CREDIT CONTROL POLICY AND PROCEDURES OBJECTIVE The main objectives of this credit control policy and procedures are to ensure that: 1. Credit terms are used to maximise sales with the minimum of risk. 2. High risk or marginal accounts, especially those likely to get into financial difficulties, are identified and

to take whatever action is necessary to safeguard sales to those customers. 3. All amounts due are collected according to the agreed payment terms. 4. A high quality of Accounts Receivable is maintained. 5. An accurate and responsible database of customers is operated and maintained. ABBREVIATIONS The abbreviations for Job Titles referred to in these instructions herein are as follows: Abbreviation Title in Full GM General Manager FD Finance Department SMP Sales and Marketing Personnel POLICIES 1. Only cheque payments or bank transfers are accepted, and the cheques and fund transfer are to be in

favour of the company. 2. The sales and marketing department is ultimately responsible for the collection of all outstanding

debts from the Customer. 3. All cheques must be banked in daily, if possible, failing which to be banked in the next working day. 4. The Finance Department is ultimately responsible for monitoring the outstanding amounts. 5. Specific Provisions and Bad Debts Written Off must be recommended by the General Manager, Trading

division to the Board for approval. PROCEDURE Debtors’ Evaluation 1. All new applicants must apply to open an account for credit facility. 2. All existing customers who wish to increase their credit limit may submit an application to increase his

credit limit. 3. Credit application forms must be completed in full and signed by an authorized person of the new

applicant. 4. If possible obtain the latest financial statement or management accounts from the new applicant. 5. If financial statements are not submitted, a company search should be carried on the new applicant. 6. Application for credit / increase in credit facility must be approved by an authorised personnel (see

EAL) 7. Account code assigned to newly approved customer. 8. The customers’ credit limits are to be evaluated from time to time based on the financial position and

buying history of the customers at the time of evaluation. It is important to note: 1. The financial position of the company 2. Company status ie Sdn Bhd, sole proprietor or partnership 3. Owners of the company 4. Number of years in business 5. Whether applicant had been rejected before

Invoicing 1. Invoices and Delivery Orders are system generated by the Accounting software. 2. Customers’ orders are keyed into the accounting system to generate Delivery Orders and Invoices. 3. The system will automatically check whether the customer has exceeded its credit limit. If the credit

limit is exceeded, the system will “flag” and the printing of Delivery Order for that particular customer will be disabled.

4. Invoices are issued to customers at the end of the week after delivery. 5. Debit/Credit Notes are issue for good damaged/lost in transit, under weight, returns, discount etc. Collection 1. Payments received from customers are passed to the Finance Dept for banking. 2. Once cleared, the payments are matched against customers corresponding invoices to arrive at an

updated outstanding position. 3. The debtors’ aging lists are printed weekly for each SMP to monitor their debts collection. 4. During the weekly meeting the SMP will update the GM on the weekly sales and debt collections. 5. Debts which are long overdue and its action plan to be untaken are discussed in the weekly meeting. 6. Post/email/fax monthly statements to customers. 7. If there are amount disputed by customer, resolve the dispute with customer amicably. Steps taken on long overdue debts 1. Stop delivery. 2. Negotiate with customer for instalment payments to settle the outstanding debts. 3. Negotiate with customer for post-dated cheques. 4. Follow-up with the customer on the long overdue debts by frequent phone calls and sending reminder

letters. 5. Send demand letter/legal letter if customer take no action to settle the long overdue debts.

Temporary Credit Limit (“TCL”) TCL may be extended to customers who may exceed it credit limit with their latest order even though some of their debts are overdue. The extension of TCL is evaluated on a case to case basis. Criteria to be considered for the extension of TCL, inter-alia :- 1. Purchase pattern of the customer whereby his demand surge at certain time of the year. 2. Financial standing of the company and its payment records. 3. The customer’s debts are not long overdue. 4. The TCL is only valid for a period of time. 5. Payment pending bank clearance. 6. All TCL must be approved before sales are to take effect.