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This program was designed to help you focus on exam strategies, short essay answers, and case study presentation.

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� The exam may vary in length and scope.

� Traditionally, the exam is two sections: �Essay questions (45 Points – 3 points ea.)�Case study (55 Points)

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You have up to four hours to complete the exam.

Completing the exam in four hours is a challenge for most.

Essay

Portionor

Case

Study

Start your exam in your strongest area

Get off to a good start

The exam measures your ability to apply concepts to situations or explain how they relate to the field of business credit.

• strategic objectives• risk management• results• professional level

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During the exam if you are uncertain about a question, move on and come back to it later or provide as much information as you know -partial credit is given.

The case study requires you to analyze a case company and apply your findings to specific questions.

Essay

Portion

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Essay questions are divided into broad categories to test your knowledge.

Each category will have more questions than you are instructed to answer. Do not answer more than instructed. Extra answers are disregarded.

Follow the instructions!!!!!If instructions state two or three well developed paragraphs, do not over or under respond.

(A paragraph is 3 to 5 sentences)

Read through all

the questions

carefully

Underline key

words

Select questions

to answer first

ESSAY PORTION OF THE EXAM

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CONCISE

Clearly state points, no rambling

COMPLETE

It answers all parts of the question

WELL FOCUSED

Answer the question completely

CONCLUSION

Summarize with emphasis on main points

BODY

INTRODUCTION

WELL ORGANIZED

Structured and thought out (don’t think-as-you-go)

SHARE YOUR EXPERIENCE

Effective evidence makes an effective answer

GIVE THE EVIDENCE

Give the facts, examples, previous results

WELL SUPPORTED

Don’t just state it, prove it

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PRACTICE

Ask a friend or mentor for critique

WRITE TO EXPRESS NOT IMPRESS

Use good vocabulary, write for clear understanding

WELL PRESENTED

Use your best language/writing skills

� State your assumptions, your decisions and the expected outcome

� (don’t rewrite the facts)

� Definition◦ Define X

◦ What is the process

� Details that describe the term

� Examples

� Comparison to familiar objects

� What it is not

� Break it down into parts

� Origin/causes

� Results, effects, uses

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� Analysis◦ Analyze X

◦ What are the components of X (break it down)

� There are 3 types of X

� X1

� X2

� X3

� Transition words

� In addition

� Another

� Next

� Cause and Effect◦ What are the causes of X

◦ What led to X

◦ Why did X occur

◦ Why does X happen

◦ What would be the effects of X

� Transition words

� Because

� As a result

� Therefore

� Consequently

� Process (process analysis)

◦ Describe how X is accomplished

◦ List the steps involved

◦ Explain what happened in X

� Transition words

� First, second, third

� Following this

� Finally

� Then

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� Comparison – Contrast◦ How does X differ from Y

◦ Compare X and Y

◦ Advantages and Disadvantages of X and Y

XAdvantagesDisadvantages

YAdvantagesDisadvantages

AdvantagesXY

DisadvantagesXY

Define “perfection” under UCC.

DefinitionDefine XWhat is the process

Details that describe the termExamplesComparison to familiar objectsWhat it is notBreak it down into partsOrigin/causesResults, effects, uses

Perfection, under the Uniform Commercial Code is taking the legal steps necessary to ensure that a secured party’s interest in collateral will withstand attack by competing secured creditors or a bankruptcy trustee.

Perfection can be by possession or control of collateral, by filing a UCC financing statement, or both. An example of physical possession would be holding collateral stock certificates in your safe. An example of control without physical possession would be collateral held in a warehouse or financial institution in the secured party's name. A UCC financing statement would be filed in the state of incorporation for a corporation. For an LLC or registered partnership, filing would be made in the state of registration. If unregistered, file the financing statement in the state where the chief executive office is located.

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What are the two types of alternative dispute resolutions and how can credit managers use them to their advantage.

DefinitionDefine XWhat is the process

Details that describe the termExamplesComparison to familiar objectsWhat it is notBreak it down into partsOrigin/causesResults, effects, uses

Alternative dispute resolution (ADR) is a way to resolve disputes without litigation. Two types of ADR are mediation and arbitration. Mediation, which is non-binding, uses an independent mediator or facilitator to help the parties reach an accord. Unlike arbitration, mediation can be chosen after a dispute has arisen. Arbitration is usually provided for in a contract and uses an independent arbitrator to act in lieu of a judge and/or jury in resolving a dispute. Both parties present their case before the arbitrator.

A credit manager could use ADR to resolve disputes in collection of accounts receivable or disputes regarding products and services. An additional benefit to ADR is a savings of time and money in resolving disputes and collecting money.

What is a preference payment? Explain two defenses against preference claims in bankruptcy.

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A preference payment is payment made by a party within 90 days of filing bankruptcy to an unsecured creditor for an existing debt. The preference period is extended one year if the payment was made to an insider.

A credit manager receiving a request from a bankruptcy trustee for return of a preference payment may defend the claim by proving contemporaneous exchange, or showing that new value was given in the form of goods and/or services. Ordinary course of business is another defense a credit manger could use. Ordinary course would be evidenced by providing documentation showing invoice and payments dates and amounts for a period of time substantiating the payment was in-line with the history of business between the parties.

What is a bust-out? How can a credit manager prevent being drawn into one?

Process (process analysis)Describe how X is accomplishedList the steps involvedExplain what happened in X

A bust-out is a scheme to defraud business credit grantors. A new entity establishes a good credit history on relatively small scale with several companies. Those companies are then used as references for larger orders until the bust-out when the fraudsters skip with the goods. Bust-out artists will have reasonable answers for increasing orders, such as expansion, going national, or opening new locations.

Pro-active credit managers protect their companies from bust-outs by educating and training their sales team to be observant during customer site visits. Sales can document and provide detailed information on the condition of the customer location, inventory levels, employee activity (are they busy) and customer’s reputation in the industry. Credit managers will also want to be aware of the number of inquiries on their existing and prospective customers.

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Why is a credit manager concerned about the legal form of organization of their customer?

AnalysisAnalyze XWhat are the components of X (break it down)

There are 3 types of XX1X2X3

A credit manager’s concern about how a customer was legally formed is to determine who is legally responsible for payment and to understand where the financial strength comes from. If legal action becomes necessary, who does the credit manager file suit against.

If a customer is a sole proprietor, the proprietor has unlimited personal liability for the debts of the enterprise. If the company is an LLC or a registered partnership, the credit manager must determine where the liability rests with managing or directing partners, jointly and severely. A customer selling to an incorporated entity looks to the artificial corporate entity for payment ability, payments and as the subject of legal action, if needed.

What is political risk? How is it different from country risk?

Comparison – ContrastHow does X differ from YCompare X and YAdvantages and Disadvantages of X and Y

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A company is not able to pay their bills as they become due. Should they file Chapter 7 or Chapter 11?

Questions for this session were taken from:

Credit Management: Principles & Practices, 3rd

Edition by Dr. Charles Gahala, CCE

Additional resource materials can be purchased online. NACM Bookstorehttp://web.nacm.org/eseries/source/Orders/index.cfm?section=unknown&activesection=Orders

NACM Professional Certification ProgramP: 410-740-5560F: 410-740-5574E: education_info@nacm.org