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.