logo

Assignment - Credit Policy

   

Added on  2020-05-16

20 Pages5480 Words190 Views
Impact of credit policy on sales performance of FMCG in UAEA case study of IFFCO, UAEName :Course:

1Table of contentsIntroduction................................................................................................2First: The importance of credit Policy in the FMCG industry of UAE.....................................3Second: Objectives of credit policy...........................................................................................4Third: The role of credit insurance in credit recoveries.............................................................5Fourth: The sales performance – Implications and application in FMCG Sector, UAE...........6Fifth: Critical discussion of the positive and negative impacts of credit policy on sales performance................................................................................................................................7Sixth: The frequency of reviewing the credit policy..................................................................7Seventh: Factors to be discussed while appraising credit applications......................................8Eights: Methods employed to encourage prompt payments by customers................................9Ninth: The procedures/ techniques for accounts receivable management.................................9Tenth: The possible challenges encountered while implementing credit policy.....................10Eleventh: Methods for effective accounts receivable management.........................................11Twelves: Ways of enhancing the effectiveness of IFFCO’s credit policy and recommendations.....................................................................................................................11

2Conclusions..............................................................................................................................14References................................................................................................................................16IntroductionThe global financial crisis had several negative implications for the UAE economy,represented in tightening international credit and the national economy as well in 2009 and2010. The UAE authorities followed the policy of increasing spending and boosting liquidityin the banking sector to overcome the negative impact on the economy. Currently, the UAEeconomy is mainly driven by the trade and tourism sectors [ CITATION Bal08 \l 1033 ]. Thecredit facilities to customers varies according to their credit standing and the credit ability ofthe banks with regard to the business activity, the legal status, the business history, currentand future financial position, the availability of the required official documents (HSBC;PricewaterhouseCoopers, 2013; Guastella & Menghi, 2016).Considering the oil prices, thegovernmental deposits decreased, which affected the growthrate of money supply. But the improvements in the banks’ loan portfolio quality couldmaintain moderate credit facilities. The non-oil sector including the FMCG sector couldbenefit from the bank credit and finance their businesses (UAE Ministry of Economy, 2015).The fast-moving consumer goods (FMCG) industry is considered one of the largest industriesworldwide and in the UAE as well. It is characterized by the low-cost of product supply thatare highly demanded short shelf life and non-durable product (Dubai exports, 2016; Mahajan,Garg & Sharma, 2017). The UAE bank credit to the wholesale and retail trade sectorincreases constantly on an annual basis. In 2013, this sector accounted for 11.6% of totalbank loans (Emirates NBD, 2014).

3It is expected that the FMCG will continue to grow in the future in the UAE due to thechanging demographic and the increasing competition. The UAE market is resilient, theconsumer preferences are consistent, the companies are aware of the consumer preferencesand can engage them (KPMG, 2016).The following section sheds the light on the literature review concerning the credit policy inthe UAE and its economic framework with regard to the FMCG sector. It also focuses on theIFFCO credit policy and provides recommendations.First: The importance of credit Policy in the FMCG industry in UAEThe UAE banking system is stable and strong, it is advantaged by its competitive institutesthat offers necessary credit facilities with transparency and governance. The state has alsoestablished the Institute of Corporate Governance and application of governance to employits principles. The positive growth of credit was achievedin 2013 and continued to increasein 2014 (UAE Ministry of Economy, 2015). The domestic banks' credit to the private, GREsand Foreign credit sector has increased by 5.2% on annual basis in 2016. The credit growthcould offset the slow growth of the non-oil sector. The banking system in the UAE continuedits stability and remained solid supported by the growth in the non-oil sectors (Central Bankof the UAE, 2016).The grocery retailed outlets in the UAE recorded 9663 in 2014, that diverse between themodern and traditional outlets. The modern grocery retailers include convenience, discounter,chained forecourts, forecourt retailers, independent forecourts, supermarkets andhypermarkets (Agriculture and agri food Canada, 2016; Sundarakani, 2016) [ CITATIONVcs12 \l 1033 ]. The FMCG is considered a very important sector that grows continuouslyand have the full access to the credit facilities in the UAE. The companies working in the

End of preview

Want to access all the pages? Upload your documents or become a member.

Related Documents
Critical analysis of the ongoing Oil Price volatility
|5
|891
|19

Impact of Global Financial Crisis on UAE’s Banking Sector
|20
|6411
|56

International Financial Market and Banking Assignment
|14
|4080
|209

(PDF) Covid-19 Impact of Banking Sector
|8
|3020
|137

Coronavirus Financial Crisis Article 2022
|13
|3773
|36

Policies of UK in Country and Measure of Government during Different Economic Situations
|7
|2617
|168