Credit and Collection Process

Introduction

Processes are an invaluable aid to staff in carrying out their duties, training new staff and enabling an overall assessment to be made as to adequacy of internal controls in all systems within the company.

Credit and Collection department is an essential unit of TD due to the fact that the company heavily relies on Credit sales in achieving its Sales objectives. Its focus is to ensure the credit system of the company is properly managed. Its core focus is divided into: Credit Management and Debt Management. It also has Partner Advantage Scheme (PAS) as a major focus.

As a result, this process manual has been produced sets out procedures governing Credit and debt management for the company as a whole.  The use of these process manual is mandatory.

 Scope of Operations

This Procedure covers Account related activities of the company as stated below:

• Credit Management
• Debt Management
• Partner Advantage Scheme (PAS)

Purpose

This manual provides ample description for the system and processes required for the efficient and effective management of all activities as carried out by the department.

  Authority/ Responsibility

The Head, Credit and Collections, is responsible for ensuring total compliance with the requirements stated in this Process manual in order to maintain consistent workflow within the department.

 Departure from Procedure

Adherence to all procedures stated in this manual is obligatory for all members of the department and as such, due authorization is obtained from the Head of the department before deviating from these procedures.

• Our Vision and Mission

Our vision is to be a global leader in distribution, empowering Africa with transformative technologies.

Our Mission

To ensure accessibility, affordability and useability of technology across Africa, empowering individuals and businesses, nurturing local innovations and steering a sustainable digital evolution.

 TD Quality Policy Statement

• We are committed to empowering all our stakeholders with exceptional experiences in the technology ecosystem. At TD Africa we know that poor quality products can cost loss of market, time and credibility. To uphold our quality policy, we maintain zero tolerance for deficiencies. We understand the importance of prompt quote response, quality products and timely delivery.

 TD  Quality Objectives

• To achieve Gross Profit Margin of 8% annually
• Achieve 100% in customer satisfaction.

  Departmental Quality Objective

• Ensure aged debt at every point is not more than 20% of the total debt for the period in question.
• Ensure debtors turnaround time of not more than thirty (30) days.

Infrastructure /Work Environment

An updated list of infrastructures/tools used within the department is maintained by the Head of department.

  Inter- Relationship with Other Department

 CREDIT MANAGEMENT

     Credit Management is made of the below:

• Credit Profiling – This is the due diligence carried out on customers when credit recommendations are received from Sales. The recommended customers are to be visited by either a representative of the credit team and/or a nominated representative. The representative assesses the customer’s location and request for credit documentation. Credit documentation required are:

• Manage Credit Rating System – Liaise with the Data Analyst team to get the monthly credit rating. This rating is shared with TD Audit and TD sales to aid in their daily transactions.

• Credit Reviews – Review credit every quarter. To do this.
  • Review the customer credit behavior based on the credit rating.
  • Recommend an action – remain the same, reduce, increase credit or remove customer from the credit list – to the Executive Management of the Company.
  • If this recommended action is ratified, remove the customer from the Credit list.
• Credit Policy Review – Carry out reviews of the Company’s credit twice a year to ensure that the Credit policy is relevant and useful.
• Credit Options.
  • Unsecured Credit: this is where customers are approved for credit after being recommended and due diligence.
  • Secured Credit: This is where a customer gives a security for its transactions. Security acceptable to TD is either a Bank Guarantee or a perfected property in either Lagos, Enugu, Abuja or Port Harcourt.

 Bank Guarantee (BG) Process

1. Customer’s name, Payer, duration and expiry date is documented in the BG document on the system.
2. Write or phone the customer 7 days before expiry of the BG.

• Call – in the BG two days before expiry if payment is not made.

1. File or save a copy of the letter in the file/folder for the customer

Perfected Property.

1. Receive the property from the customer and deposit with the Group office.
2. Engage the group office to value and assess the property for any encumbrance.

• Ensure all necessary agreements as prepared by the Group Office are signed.

1. Give a credit line not more than 75% of the forced sale value of the property.

• Other Credit Options:

Domiciliation:

• Get all requirements from the customer.
• Ensure Agreement with customer is signed.
• Do all necessary confirmations with the end-user.
• Once completed, send to sales to invoice transaction.

