Foundation Certificate in Credit Analysis (FCCA)



Who Qualifies for FCCA Admission?

To register for FCCA designation, there is no prior work experience requirement. Those who are currently performing credit analysis role at entry level, as well as those who presently do not have any qualification to engage in a good job but now wish to take up a career in credit management with specialization in credit analysis are the target of the FCCA.
FCCA is an academic-based designation of the London Postgraduate Credit Management College (LPCMC) which signals mastery in credit analysis, serving as evidence that its holder possesses strong ability to make informed credit risk assessments.

Programme:               Foundation Certificate in Credit Analysis (FCCA)
London Weekend Class: Saturdays only for 6 months covering 12 course modules
Course dates:             February 2016 – July 2016 and September 2016 – February 2017
Award:                        Foundation Certificate in Credit Analysis (FCCA)

Programme Fee:        £3,500 payable in full or two equal instalments.
Method of payment: Bank transfer only
Lecture Time:             1.pm to 6.pm (Saturdays only)
Lecture Venue:           Birkbeck University of London, Malet Street, London WC1 E7 HX

Who can be a FCCA student?

If you are considering shifting, moving to or consolidating your career in credit management profession.

What is Credit Analysis?

  • It is the method by which one calculates the creditworthiness of a business or organization.
  • It is evaluation of the ability of a company to honor its financial obligations.
  • The audited financial statements of a company might be analyzed when the company is seeking credit line. Or, a bank may analyze the financial statements of a business organization before making or renewing a commercial loan.

The objective of credit analysis:

  • To look at a borrower or business credit customer and the credit facility being proposed and to assign a risk rating.
  • The risk rating is derived by estimating the probability of default by the borrower or customer at a given confidence level over the life of the credit facility, and by estimating the amount of loss that the credit provider or lender would suffer in the event of default.

Credit analysis:

  • Involves a wide variety of financial analysis techniques, including ratio and trend analysis.
  • Creation of projections and a detailed analysis of cash flows.
  • Credit analysis also includes an examination of collateral and other sources of repayment as well as credit history, legal and ownership records, and management ability. 

Foundation Certificate in Credit Analysis (FCCA)
The London Postgraduate Credit management College (LPCMC)’s Foundation Certificate in Credit Analysis (FCCA) is broad in focus. The programme provides a broad understanding and relevant knowledge and skills in credit analysis. Additionally, the programme improves an individual’s confidence and ability to communicate credit management operations, enabling him or her to participate fully in organization’s credit analysis process, which consequently helps to attain and maintain excellent credit control competencies. LPCMC’s Foundation Certificate in Credit Analysis (FCCA) is designed to nurture credit executives and credit trainees to become team leaders, trainers and managers of the future, thereby developing their internal capacities to manage future credit management training and achieve productivity gains. FCCA contributes to real productivity and efficiency gains, and can transform organization’s credit operation faster than the traditional orientation programme that organizations run for their credit analysis and new credit control trainees.
With an investment of a bit of personal time over the weekend, a credit workforce analyst or trainee could progress from the foundation certificate course to a higher specialist qualification in credit management such as Certified Postgraduate Credit Supervisor (CPCS), Certified Postgraduate Credit Manager (CPCM) and Certified Postgraduate Credit Examiner (CPCE),upon completion of the FCCA.

FCCA Modules

Module 1
What is Credit Analysis?
What is Credit Management?

Module 2
Basic Factors Affecting Credit Analysis
Importance of credit. Criteria of a sound credit policy, the influence of trade and other conditions on credit policy. Relationship of credit department with sales, purchasing, production and financial controller’s departments.
Types of Credit
Comparisons of trade and bank credit. Definition of open account credit. Documentary instruments of credit. Comparisons of open account credit with credit extended on negotiable instruments. Foreign trade.

Module 3
Credit Insurance and Export Credit Guarantees
Specific account insurance. Whole turnover insurance. Limitation of cover. Export credit guarantees. Insolvency and protracted default. Pre-delivery risks. Claims and collections.

Module 4
Antecedent Information, Method of Operation
Classification of information for analytical purposes. Nature of business and location. History of the concern and details of the principals. Method of operating. Manufacturing. Wholesaling. Retailing.
Forms of Business Organisation
Individual ownership. Partnerships. General and Limited. Companies. Effect of Companies Act thereon. Co-operatives Societies. Special features of different forms of business organization. Buying Groups. Parents-subsidiary relationships. Effects of business combinations. Mergers and take-over Bids.

Module 5
Introduction to Financial Statements
Composition of annual accounts. Traditional balance sheet presentation. New prescribed formats. Classification of assets and liabilities. Net worth. Reserves. Provisions. Working capital. Profit & loss account. Prescribed formats. Current cost accounting.
Examination of Financial Statements.
Accounts Receivable (Debtors) and Bills Receivable. Stock-in-Trade and Valuation of Inventory. Tax refunds. Prepaid expenses.  Investments. Intangibles. Fixed Assets. Depreciation. Trade Creditors and accrued charges. Bills payable. Bank loans and overdrafts. Short-term indebtedness to subsidiaries. Deferred debt. Classification of Reserves. Minority interest. Net worth. Contingent liabilities.

