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



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.



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.



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



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



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



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.



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



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



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.



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.



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”.



THANK YO

Tahir SohailManager – Billing, Collections &

[email protected] +973 33011557

mailto:[email protected]

mailto:[email protected]

Date post:	03-Apr-2018
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Effective Credit Control - By Tajir Souhail - During iCompetences FRR2013

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