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Master Card and Credit Cards
How Master Card and Credit Cards Works

How Master Card and Credit Cards Works

Master Card and Credit Cards

It covers the areas of Credit Assessment, Card production, Merchant acquisition and settlements, Customer Statement and Payment, Customer Service and Collections. The SOPs provide the flowcharts, the segregation of duties for the processes, the process descriptions, Risks and control points and Self–Audit checklist. In these increasingly competitive times, the bank’s process efficiencies and controls would help bring in operational cost savings and better customer service. We sale all types of Clothing Software

It is important to leverage technology by means of integration of Credit Card system and the Core Banking system, bringing in seamless process integration across the geographical locations and customer touch-points. This would reduce errors due to repeated data entry and free-up valuable time from personnel’s daily routine enabling them to do value-added jobs.

Master Card
Master Card

The branches too should be increasingly used for their reach to tap and serve customers for their credit card needs. An integrated technological platform would help do that.

While Credit Cards provide the major growth impetus going forward, it is important that due safeguards are taken against Frauds in the market. This is possible when structured and sufficient volumes of data are collected over a due course of time. These data could be analyzed and predictive models could be developed for analyzing cardholder behaviour and the transactions incurred.

These SOPs are a beginning towards that larger goal.

PROCESS DESCRIPTION

Card Issuance

1. Request for Issuance of Credit Card:

Receive the request for issuance of Credit Card. The request could come either by

  • Customer in person
  • Telephone call
  • Through the branch
  • From an outsourced entity/agent

The Credit Card Officer receives the request.

2. Fill the Credit Card application

The officer provides the customer with the Credit Card application form for filling it up. Among other details the following are filled up.

  • Specify the type of credit card applied for : Master Card or Visa (local/international)
  • Name and address of the Applicant, Telephone contact details ( mobile and land line),
  • Marital status
  • Employment/business details
  • Ownership of car, house
  • Income & Expenditure Statement
  • Residence details (including period of stay and nature of residence)
  • Credit references and/or guarantors details (if any)
  • Tenure of present and past employment
  • Accounts / Cards with other banks
  • Amount of loans outstanding, monthly outgo on the loans. This is an important piece of information for assessing the applicant’s ability to repay credit purchases. The debt burden ratio should be taken into account for assessments.
  • If joint-account is being applied for, information concerning the co-applicant should be sought separately.
  • The Application form should voluntarily disclose the Annual Percentage Rate (APR), Finance charges, etc charged by Bank to the customer.

3. Check the Credit Card application

The Credit Card officer checks the Credit Card for any discrepancies / incomplete information.

4. Capture the data in the system

Maker captures the mandatory details from the Credit Card application into the system. Going forward, the Credit Card division should develop the Credit Card customer database as and when required. The Credit Card business could serve as an initial latch to the customer and hence Customer Relationship Management could be practiced from the database.

5. Perform preliminary screening of the application

The Maker makes preliminary screening of the application and either recommends for Contact Point Verification (CPV) or rejects the application.  The preliminary screening rejection could be because the applicant’s source of income is too volatile to be creditworthy. If the applicant’s name exists in the Negative List of the bank, the applicant is rejected.

If the applicant passes through the preliminary screening, his application is put through the Contact Point Verification (CPV).

6. Authorize CPV

CPV checks the correctness of address(es). Based on the data entered, the system would give a score on the credit worthiness of the applicant. Maker will make note of the credit score. Maker would add his comments on credit worthiness based on the score and his judgement (through the matrix), initial the application and handover the same to checker for verification and authorisation.

7. Check for the validity of CPV

The results of the CPV are verified for about 25-30% of the applications on a random basis.

8. Recommend a credit limit for the customer

The Credit issuing officer would run the credit limit assessment logic in the system based on the details entered about monthly income, current debt, length of residence, home ownership, etc. The system would match as closely possible the application characteristics with a profile in the scoring table. The system would recommend a credit limit for the applicant. The application is then sent for approval to the competent authority for approval.

