Transcript
Joy: Welcome to SACCO Management — practical ways to run a healthier SACCO. I'm Joy, and with me is James. Today: managing delinquency, with PAR and recovery.
Joy: James, start us off. What is delinquency?
James: It's when loan repayments fall behind schedule. A few late loans are normal, but if you don't manage them, they spread, and they quietly eat your income and your members' savings.
Joy: And PAR — that's the measure everyone talks about.
James: Portfolio at Risk. It's the outstanding balance of loans in arrears, divided by your total loan portfolio. Always say the days — PAR30 means loans more than thirty days late. The golden rule is to track PAR30 and PAR90 together.
Joy: Why both?
James: Here's the insight. If PAR30 is falling but PAR90 is rising, it's not good news — it means loans are aging through the buckets without ever being resolved. They're just getting older and worse. Watching only one number hides that.
Joy: What's a warning level?
James: A PAR30 above ten percent should worry you. That's the moment to dig in.
Joy: Why does early action matter so much?
James: Because a late loan rarely fixes itself. Day one of arrears, a member might just have forgotten. Day ninety, the money's often spent and gone. The cost of waiting is real — you have to set aside provisions against risky loans, that capital is locked up, and a non-paying loan earns no interest while you still owe your savers.
Joy: So what does good recovery look like?
James: Think of a ladder. First rung, a reminder — a call or message the moment a payment is missed. Second, a visit — sit with the member, find the cause, agree a plan. Third, restructure — reschedule the terms, but only if there's genuine ability to repay. Don't just push the problem down the road. Last rung, call on the guarantor or the collateral.
Joy: Give us an example.
James: A member misses a payment because their harvest came late. A same-day reminder and a short visit reveal it's a timing issue, not a refusal. You agree a revised date, and it's recovered cleanly. Now imagine no one called for three months — same member, much worse outcome.
Joy: So prevention beats recovery.
James: Always. Strong appraisal up front stops most defaults before they start. Then monitor weekly, not at month-end. In CAMS, loan reports surface PAR and arrears aging, so you see trouble while it's still small.
Joy: One takeaway, James?
James: Watch PAR30 and PAR90, act on day one, and follow the same recovery ladder every time.
Joy: Brilliant. Thanks, James — and thanks for listening to SACCO Management.