Joint Account Arrangement:

• Get all requirements from the customer.
• Do all necessary confirmations with the end-user and with the bank.
• Ensure agreement between the parties is signed.
• Once completed, send to sales to invoice transaction.

DEBT MANAGEMENT – This is made up of:

• Collection of debt.
• Liaise with 3^rd parties such as external lawyers, Police and CollectorsCollection of Debt – Aged Debt
• Receipt of information on cheque deferral either directly from a customer or from Accounts Department.
• We follow – up with the customer for redemption of the cheque via telephone call and/or emails.
• If payment is not made after the deferred date, follow – up with telephone calls and/or emails until payment is made.
• When the Payment is received, customer is notified in writing to pay accrued interest at 2% per month due to delayed payment.

• Returned Cheques

• Accounts Department informs Credit and Collections via mail on returned cheques.
• Credit and Collections team notifies customers via phone on returned cheques immediately upon receipt of notification from Accounts Department.
• Customer is notified in writing on returned cheques within 7 days of receipt of information on returned cheques.
• If payment is not made after one week, follow – up with telephone calls until payment is made.
• When the Payment is received, customer is notified in writing to pay accrued interest at 2% per month due to delayed payment

• Old Accounts Management

These are high risk accounts that have remained unpaid for at least 6 months. Each account is unique and requires a unique strategy.

• Make a phone call at least once in a week.
• Visit the customer at least once a month and document the findings for Management attention and records.
• Revert to the customer based on Management comments if the need arises. This process goes on until payment is made.
• Ensure that call reports are maintained.
  • 3^rd Party Recovery

Where customer doesn’t pay after a period of 12 months, the Unit will make its recommendations to the Management for 3^rd party engagement to ensure to recover the money.

DEPARTMENTAL MEETING

Departmental meetings are held at least once in a month and key issues discussed as well as relevant contributions made by departmental staff at such meetings are usually documented. Minutes of meetings are maintained.

CORRECTIVE ACTION

• The department makes enquiries into reported cases of non-conforming services or identified cases of nonconforming services with the aim of identifying their root cause or causes without delay.
• Subsequently, corrections and corrective actions considered appropriate to the effects of the nonconformities encountered are proffered and implemented.
• All corrections and corrective actions implemented are evaluated for adequacy.
• Corrective actions relating to Issues of companywide nature are discussed at appropriate meetings such as Management meetings.
• Records of activities relating to handling of nonconformities are maintained including details of the nature of nonconformity and action taken to correct such.

 PREVENTIVE ACTION

As a proactive measure taken to deal with probable nonconformities, the following procedures are observed by the department:

• Review of the trend history of nonconformities recorded in the department in times past to facilitate identification/ determination of potential nonconformities and their probable root-causes.
• Evaluate the need for actions to prevent occurrence of nonconformities identified.
• Determine and implement action(s) needed to prevent recurrence and occurrence of such nonconformities.
• Maintain record of the result of action(s) taken for use as inputs for reports presented to Management.
• Review the effectiveness of preventive action(s) taken.

 CONTINUAL IMPROVEMENT

For the purpose of achieving continuous improvement in all operations within the department it is ensured that:

• Appraisals are conducted at intervals to help identify competence gaps.
• Service level agreement (SLA) is established for each staff based on their related job function
• SLA is completed every month by the HOD and forwarded to HR who prepares the score card
• Constructive suggestions received from members of staff during departmental meetings are noted, reviewed for modification where necessary and implemented afterwards.

 RECORDS

Appropriate records are maintained for all operations in soft copy. The department maintains an index of records which is updated regularly.

PAS

PAS, is TD’s Loyalty scheme aimed at recognizing and rewarding strategic partners for their loyalty and repeated business with TD. PAS will be positioned to be an actual Sales Tool – both for Purchases and Payment. We have reviewed PAS to give proper focus to the Scheme.

• Categories target on PAS
• Category A (Enterprise, Mobile and Computing) $250k monthly.
• Category B (CE FMCG and Print) $100k monthly.
• Category C (software) $25k monthly.
• Expected to contribute to 70% of TD’s Target.
• Quarterly targets to replace monthly target.
• Rebate payout to be based on customers debt position at the end of each month.
• Payout to be made in the 2^nd month after quarter ends.
• Rebate remains 0.5% on 100% achievement of target.
• Increase Marketing activities.
• Use of Data team for accurate data