CHAPTER 20 ACCOUNT MANAGEMENT
VOCABULARY
Account management= management of costs, cash and margin (gestion des comptes)
Credit= method of deferring payments for goods or services usually including interest on top of the original amount of money
Terms of payment= conditions under which credit is granted and the way in which it is to be honoured (conditions de règlement)
Risk assessment= evaluation of customers' credit and financial positions in order to establish the reliability and ability to pay debts (évaluation des risques)
Credit-rating= agency firm which specialises in keeping a list of people who have defaulted on payments in which, in return for a fee, can check if a particular firm has ever had problems or if it has a clean record of reliability. (cote de crédit)
Creditworthiness= reliability and ability to pay debts/credit worthiness (solvabilité)
Ratios= relationships between a company's assets and its liabilities aimed at establishing credit limits/debt-equity ratios (ratio, rapport, taux, pourcentage..)
References= testimonies of the reliability and trustworthiness of the customer; trade references, bank references
Credit control= account management activity dealing with customer monitoring, credit limits and payments (contrôle des crédits)
Debtor= person or firm owing money to another person or firm (débiteur)
1)tied up (capital)= any capital that is not immediately accessible as money, so it can be investment bonds with a specific term but it can also be property or other investments (capital lié)
2)bills= invoice (une facture)
3)bad debt= debt unlikely to be repaid ( une créance irrécouvrable)
4)a statement=written accounts (from the bank…) (un relevé, une déclaration)
5)account reminders= something (oral, written) that serves as a reminder of another thing and makes you think about the other thing (un rappel des comptes, une relance)
6)credit periods= the time periods a creditor extends credit to a customer. At the end of the credit period, the customer of the business is expected to have met all financial obligations in exchange for the goods or services which were obtained on credit. (durée de crédit)
7)credit limit= the maximum amount of credit that a financial institution or lender will extend to a debtor for a particular line of credit. (plafond de dépenses, de paiement)
8)corporate customers=client of a business corporation (client corporatif, entreprise cliente, client commercial)
9)companies House=the UK's registrar of companies. For example, it incorporates and dissolves limited companies, registers the information the companies have to give…..
10)credit position= someone's position (the credit they have at their disposal) at a particular point in time (situation de crédit)
11)credit clearance period= the time interval that occurs between the point at which an account is marked for final collection and the point at which any available credit is removed from the account (période de crédit, solvabilité)
12)marginal customers= customers who present an abnormal risk of non-payment. A marginal account is usually characterized by slow purchases and slow payments, inadequate working capital, weak or indifferent management, and/or excessive liens and judgments against the person or the firm. (clients peu éligibles)
13)reliability= when people or things can be trusted to work well or to behave in the way you want them to (confiance)
14)sales orders=orders issued by a business to a customer for products or services (ordre de vente, bon de commande, document de vente)
15)take orders= request for a product to be made for you or delivered to you (commandes)
16)monitoring accounts= supervising, watching accounts ( la surveillance des comptes)
17)overdue (payments)= late, past deadline (en retard)
18)sales force= number of salespersons employed and managed directly by a firm (personnel commercial,personnel de vente)
19)administrative staff= workers in the administration (personnel administratif)
20)salespeople= shop assistants, representatives (vendeurs, personnel commercial)
21)due payments= payments that need to be paid ( à échéance)
COMPREHENSION
Exercise 1: Answer these questions
1) What is bad debt? A debt that customers are unable to pay back
2) What is the role of credit? To provide finance for business.
3) Can you give examples of activities involved in customer account management?
Keeping or maintaining customer records, preparing statements and account reminders
4) Why is it necessary for organisations to carry out a risk assessment before granting credit? To help set credit limits on the account of each customer.
5)How can organisations find out about the creditworthiness of new corporate customers?
By obtaining statements from companies House, by contacting a credit-rating agency, or by asking for a reference on the creditworthiness of the customer
6) How many categories of debtor are found in a number of credit rating systems?
There are four categories of debtor: strong, average, marginal and weak.
7) What is the basis of their classification?
Debtors are classified on the basis of how promptly they can repay debt.
8) What role does the credit control department of an organisation play once credit is provided?
Once credit is provided, the credit control section will keep up-to-date with credit accounts and identify when accounts become overdue.
9) What do salespeople tend to overlook when selling company products to customers?
They tend to overlook taking into account the extent to which their customers are solvent or otherwise.
10) How can companies make sure that their sales forces do not focus only on the process of selling?
By getting them involved in the process of monitoring customer accounts and of reminding customers when payments are due.
VOCABULARY
Exercise 2: Use the list of definitions above to select the appropriate term to fit each sentence
1) Companies selling goods or providing services to others often do so on credit as opposed to cash.
2) The business may impose penalty clauses as part of the terms of payment.
3) Large firms have credit control sections which make sure that letters and phone calls are used to remind customers about payment and which, in some cases, take legal action.
4) Before providing credit, the firm could make enquiries with a credit-rating agency to see if the firm concerned has a clean record of trustworthiness.
5) If you wish to keep an eye on a debtor ,you have to invoice them quickly and correctly.
6) The standard practice in many countries of the world is not to grant credit to companies exceeding a 1/1 ratio.
7) Before granting credit, a firm will usually ask for references from the bank or a supplier who has previously given credit to the business concerned.
8) Many businesses have been brought down by organisations which had failed to pay their bills before vanishing. It is therefore necessary to assess the credit worthiness of the customers will you are dealing with.
9) Institutional investors always carry out a risk assessment of their prospective customers.