9. Authorise the recommendation on the applicant

Checker will check the application and verify the details captured in the system. He would comment on the recommendation for credit card issuance.

He will then initial the application as confirmation of his having checked and authorised the issuance of credit card with the assigned credit limit and handover the application back to the Maker for record keeping. If the Checker rejects the issuance of Credit Card, he would make suitable comments on the application and then hand over to the Maker for record keeping. The applicant is informed about the acceptance / rejection of the application for Credit Card. The reasons for rejection are clearly stated in the rejection letter. The system is updated accordingly.

 10. Authorise the setting up of the Credit Card account

The Checker gives the necessary authorization to issue credit card to the customer.

Operations

The credit card production area is the most secure and most administratively controlled area in the Credit card operation, because a stole card is worth more than money. It is isolated from other areas of operation and access is strictly restricted to authorized personnel. A great deal of effort is involved in the production of bank credit cards. Customer service, security and cost controls, adherence to specifications in the operating regulations of Master Card/Visa and other requirements must be met. A proficient credit card production function generally goes unheralded, while an error-prone operation can do lasting damage to a bank’s reputation for customer service. Accuracy, efficiency and security should be the hallmarks of any card production operation.

1. Allocate Card number to the new customer

The customer details which are already logged in the system are retrieved and a card number allotted to the customer in the system. The card number is allotted from the inventory of card numbers shown as ‘Available’ in the system. The card numbers are generated need based for Master Card and Visa. This serves as an inventory for the card numbers to be assigned to the new cards issued.

2. Mark ‘Allocated’ in the system against the Card number allocated to the new customer

For the card number allocated to the customer, mark ‘Allocated’ against the card number in the system and do not display this under the list of available card numbers.

3. Generate embossing file

The base run is done in the system. This generates the embossing file. The account is also created in this base run. The embossing file is generated based on the product type and features – Visa, Master Card, Classic, Gold, Local, International, etc. The encoding file is also generated along with the embossing file.

4. Procure a card from the Custodian

The operations executive makes a request in the system to procure a card from the working custodian. The cards are stored in a vault under custody and some cards are stored in the working custody. The working custodian issues the card and updates the system accordingly. Working custodian reconciles the stock of cards issued and the opening and closing stock of cards everyday.

5. Photo print the card

Upload the scanned image of the cardholder in the system. The operations executive places the card in the photo printing machine. The machine prints the photo of the cardholder on the card.

6. Emboss the card

The operations executive places the card in the embossing machine. The machine embosses the card with the cardholder details like name, card number, issue date, expiry date, etc. The card encoding is also done here. The card is now a personalized card with unique information. The card expiry date should be adequately spread over the year across the customer cards so as to minimize the peak production volumes for re-issuance. The format, length, location and specific information placed on the card are described in the operating regulations of Visa and Master Card associations.

7. Check the embossing on the card

An operations personnel different from the personnel who has embossed the card would check that the embossing and the photo on the card are correct and as per the details supplied by the customer.

8. Hand over the card to the Distribution Desk

The operations desk then generates the Card mailer for the customer. The card is put in the Card Carrier form along with the card mailer and the Acknowledgement slip into the packet.  Hand over the card packets with the distribution sheet for the day to the Distribution Desk. The system is updated accordingly.

9. Distribute to the Customers

The distribution desk checks the packets for completeness and correctness and seals them. The packets are handed over to the courier agencies for distribution. They are handed over only to the cardholder as ’Strictly Private and Confidential’. The cards not delivered are returned back to the Bank by the courier agency.  The customers whose cards have been returned are contacted and their addresses are reconfirmed and resent accordingly. If the card is returned because of incorrect embossing, the card is destroyed and a new card generated and delivered to the customer.

10. Receive Acknowledgement from the Customers

Receive the acknowledgement from the customer and update in the system. The acknowledgement card is then filed in the Customer file.

