work
environment
Corporate Governance
• Explain
• List and explain the 7 factors
required
Economics
• Terminology
– GDP explanation and calculations
– Income per Capita – explanation and
calculation
– Inflation – explanation
Economic Systems
- explain, compare – give advantages
and disadvantages
STUDY TIPS
• ORGANISE your study time – have a
plan
• EAT before you study (preferably
fresh fruit)
• DRINK WATER (250 ml for every
hour of study – keeps your brain
focused)
• TAKE REGULAR BREAKS (5
minutes every half hour)
• PRACTICE answering past questions
Exam Day Tips
• Get AT LEAST 6 HOURS sleep
the night before
• EAT before the exam (Protein and
fruit)
• WEAR comfortable clothes
• SIT as close to the front as
possible (less distractions)
• UNDERSTAND all verbal
instructions given by the invigilator
Exam Day Tips contd
• READ the full paper before you begin &
make brief notes
• READ QUESTIONS CAREFULLY
• Answer the easiest ones first (mark your
question numbers carefully & correctly)
• CHECK THAT YOU HAVE ANSWERED ALL
QUESTIONS BEFORE YOU HAND IN
YOUR PAPER!
• BE POSITIVE - & try to stay relaxed!
Hang out with other positive people –#
DO NOT enter into any course related
discussions whilst waiting to go into the exam
hall!
GOOD LUCK!
Thank you for choosing CSM as
your study partner!

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