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To Kevin Kelly (the tutor who conducted Chat session #1),
You were telling us the important questions that may be asked for invoice and discount factoring, however what you said was incomplete. You said:
Other important questions include: (1) Describe a Good Credit Control system
(2) Permanent versus temporary W/c elements (3) Factors affecting the size or level of
investment in W/C (4) the FINANCING of W/c or say DEBTORS (5) Exp[lain Miller-ORR model (6) Explain Baumol Model (7) Explain JIT (8) ExpPlease could you tell me what the questions were after 7? Thanks!
Also, you said:
Answer
There are 3 levels of service – each for a progressively higher fee.• Administer Sales & Debtors Ledgers
– Administration of Sales and Debt Collection includes:
– Assess Customer Credit Worthiness
– Set Customer Credit Terms and Settlement Discounts- Manage Customer Credit Control
Systems – No Bad Debt Insurance – the company retains responsibility foPlease could you finish the last sentence? Thank you
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(8) Explain EOQ (economic order quantity) in relation to stock management (9) Explain Over-trading and describe its symptoms, together with suggestions for remedial action. (10) Compare Debt Factoring and Invoice Discounting as methods of obtaining short-term finance.
There are 3 levels of service – each for a progressively higher fee.
Administer Sales & Debtors Ledgers
– Administration of Sales and Debt Collection includes:
– Assess Customer Credit Worthiness
– Set Customer Credit Terms and Settlement Discounts
– Manage Customer Credit Control Systems
– No Bad Debt Insurance – the company retains responsibility for any bad debts.Advance Finance – with Recourse
– Advance, say, up to 80% of sales values immediately upon invoicing
– The company remains responsible for any Bad Debts, i.e. No Bad Debt InsuranceAdvance Finance – without Recourse
– As above (with recourse) but this time the factor accepts responsibility for any Bad Debts , i.e. Bad Debt InsuranceHope this is fine now Achtung,
Regards, Kevin Kelly
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Sorry acltang72 … I didn’t spell your avatar name correctly last time.
Come back to me if I can be of further help.
Regards, Kevin Kelly.
Thanks a lot for the useful information! I look forward to the next session
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could u plz explain mea bout hedging foreign currency risk
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could u plz explain mea bout hedging foreign currency risk
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Hi badri, your question is just too broad and general to be answered in a meaningful way. Can I suggest you ask a more specific question after you have firstly studied the material outlined in the syllabus under forex.
Generally, Forex risk is categorized as follows:
Types of Foreign Exchange Risk
Transactions Risk / Exposure
Translation Exposure It is the first 3 of these you need to
Economic Exposure be most clear on for F9
Contingent Exposure
Political Risk ExposureOptions available for reducing Transactions Risk Exposure
Definition arises when you have short-term assets or liabilities denominated in a foreign currency (ie.Debtors and/or Creditors).
Therefore, it arises from Importing / Exporting …on credit in the foreign currency!
Protection? You protect against TRANSACTION RISK by adopting a hedged position – ie. entering into a counter-balancing contract (asset or liability) to off-set the risk/exposure.
* Tutor’s note: In your Exam answer………consider the relevance of some or all of the INTERNAL and/or EXTERNAL hedging techniques as appropriate… you will find details on these Internal and External Hedging techniques contained within chapters 21 and 22 of the OT Lecture Notes: The relevant chapters in the BPP Study Text cover these areas very well also. Hope this is helpful, Kevin
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