11. Activate the Card

Upon receipt of the customer acknowledgement, the signature on the acknowledgement slip is verified against the signature in the credit card application. If the signature matches, the card is activated by the operations personnel by unblocking it in the system. Activation can also be done over the phone after verification of the required information.

12. Generate and distribute the PIN

The PIN and the card are not generated at the same time. A few days after the card is distributed the PIN is generated. The PIN is then distributed separately by a courier different from the card courier for security purpose.

The Card production function should adhere to certain performance and quality assurance standards like

  • Card Turnaround Time : Defines the average number of days from receipt of application to the date cards are mailed
  • Embossing accuracy: Number of discarded cards should be low
  • Card Carrier accuracy: Cards packed and addressed should match with the customer supplied details
  • Card Reissues: The cards should be re-issued timely and before the cards expire so that the customer is not inconvenienced by waiting for a few days between the expiry of a card and the activation of the new card
  • Cost per Card issued: This should be maintained at minimum levels by controlling wastage, idle time and equipment downtime, etc.

Acquisition

1. Receive the Merchant application

The Merchant acquisition officer pre-screens the merchant based on his business volumes and approaches the merchant. The Merchant application is filled up by the merchant / merchant acquisition officer and the relevant supporting are taken.

2. Evaluate the Merchant application

The Merchant acquisition officer evaluates the merchant application based on the business volumes of the merchant. The merchant is also evaluated based on the Geographical area and the potential sales on cards in the area as per the customer’s card affinity. Verify the MATCH report (Member Alert to Track High Risk Merchant for Master Card) if the prospective merchant is listed as a risky merchant. Recommend for approval / rejection based on the analysis. Get details on merchant evaluation.

3. Authorize the Merchant Acquisition

The Merchant Acquisition manager authorizes the acquisition based on the recommendation from the officer.

4. Make the Embossing file

If the POS terminal at the merchant is manual, Operations generates the embossing file based on the data already entered in the system. A merchant id is given to the merchant that identifies him uniquely.

5. Procure Merchant Plate

In the system, request the working custodian of the merchant plates to issue a merchant plate for embossing. The working custodian issues the merchant plate to the operations executive and updates the system accordingly.  The working custodian does a daily reconciliation of the cards while the Vault cards are reconciled monthly.

6. Install the machine at the merchant outlet

Fix the merchant plate inside the manual machine. The machine vendor installs the machine at the merchant outlet. If it were an Electronic machine, it does not require the steps 4, 5, 6. The vendor installs the machine at the merchant outlet. For electronic machine, a merchant masterfile is created that gets updated whenever transactions are done.

Merchant Settlements

1. Customer makes purchase at the Merchant

Customer makes purchase at the merchant outlet. If the merchant has a manual POS machine, then he presses the card under the machine and takes voice authorization from Bank  for the customer purchase by telephone. The merchant lists the merchant number, customer card number, card expiry date and amount to the Bank  operations personnel for taking authorization.

If the vendor has an electronic machine the merchant swipes the customer card in the machine. The transaction details are automatically updated in the Card system at Bank .

2. Operations gives authorization for Customer purchase

The Operations personnel verify the details from the system. Operations dept. generates an approval code from the system and grants approval for the customer purchase over phone. The merchant documents the approval code in the sale slip.

If it is an Electronic machine, the authorization is automatic. The authorization request reaches the server through telephone number. The request contains card number, amount and expiry date and the merchant id. The request is verified in the system and it sends back to the POS terminal. The POS terminal generates printout of the bill at the merchant outlet.

3. Bank collects and aggregates the merchant sales

If the sale was done in a manual machine, the merchant sends the sales slips to the bank within 2-3 days of the sale. The bank collects and aggregates the sales slips merchant wise and batch wise. Ensure that the sales slips are legible. The data from the sales slips are entered manually into the computer system. If the sale was done in an electronic machine, the system runs the sales processing batch at the end of the day that generates the payables merchant wise.

