Post on 03-Apr-2018
7/28/2019 Effective Credit Control - By Tajir Souhail - During iCompetences FRR2013
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Effective Credit Control
VIVA Telecom Bahrain – An STC Company
Presented by: Tahir Sohail
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Some facts about Bahrain
GENERAL INFORMATION
Population: 1.2Million
Capital: Manama
Area: 717 square kilometers (277 square miles)
Language: Arabic, English, Farsi, Urdu
Religion: Muslim
Currency: Bahraini dinar
GDP per Capita: U.S. $15,100
Literacy Percent: 89
Bahrain consists of 33 islands in the Persian Gulf (ArabianGulf). The islands are mostly desert, and most of thepopulation lives in or near Manama, the capital. It is connectedto Saudi Arabia by the 26-kilometer (16-mile) King FahdCauseway. Since independence from Britain in 1971, there hasbeen conflict between the ruling Sunni tribe and the Shiitemajority. A new constitution in 2002 provided for an elected
parliament and gave women the right to vote and stand ascandidates. Economy is majorly based on Petroleumproducts.
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About VIVA
• STC Bahrain (VIVA) was established in the Kingdom of Bahrain on February 2009.
• Saudi Telecom Company owns 100% of its BHD 75 million share capital which is equivalent toapproximately $ 198.75 million at the exchange rate as of that date.
• The company operates in the field of mobile services, international telecommunications,broadband and other related services in the Bahraini market, and commenced its commercialoperations on March 3, 2010.
• In 2012, the company made operating revenues of $263 Million which was 21% higher compared
to 2011 revenues of $ 207 Million.• VIVA Bahrain is regarded as a bench mark in STC companies due to highest ever gross adds
and net profit attained in such a short period.
7/28/2019 Effective Credit Control - By Tajir Souhail - During iCompetences FRR2013
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Agenda for Today
• Credit Limit/ Customer Profile Management• Financial claim management in relation to Partner fraud• Debt management & Factoring• How to secure strong cash flows
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Credit Limit – The traditionalapproach
• Customer classification into appropriatesegments
• Product based credit terms• Range of strict to flexible actions• Defined payment terms• Usage monitoring
* With launch of smart phones, the risk has gone significantly higher for
operators so the traditional checks (focused on service revenues) aloneare not sufficient anymore
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Customer Profile Managementin VIVA
In VIVA, along with the traditional checks, we strive to “profile customers” at point of sale and at back office and assocbetter credit management. Some of the checks implemented are:
Point of Sale Checks: Back Office Checks:
360 DegreeCustomer
View
Represents Pre-sale Checks
OccupationCheck
throughCPR reader
CustomerSite Visit
for SME
Deliverynote
signaturefor SME
BadPayeeList
PaymentMethods
NoContactFlagging
Accountlinkingon CPR
M
PaymentBehavior
Monitoring
Account
Aging
BrPr
Mon
Near Realtime roamingmonitoring
NoContactFlagging
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Financial Claim Managementin relation to Partner Fraud
Consider the below scenario which VIVA faced in 2nd year of operations with launch of Device Plans.
CategoryVOLUME
(Hypothetical)
Billed
Outstanding
Device Exposure
(Remaining Commercial
Installments)
Commercial Subscription
Exposure (Unrealized
Revenue)
Sales
Commission
Tot
(Hypoth
20 LINES ACTIVATED AGAINST ONE
CPR ID – Multiple Shops 20 W BHD X BHD Y BHD Z BHD 4,34
CUSTOMER DENIES OWNERSHIP 146 W BHD X BHD Y BHD Z BHD 27,2
IN-VALID CPR'S 106 W BHD X BHD Y BHD Z BHD 8,65
MORE THAN 2 DEVICE LINES
(business rule breach)
958 W BHD X BHD Y BHD Z BHD 119,6MORE THAN 5 LINES WITH THE
DEVICE PLAN (BR breach) 21 W BHD X BHD Y BHD Z BHD 32
NO PAYMENT HISTORY 7 W BHD X BHD Y BHD Z BHD 61
NO UPFRONT PAYMENT 2 W BHD X BHD Y BHD Z BHD 35
PAYMENTS RECEIVED ONLY ON
ACTIVATION 474 W BHD X BHD Y BHD Z BHD 12,8
Grand Total 1,734 122,575 232,125 199,620 31,929 174,0
1 BHD = 2.65 US dollars. This case was worth more than $4,61,000.
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Financial Claim Managementin relation to Partner Fraud
Fundamental Question – If a partner employee commits fraud, is it our problem or the partners?