Module 6
Accounting Procedures and Trial Balance
Methods of book keeping. Journals, ledgers and cash book accounting machines and computers. The double entry system debits and credits. Trial balance and adjustments. Drafting the profit and loss account and balance sheet. Summary of the accounting cycle. Supplementary notes.

Module 7
Foundation Credit Analysis 1
Basic factors affecting financial statement analysis. Method of operation and influence of type of business on statements. Seasonal influences. Methods of analysis. Long-term borrowing from special corporations. Cash sales system. Factors. Trade opinions and their applications.
Module
Foundation Credit Analysis 2
Calculation of ratios. Current ratio. Liquid or quick ratio. Cash position. Accounts receivable and collection period. Stocks to working capital. Working capital turnover. Fixed assets to Net Worth. Deferred debt. Profit ratio. Working capital analysis

Module 8
Comparative Analysis
Trend of sales, earnings and net worth. Dividend policy and its effect on net worth. Determining the operating trend when profit and loss statement is not available. Changes in working capital and working capital requirements. Examination of individual items in the balance sheet. Trend of ratios. Illustration of comparative analysis.
Working Capital Analysis
Information derived from working capital analysis. Sources and application of funds producing changes in working capital. Illustration of analysis of the change in working capital. Changes in current requirements and composition of changes in working capital. Interpretation of working capital analysis.
Financial Statement Analysis on the Basis of Sales
Objective of analysis by sales. The Cash Budget. Elements of sales and application of sales income. Illustration of statement analysis on the basis of sales. Shortcomings of analysis by sales. Overall approach to Analysis.

Module 9
Sources of Credit and Business Information
Direct information. Departmental records. Credit and business information reference agency. Group meetings. Creditors and trade references. Bank and financial institutions. Debt Collection agencies. Public records, specialized publications, sources and prospectus.

Module 10
Summary of the Techniques and Application of Credit Analysis
Conflicting indications. Co-ordination of different methods of credit analysis. Limitations of methods. Use of methods without financial information. Importance of type of operation and prevailing trade conditions. Influences of experience.

Module 11
Understanding Bank Credit Analysis Process
Conflict in banking business. What is credit risk? Need for timely repayment. Effects of default. Principles of good lending. The C’s of credit. Lending acronyms. Basic credit questions. Analytical process. Market analysis. Consumer analysis. Trade analysis. Competition analysis. Sources of competitive advantage. Credit process. Customer’s credit application. Loan interview. Overview of banks credit policy. Credit policy as a process document. Credit identification. Credit evaluation/assessment. Risk evaluation through scoring. Credit scoring attributes. Credit risk mitigation/protection. Credit report writing. Credit risk identification. Macro (Countrywide risk). Macro risk. Environmental risk. Industry risk. Company risk. Management risk. Structure risk. Financial statement risk. Measurement of financial risk. Tools of credit risk analysis. Financial statement analysis format. Credit analyst’s guide. Accounting ratios. Ratio analysis. Swot analysis. Lending rationales and protection. Why do customers borrow? Classification of loan requests. Generic classification of bank facilities. Factors affecting choice of facility. Long term loans. Asset conversion. Asset conversion lending. Evaluating risk on ACL. Inventory financing. Rationale for inventory finance. Inventory financing procedure. Risk of inventory financing. Receivable financing. Procedure for granting accounts receivable facility. Asset protection lending. Features relevant to credit analysis. Cash flow lending. Features of cash flow lending. Trade finance. Long term facilities. Leases. Finance lease. Operating lease. Sale and lease back. International trade finance methods. What is a letter of credit? LC underlying contracts. Financing the exporter. Pre-shipment finance and risk consideration. Post-shipment finance.  Risk factors in post-shipment finance. Security options for export finance. Import finance facility. Import finance. Procedure for analyzing import finance request.  Security analysis. What determines the type of security required. Overview of security types. Outline of procedure for security perfection. Economic cycle and loan behavior. Business cycles. Industry life cycle. Introduction phase. Growth phase. Maturity phase. Decline phase.

Module 12
Financial Embarrassments.
SOLE PROPRIETORS AND FIRMS. Early warning signals. Slowness of payments. Statutory information. Time for action. Debt collection agencies. Legal proceedings. Judgment summons and committal orders. Ultimate steps. Moratorium. Bankruptcy. Debtor’s petition. Discharge from bankruptcy. Variations in bankruptcy. LIMITED LIABILITY COMPANIES. Significance of limited liability. Disproportionate registered or secured indebtedness. Collection of outstanding accounts. Early warning signs. Bills of exchange. Legal action and steps in liquidation. Receiver and Manager.
Key Points

  • Interestingly, credit professionals role touches on all levels of credit management; covering every area of credit control, sales ledger, billing, risk, credit analysis, credit monitoring, real credit management, order to cash management, debt recovery, just to mention but a few.
  • There is a continual focus on credit risk and order to cash management amongst British companies over the years.  This trend is particularly centred on both junior and senior level appointments in credit management i.e. from credit clerk to credit analysts, officers to supervisory, to credit manager’s levels.  It is a growing and stimulating career opportunity for people living in the United Kingdom, and perhaps other people who may be interested in moving into the UK.