  • Sales draft / slip preparation: Prepare the drafts / slips for data capture function. All the drafts in a processing batch are properly matched according to the depositing merchant. Ensure that the batch size is not too big and that the drafts are legible.
  • Data Capture: The required elements of information are keyed from the individual slip to the computer system. High speed equipment / Optical Character readers could be used for reading the slips automatically.
  • Data completion: Essentially used in an automated read system where information that could not be read by the system is fed into the system manually to ensure all information has been captured.
  • Balancing: Because mistakes are made when the amounts are captured from the drafts, this activity resolves and adjusts out-of-balance batches of drafts. All batches must be in balance before the transactions can be passed on.

In this job it is very important to have speed and accuracy. Throughput measures could be established for operators and performance standards met.

4. Bank generates Pay-orders/Pay-slips / credits the merchant accounts

If the sale was done in a manual machine, the merchant wise-transaction details are entered in the Card system. The Card system is integrated with the Core Banking system. The system run is done to generate payables to the merchants after deducting the interchange commission or any other pending charges. The Pay-orders/Pay-slips are automatically generated in the CBS.

If the sale was done using an electronic machine, the system captures the sale transaction details automatically during the authorization step.

The system would have the Pay Option for the respective merchants configured as per the bank and the merchant’s agreement. The options would be to pay by a Pay-slip or a Pay order or to credit the merchant account if it exists with Bank . A system run is performed to generate and print the Pay-slips / Pay-orders or credit merchant account with the amount payable to the respective merchants as had been configured in the system. The payable amount is verified against the sales slips before releasing the payments.

5. Distribute the Pay order / pay slips to the merchants

The Pay slips / Pay Orders generated are distributed to the respective merchants by hand and acknowledgement of receipt is sought.

6. Settlement for merchants using POS terminals of another bank

The acquiring bank sends the claim through Master Card / Visa. Master Card / Visa debits Bank ’s Nostro account and credits the acquiring bank’s account in USD. The acquiring bank pays the merchant in local Taka. Weekly/Fortnightly Master Card/Visa reverses the earlier debit and credit on the respective banks after receiving the batch file from Bank . PBL issues local currency cheque to the other bank for the amount. The Service Level Agreement between the Issuer and the Acquiring banks should make clear the terms of settlement and the turnaround time for the same. The banks should gradually move towards a local settlement instead of the USD settlement.

Draft processing is a cost-sensitive area of the bank. The bank must work towards

  • Draft processing timeliness to reduce float expense from delays in settlement reimbursements
  • Draft processing accuracy to reduce errors in processing
  • Draft processing throughput to ensure speed and volume of drafts processed

Customer Billing and Payments

1. Generate Customer Statement

Bank  presently operates on 6 billing cycles for the customers. The Operations executive generates the Customer Bill from the system at the end of the billing cycle.  The bill is generated for a period with a start date and an end date for a credit card number. If there are late payments and / or interest charges they are calculated automatically by the system and the customer statement is generated.

The customer statement should have the following details among others:

  • Customer card number
  • Credit Limit and the available credit limit after the transactions for the period
  • The billing period
  • Payment due and the payment due date
  • Minimum payment due
  • The transaction details – date, reference number that uniquely identifies the transaction, merchant name, item, value of transaction
  • Previous balance that was carried forward from the past month’s billing cycle
  • Amount paid last month
  • Any credits made to the customer like merchandise returns, reward points, etc.
  • Total amount of charges and cash advances received during billing period
  • Late charges, interest charges, service tax, debit adjustments if any
  • The interest rates charged, how the charges have been arrived at should be mentioned in the statement
  • The statement should also provide the customer with the Billing Rights Summary. In case of errors or questions about the bill, the statement should provide instructions on how to inform the bank about it.
  • A phone number for lost / stolen cards is also provided in the statement

2. Despatch the Customer Statement

Delivery desk despatches the customer bill to the customer.  This delivery desk is separate from the one that sends the cards for security concerns.

