This unit may be adapted to meet a range of debt recovery and credit management job roles.

ELEMENT

PERFORMANCE CRITERIA

1. Manage the interaction between addressing credit risk and business objectives/strategies

1.1. Credit risk factors are accounted for and knowledge of environmental factors to the credit relationship is applied to business strategies

1.2. Effective performance management techniques are used to achieve effective credit management

2. Dealing with debtors in difficult circumstances

2.1. Strategies to identify early warning signs of debtors experiencing difficulties are developed and implemented

2.2. Strategies to address debtors experiencing difficult circumstances are developed and implemented

2.3. Relevant and legislative remedies to the specific debtor situation are determined and applied

2.4. Responses to particular circumstances are in accordance with organisational policies and procedures

3. Terminating the credit relationship

3.1. All record keeping is accurate and maintained in accordance with legislative requirements

3.2. Documentation is destroyed or stored in accordance with legislative requirements

Required skills

well-developed communication skills to:

clarify, discuss and update credit risk situations with colleagues and customers using questioning and active listening as required

liaise with others, share information, listen and understand

use language and concepts appropriate to cultural differences, comprehension, age, possible disability and language level of the customer

well-developed numeracy and IT skills to:

perform credit risk facto calculations

use relevant software, spreadsheets and databases

access web-based information services

research and analysis for accessing, interpreting and managing business and personal information to determine credit risk and debt management options

well-developed judgement skills for making credit risk determinations and debt management strategies

organisational skills, including the ability to plan and sequence work

Required knowledge

credit risk treatment strategies

current organisational policy and procedures for credit risk identification

interrelationship between debt recovery and business strategy

relevant current credit management legislation

The Evidence Guide provides advice on assessment and must be read in conjunction with the performance criteria, required skills and knowledge, range statement and the Assessment Guidelines for the Training Package.

Overview of assessment

Critical aspects for assessment and evidence required to demonstrate competency in this unit

Evidence of the ability to:

interpret and comply with relevant legislation

accurately check customer accounts for credit risk

apply relevant organisational policies and procedures

exhibit appropriate empathy to customers when managing debt matters

analyse company data comprehensively and make sound judgements.

Context of and specific resources for assessment

Assessment must ensure:

competency is demonstrated in the context of the work environment and conditions specified in the range statement either in a relevant workplace or a closely simulated work environment

access to and the use of a range of common office equipment, technology, software and consumables

access to organisational policies and procedures for credit risk factoring and invoice discounting and relevant legislation.

Method of assessment

A range of assessment methods should be used to assess practical skills and knowledge. The following examples, in combination, are appropriate for this unit:

evaluating an integrated activity which combines the elements of competency for the unit or a cluster of related units of competency

verbal or written questioning on underpinning knowledge and skills

setting and reviewing business simulations or scenarios

accessing and validating third party reports.

Guidance information for assessment

The range statement relates to the unit of competency as a whole. It allows for different work environments and situations that may affect performance. Bold italicised wording, if used in the performance criteria, is detailed below. Essential operating conditions that may be present with training and assessment (depending on the work situation, needs of the candidate, accessibility of the item, and local industry and regional contexts) may also be included.

Credit risk factors may include:

creditworthiness of customer

customer's assets

customer's credit history

importance of customer to the business

level of credit provided

level of credit requested

size of business providing credit.

Environmental factors may include:

degree of competition

economic conditions

legislative factors

market conditions

market share

nature of industry

seasonal factors

trends in employment.

Effective performance management techniques can include:

calculation of Days Sales Outstanding (DSO)

employee turnover

level of write-offs

number of active accounts managed per employee

number of credit notes raised

number of invoices issued per employee in the credit function

percentage of prior months sales collected

percentage of trial balance aging

time taken to contact overdue account.

Difficult circumstances could include:

personal hardship

corporate recovery programs

mergers and takeovers

natural disasters such as:

fire

flood

drought

turnaround management schemes.

Organisational policies and procedures covers:

situations relating to difficult customer circumstances and distinguish between counselling in relation to company requirements and factors beyond the control of the business.

Legislative requirements include a sound knowledge of relevant legislation such as:

Consumer Credit Protection Acts

Corporations Act

Personal Property Securities Act

Privacy Act

taxation law implications.

Document destruction and storage must be:

in accordance with relevant legislation and organisational policy and procedures.

Unit sector

Credit management

This unit contains employability skills.