To determine this,let’s look at the following:
If above are not clear and formally documented, can a counter claim come? Are our losses covered?Some other important elements to look at:1. Company reputation2. Engagement model with partner3. Do we have a replacement if things go south? What will the impact be on sales?
4. Is partner a sister concern?
Contract Type
Quality Assurance
Business Rules
Customer Documentation
IT Systems
Policy/ procedures
• Liabilities are clearly defined• Claw back conditions exists
• Sits with operator• Sits with partner
• Agreed and signed
• Timelines when communicated
•Is readily available•Who is responsible to maintain
•Employs controls•If not, whose liability
• Defined clearly for all scenarios
• Vague
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Manages and automates credit and collection operations (front and back office).
VIVA’s Debt ManagementFramework – 3 Phase Approach
Payments History
Large, Medium and Individual accounts
Capability to pay
Income/ occupation analysis
Risk Analysis
Credit and Payment Behaviour Scoring
Decision about credit limit
Credit specialist analysis
Detection of possible non-payment
signs
Debt follow-up via In-house for early
delinquency buckets
Prevent new customer bad debt
occurrencesInitiate preventive credit control actions
Demand payment
Initiate bad debt collection & legal
actions
Prevent conflict situations
Debt negotiation
Update and maintain credit scoring
Centralized system so that consistent
information is available to front liners
Payment of the
debt
Phase 1
Credit Approval
Phase 2
Credit Control
Phase 3
Debt Collection
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Debt Management & Factoring
Conflict of interest (Commercial vs. Finance): From purely financial perspective, DSO and inventory days are targeted to be as low as possible. From commercial perscutting down on your DSO (debtor days) or increasing your DPO (creditor days) are not necessarily good long-term sol
Smart management of cash flow cycle, including tighter business processes and better credit management, is essential. Tany organization to be effective, great care must be taken to balance the financial and commercial needs and businessesthe relationship with suppliers from being just suppliers to partners and ultimately to being promoters of the business.
Factoring @ VIVA
1. Early Payment Discounts – Encouraging customers to pay early. Discounts up to 5% of billed amount
2. Selling Portfolio – Majorly being employed for older debt where the portfolio is sold to a collections agency and com50% of collected value.
3. Credit Analysis for SME’s & Corporate clients – Trade references, background check is performed by collection ageoperators, MOI]
4. Invoice discounting – Being used for “not so old debt, only recent year” where portfolio is given to an outside agen
receipt and payment is done on 30% of collected value. Portfolio remains VIVA’s property.
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How to secure strongCash Flows – 4 Principles
Cash is notgiven
• Has to be chased & tracked
• Does not come willingly• Always room for improvement and process refining
Integral tobusiness
• As important as producing products & services• Can live without products, but not cash
DataAnalytics &
behavior
• Know your customer• Check credit worthiness, payment pattern• Company’s debt capacity, maturity of facilities • Supplier receipts etc.
SkilledApplication
• Recognize cash management as a skill• Only a firm grip will yield results.
7/28/2019 Effective Credit Control - By Tajir Souhail - During iCompetences FRR2013
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Cash Flow Management@ VIVA
Collecting receivables
T
re
Pricing discounts
Securing loans
Getting Control ofYour Cash
Flow
VIVA employs a 6 step approach towards managing its
cash flow:
Ask yourself the following two questions to get a senseabout whether you have your business' cash flow
situation under control:
1. What is my cash balance right now?
2. Where do I expect my cash balance to be six monthsfrom now?
"If you can't answer these two questions, then strap
yourself in for a wild ride”.
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THANK YO
Tahir SohailManager – Billing, Collections &
TSOHAIL@VIVA.COM.BH +973 33011557