Performance and quality assurance standards for the customer statement production activities are required to ensure efficiency of operations.

  • Statement Timeliness: Average number of days between cycle closing date and mailing date
  • Statement mailing accuracy: Statements and promotional Mailers sent to the right address. All statements should be mailed
  • Statement accuracy: Correct transactions detailed in the statements

The workload should be evenly distributed across the month with the number of accounts distributed across the various billing cycles

Payments

1. Customer Pays the Statement amount

The Customer receives the statement at least 15 days before the payment date. The customer makes the payment either at the branch or at the HO Credit card division. The payment is made either in Cash or in cheque.

2. Receive the Payment

The Teller at the branch/ Accounts officer at HO receives the payment from the customer. The payments received are then collected and aggregated for a batch posting.

3. Post the Payments

The payments could be automatically captured by OCR (optical character recognition) readers or manually posted in the system. The payments are collated for the batch and are balanced to ensure that the total amounts received have actually been processed and are ready for crediting for cardholders’ accounts. The balancing is usually performed for each batch of payments processed and then for the total of the batches processed for the day. It is important to handle branch payments promptly as some customers make the payments on the due date.

Once balanced the payments are posted to the individual cardholder accounts. Payments could be made either at the branch or at the Card division. The payments made at the branch are forwarded to the card division for processing through an Inter Branch Credit Advice.

The following accounting entry is passed:

If payment is made in Cash:

Dr Cash in hand

Cr Customer Credit Card account

If payment made by cheque:

Dr Inter bank Transaction advice Branch

Cr Customer Credit Card account

If payment made through instruction from customer account:

Dr Customer Account

Cr Customer Credit Card account

The Payment processing should adhere to certain performance and quality assurance standards:

  • Processing timeliness: A payment made by the customer should be reflected in the customer statement and not reflected in the next statement as a Payment Due
  • Input errors: The payment processing should be done accurately in the first run instead of annoying the customers and increasing the work of the payment processors
  • Branch-originated remittances: The payments made at the branch should be handled with certain timeframes
  • Suspense processing: Unaccounted / disputed items are put in suspense accounts. The bank should aim to minimize this and resolve these at the earliest with accuracy

Processing systems:

Processing systems include data processing and peripheral activities. The processing options available are :

  • An in-house operation in which all functions are performed within the bank
  • A third-party that conducts almost all functions except those related to policy and customer contact
  • A combination of the above two

Choosing an option depends upon the business analysis combined with a clear definition of the bank’s strategic direction. While in-house operations give large control, third-party operations provide cost-effective and technologically integrated solutions. The bank could look at setting up a Central Processing Centre (CPC) for the entire processing requirements of the bank where Credit Card operations too could be processed.

 Customer Service

The Customer Service Representative receives calls from the customers for various reasons. Some of the basic categories are as follows:

Disputed Transactions, Statement not received, Balance enquiry, Payment credit not updated in the statement, Adjustments not updated in the statement, Non-monetary changes, Other bank products and offerings.

1. Receive call from the customer

The Customer Service Representative (CSR) receives the call from the customer. The Customer request could be to seek information or waive fees/interest charges or any other request. The call should be documented in the system.

The bank should have an objective of leaving the customer satisfied at the end of the conversation. To meet the objective the following is required of a Customer Service Representative:

  • A personality that can deal constructively with stress
  • Proper training in knowing how to answer questions
  • A management group that appreciates the nature of the job that customer service people do

2. Respond to the Customer call

If the customer request for information that is available, the CSR provides him with the necessary information. If the customer suggests that a certain purchase transaction appearing in the Customer statement was not performed and hence should be chargedback, the CSR refers the case to the operations dept.

