This lesson covers the ongoing management of the credit portfolio, including monitoring systems, early warning indicators, and portfolio quality assessment.

7.1 The Scope of Credit Administration

Credit administration encompasses all activities following loan disbursement to ensure portfolio quality and regulatory compliance . Key functions include :

  • Accounts receivable administration 

  • Collection and adjustments management 

  • Control systems and computer support 

  • Compliance with regulatory standards 

7.2 Credit Monitoring and Control Systems

Effective credit monitoring requires:

  • Regularly reviewing accounts receivable 

  • Employing credit management software and automated alerts for overdue payments 

  • Conducting periodic credit reviews 

  • Assessing changes in market conditions 

  • Utilising customer communication channels 

7.3 Early Warning Systems and Portfolio Quality

Early identification of deteriorating credit quality is essential for proactive risk management. Key early warning indicators include:

  • Deteriorating financial ratios and declining cash flow

  • Missed covenant compliance or delayed financial statements

  • Payment delays or increased borrowing requests

  • Operational issues (loss of key customers or management)

7.4 Credit Portfolio Management

Credit portfolio management involves systematic oversight of the entire loan book . Key elements include:

  • Portfolio concentration risk assessment

  • Non-performing loans and asset quality monitoring 

  • Provisioning and write-off procedures 

  • Regulatory reporting and compliance

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