The Credit and Collection Case study.pptx

This presentation is vital in determining the real case scenarios in the credit operation of the business firm.

1. Credit and Collection A case to study and solve

2. Case Problem for Group 1: Mr and Mrs S were experiencing financial hardship as a result of Mr S suffering a workplace injury and Mrs S having recently given birth to their child. There had been a delay in settlement of the sale of their home due to the impending approval of a subdivision and they had fallen behind in the repayment of their home loans. Mr and Mrs S had kept the bank informed of any possible delays with settlement and were mindful of not having a default listed against their names. Mr and Mrs S made a number of calls to the bank regarding their predicament and they say they were given differing responses about how the matter should be handled. Mr and Mrs S say that the bank officer who ultimately dealt with their concerns appeared insensitive to their financial predicament and would not consider any alternative solutions to their problem.

3. Case Problem 2: Mr G was a self employed builder. In July 1999 he approached the bank about an organic fruit and vegetable business he was considering purchasing. Mr G was provided with a loan of $125,000 which he used to purchase the business for $120,000, with the additional $5,000 being for working capital. The bank also provided lease finance of $39,000 for a new van for deliveries and a bank guarantee for $7,950 in relation to the rental of the business premises. Security was provided by a mortgage over Mr G’s investment property which was vacant at the time with a renovation about 75% completed. At the time, Mr G’s existing debts included a loan in relation to the investment property, a loan in relation to a property he had purchased jointly with his girlfriend and a credit card debt. It soon became apparent that Mr G could not meet his monthly commitments from the returns of the new business. In December 1999 he placed the business (including the van) on the market for $125,000. The business was ultimately sold over twelve months later for $35,000. Mr G subsequently complained to this office claiming that the bank should not have granted him the loans because he did not have the capacity to meet the repayments.