How to Mitigate Credit Risk for Sa Clothing Retailers

Topics: Risk management, Credit, Debt Pages: 41 (8982 words) Published: February 27, 2011
An investigation on how to mitigate credit
risks faced by South African clothing


Nontutuzelo Lydia Mbiyo (3312-655-0)

Submitted in partial fulfillment of the requirement for the degree Hons BCom (Financial Management)

At the University of South Africa

Supervisor: Mrs A.T. Mutezo


Nontutuzelo Lydia Mbiyo, a Bcom Honours student at University of South Africa takes her hat off to those who made and took part in the successful completion of this research study, known and unknown, friends and colleagues, gentle critics, my supervisor Mrs A.T. Mutezo and the whole Unisa community. There are far too many to salute individually, but to all of you, I extend my acknowledgements and appreciation wherever you are. You had a greater part in making this research a success and without your friendly, professional and willing co-operation; this research would not have been possible.

Working on this project, I often felt like a mouse hitching ride from elephants. I have been privileged to stand on the shoulders of giants, far too many to name. I am deeply grateful to Research Department of UNISA for enabling me to find the time and resources to conduct this research and particularly grateful to Edward Masemola of Bureau of Market Research. I am also most grateful to the clothing retailers who assisted in this research by sharing their experience with me and giving up their time to be interviewed for the success of this project.

Thanks to all of you!


I declare that “An investigation on how to mitigate risks faced by South African clothing retail outlets” is my own work and all the sources used or quoted have been indicated and acknowledged by means of complete references.


Table of contents

List of diagrams(i)
List of figures (i)


1.1 Introduction 1 1.2 Problem definition2

1.3 Research objectives3

1.3.1 Main objective3

1.3.2 Sub objective3

1.4 Limitations of the study3

1.5 Research methodology3

1.5.1 A literature review 4

1.5.2 Empirical Study 4

1.6 Chapter outlay 4


2.1 Introduction 5

2.2 Abuse of clients by clothing retail outlets6

2.3 The importance of Risk Management 7

2.3.1 The importance of Risk Management 7

2.4 Risk management process 8

2.4.1 Risk Identification 8

2.4.2 Risk evaluation and assessment 9

2.4.3 Risk Control 10

2.4.4 Risk Financing 10

2.4.5 Program monitoring and administration 10

2.5 Proactive risk management 11

2.6 Credit policy 11

2.6.1 Credit selection 12

2.6.2 Credit vetting process 12

2.6.3. The application form...
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