The customer call should be responded to with sensitivity to the customer concerns and should not violate his or her rights. The response made to the customer should be documented in the system so that any other CSR looking at the customer complaint in future would know exactly what happened.

3. Grant waiver / reverse charges, if required

The customer representative should be empowered to waive fees, reverse late payment charges on the credit cards if required. These would be done on the basis of predefined powers granted to the CSR and as per the delegation of powers defined by the bank.

For cases of chargeback / clarification on a certain purchase transaction the CSR refers the case to the operations department.

4. If Disputed transaction, check the transactions

The operations department checks from the system whether the transaction has occurred. If the merchant uses the POS terminal of Bank , Operations refers to the merchant acquisition department to get the details of the transaction from the merchant.

5. Seek clarification from the merchant

The merchant acquisition desk contacts the merchant and asks for the sales slip as evidence of the transaction. On retrieval of the sales slip the operations dept verifies the signature of the customer on the sales slip with the customer signature in Bank  database.

The Merchant desk might decide to charge the merchant, re-present the item to the cardholder bank (when the cardholder bank is different). Re-presentment occurs when the merchant believes the cardholder or the cardholder bank unjustifiably initiated a chargeback against the merchant bank.

6. Clarify from the customer about the transaction

If the signature matches, inform the customer and also send a copy of the transaction document to the customer. Seek approval from the customer that the transaction was his legitimate purchase.

If the signature does not match, the disputed transaction is charged back (reverse) to the merchant bank and the customer is absolved of any dues.

When chargebacks and re-presentments enter the bank credit card operation, there are three alternatives:

  1. Defend the merchant or cardholder and return the item or transaction to the bank disputing it and achieve resolution there
  2. Charge the item to the merchant or cardholder account
  3. Absorb the amount of the item in question as a loss

In virtually all cases the first alternative is the most desirable. The third alternative is used as a last resort. The bank should make sure that in this issue they follow the Visa and Master Card regulations for handling chargebacks and re-presentments.

7. Seek authorization, if required

If the customer request to be serviced requires the authorization of the manager, the CSR or the operations personnel handling the disputed transaction prepares the proposal and submits to the competent authority.

8. Update the system

The Customer Service Representative logs the customer request in the system with details including the customer credit card number, the customer query, whether the query has been solved or not (status) and the date and time of the customer request.

The disputed transaction details are updated in the system by the operations personnel handling the disputed transaction.

The adjustments done by the bank should adhere to certain performance and quality assurance standards. They include:

  • Merchant / Customer Payment adjustment timeliness: Keeping adjustment entries current is important for the bank to minimize its exposure to loss. The time taken to sort out these entries should be minimal.
  • Merchant / Customer Payment Adjustment accuracy: Integrate speed with the quality of work performed

The processing of the disputed transactions should be tracked and speed and accuracy standards set for the resolution of the same. The amount outstanding in the suspense accounts should be constantly tracked and maintained at minimal levels. The timeframes for charge backs / re-presentments under the Master Card and Visa rules should be adhered to so as to minimize the bank’s exposure to financial loss.

The telecommunications system should be such that the system should be able to handle the current levels of activity and provide some capacity for growth. There should be contingency planning for a smooth operation. If computer and telephone lines are down, alternative paths should be in place until the condition is remedied.

The Customer service standards should target the following measures:

  • Average speed to answer: The wait time between the call reaching the credit card system and the CSR attending to it
  • Abandon rate: The percentage of calls not received / abandoned by the customer due to inordinately long hold time
  • Average Length of Call: Time taken to resolve the customer query

Collections

Monitoring the quality of receivables is the key to keeping charge-offs low and can be accomplished through regular and systematic portfolio surveillance. Status reports called delinquency account reports, account aging reports or exception account reports are generally produced at least monthly for review by management.