10) Credit control, risk assessment and invoicing are all activities involved in customer account management.
GRAMMAR
EXERCISE 3A: Underline all the modals used in the text:
must, may (x17), cannot, will (X4), can (x3), would, should (x2)
EXERCISE 3B: Complete the following sentences with a suitable modal used in the text
1) Customers who save every month can get a much higher return on their savings.
2) Insurance companies will never refuse you cover because of your age.
3) When using travellers' checks and foreign currency, you may have to pay commissions and conversion charges.
4) It is commonly believed that top managers should be rewarded for the way they manage their organisations.
5) With your visa card, you can withdraw cash from cash dispensers anywhere in the world.
ASSIGNMENT:
Exercise 4:Find out what criteria banks usually take into consideration for lending money to individual and corporate customers. Report your findings orally to the class and compare them with those found by the other students.
FROM THE NEWS: Debt markets: what isn't known about bad debts
Vocabulary
1) subprime= lending at a higher than unusual rate of interest because it involves borrowers who are less likely to be able to pay back their loan ( prêt hypothécaire à risque)
2) to default= be unable to repay a loan= ne pas payer, ne pas rembourser, ne pas s'acquitter d'une dette
3) epistemological= based on the theory of knowledge (épistomologique)
4) GDP (acronym for) Gross Domestic Product= the value of a country's overall output of goods and services (typically during one fiscal year) at market prices, excluding net income from abroad=PIB= Produit Intérieur Brut
5) a layer= a tier, a level= un niveau, étage, gradin, plateau
6) a middleman= a go-between, intermediary= un intermédiaire
7) an incentive= an inducement= un avantage, motivation, incitation
8) to overstate= exaggerate= exagérer
9) securities= financing or investment instruments (some negotiable, others not) bought and sold in financial markets, such as bonds, debentures, notes, options, shares (stocks) and warrants = titres, fonds, valeurs
10) to carve up= cut up, divide= découper, diviser, morceler
11) CDO (acronym for collaterised-debt obligations) = a structural financial product that pools together cash flow-generating assets and repackages this asset pool into discreet tranches that can be sold to investors. A CDO is so-called because the pooled assets- such as mortgages, bonds and loans- are essentially debt obligations that serve as collateral for the CDO= obligation adossée à des actifs
12) reset= set again, return to original state= réinitialisation, redémarrage
13) teaser loans=an adjustable-rate mortgage loan in which the borrower pays a very low initial interest rate, which increases after a few years. Teaser loans try to entice borrowers by offering an artificially low rate and small down payments, claiming that borrowers should be able to refinance before the increases occur=prêts incitatifs
14) to go bust ( informal)= be bankrupt= faire faillite
15) to file for bankruptcy= declare oneself bankrupt=déposer le bilan, se mettre en faillite
16) a quarter= three months =un trimestre
17) barely= hardly, only just= à peine, tout juste
18) delinquency rates= the number of failures to repay an obligation when due or as agreed. In consumer instalment loans, missing two successive payments will normally make the account delinquent. In credit card payments, a delay of 15 to 30 days is generally allowed before declaring delinquency. = taux de délinquance des paiements
19) to struggle= have difficulty= avoir du mal à, être en difficulté, galérer
20) a covenant-lite loan=A form of debt providing limited requirements on pledged collateral, payment terms and income disclosure. The debt service capabilities are not considered and the loan is typically used in performing leveraged buyouts. =une convention de prêt
21) a covenant= a legal contract= un engagement, contrat, convention
22) a breach= breaking or rupture= violation, infraction, rupture, brèche
23) to spot=to see, recognize, identify= repérer, identifier, reconnaîre
24) a creditor=someone to whom a debt is owed= un créancier
25) a safeguard= a protective measure= une protection, une sauvegarde
26) dodgy (informal)= not safe= risqué, dangereux
27) private equity deals=contracts dealing with money invested in firms which have not "gone public" and therefore are not listed on any stock exchange. Private equity is highly illiquid because sellers of private stocks (called private securities) must first locate willing buyers. Investors in private equity are generally compensated when 1) the firm goes public 2) it is sold or merges with another firm 3) it is recapitalized.=contrats avec du capital privé
28) a downturn= an economic decrease or decline= une baisse
Read the article below and discuss or write answers to the following questions
1) Which sectors do the debt markets cover?
They cover the housing market (paragraph 1) , the credit cards and auto loans markets (paragraph 4)
2) What is classed as a "known-unknown" about bad consumer debts?
When consumer debts are high relative to the GDP and American house prices are falling nationwide for the first time since WWI, the level of bad debts is higher in this cycle= known -unknown (paragraph 2)
3) What has made the situation of the sub-prime market worse?
The teaser loans worsened the subprime market: low interest rates for the first couple of years and then the rates increase so much that borrowers default on their debts. (paragraph 5)
4) How have car companies managed to maintain sales during the present economic downtown?
They relied on cheap financing rates to maintain rates (paragraph 7)
5) What is the difference between teaser loans and covenant-like loans? Who are they intended for?
See vocabulary
For borrowers who don't have a lot of money, teaser loans=an adjustable-rate mortgage loan in which the borrower pays a very low initial interest rate, which increases after a few years. Teaser loans try to entice borrowers by offering an artificially low rate and small down payments, claiming that borrowers should be able to refinance before the increases occur
For anybody who needs to borrow money, a covenant-lite loan=A form of debt providing limited requirements on pledged collateral, payment terms and income disclosure. The debt service capabilities are not considered and the loan is typically used in performing leveraged buyouts.