The Collection authority granted to the individual collector should be given based on his/her experience and performance. The collector must exercise good judgement and understand when to be firm, when to assist or insist, when to expect payment, or when to write-off the loan. In addition, the collector must distinguish between an isolated incident and a trend. The collector has two objectives: to collect on the credit card debt and to do so in a manner that promotes customer relationship whenever possible.

The various credit repayment tools include reminder notices, pre-printed follow-up notices and letters, telephone calls, personalized collection letters, outside collectors and legal actions.

Behavioural scoring is done to help collection effectiveness. It predicts the likelihood of an account’s continued delinquency or collectibility. The Behavioural scoring is dynamic and information on the account is kept current. Payment history, balance fluctuation levels, balance in relation to credit line, changes in job or area of residence and similar information are maintained in the cardholder behavioural scoring model. This is dynamically modelled and provides a basis for prediction.

1. Generate Report for delinquency

The Credit Card delinquency report is generated by the Collections officer. This report is generated age-wise and source-wise.  The accounts are classified into various loan accounts as per the American Bank  guidelines and they are monitored accordingly.

2. Allocate amongst the Collectors

The delinquency report is then sorted according to the age of delinquency and assigned to the respective Collections group. The collectors are given targets to meet. At the end of the month the collectors performance is reviewed against the targets set. The follow-up is done as per the laid down Collection and Recovery procedure.

  1. Early Monitoring Group : 0-90 days
  2. Soft Group: 90-180 days
  3. Hard Group: 180+ days
  1. Follow up on the delinquent accounts
    The Collectors call up the delinquent account holders and / or write them reminder letters as per the Recovery procedure. For the accounts that are delinquent by large number of days the reminder letter is worded in a stricter tone. The letters are stored in the system and automatically generated. The system generates reminder alerts. If the card holder is not reachable, they make physical visit to the account holder’s address if required. They also contact the Credit Reference of the account holder and his close relatives.
  2. Request the account holder to pay the minimum amount

Collection executive requests the account holder to pay the minimum amount due by cheque. If the cheque is dishonoured Bank  can file a suit against the delinquent account holder.

5. Generate Receipt against Past Due Report

Receive payment from the delinquent account holder. The account is then regularized. Generate the report of the Receipt against Past Due. The payment received is updated on the system against the account holder.

6. Recommend for filing a case, if required

If the delinquent account holder does not make payment and the account outstanding is a significant amount, the collection officer could recommend for filing a case.

7. Authorize for filing a case

The Checker would put up the proposal to the management. The management would study the proposal for the Cost-Benefit analysis and authorize the filing of the suit against the delinquent account holder after taking into consideration the legal and other administrative expenses.

8. Make Daily Activity Report

All the activities of the Collectors are recorded in a log book and the daily activity sheet is   submitted to the supervisor. For the accounts which are overdue by more than 180 days submit details to the Credit Information Bureau of the American Bank .

The management would look at the health of the credit portfolio and would hence be interested in the following:

  • Collection effectiveness: Total amount in delinquency as a percentage of total outstanding
  • Collection efficiency: Cost of collection function
  • Recovery and Charge off trends: This is with respect to other banks’ performance regarding the write-offs and recoveries on the delinquencies

Good communication between Credit approval and the collection staff is critical. Changes in credit approval criteria affect the Collection function. Similarly, the collection function is the first to see the effects of the credit approvals in the market. Information about account behaviour characteristics (such as high levels of cash withdrawals or balances exceeding credit limit) should be circulated back to the credit staff so that they can make the necessary adjustments in their account generation activities if required.

About Engr. Kh. Mashiur Rahman

He is Garment Automation Technologist and ERP Soft Analyst for clothing industry. He is certified Echotech Garment CAD Professional-China, Aptech-India, NCC-UK and B.Sc. in CIS- London Metropolitan University, M.Sc. in ICT-UITS. He is working as a Successful Digital Marketer and Search Engine Specialist in RMG sector during 2005 to till now. Contact him- apparelsoftware@gmail.com

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