New Horizons > December 2001

Safety and security

Dear New Horizons
In order to secure ECLOF Armenia loan collections, and guarantee the safety of its loan officers, we deal with cash transactions only through banks.

ECLOF Armenia organises regular seminars for clients to explain how to work with banks. We cover procedures for collecting loans and making repayments. This is necessary because most of our clients are peasants and have no experience of banks.

To enable the payment of a loan, group members first nominate one of their number. The cheque for the loan amount is then made out to that person. However, to cash the cheque, at least three of the group members must be present.

Loan repayments are made at the nearest bank. Each client decides which bank to use because the loan amounts involved are not large enough to make robbery a high possibility.

Except for the treasurer, no ECLOF Armenia employee deals with cash. Only a limited amount of money is held in the cash register to pay for those expenses that are too small to make reimbursement through a bank transfer worthwhile.

Tigran Hovhannisyan
Programme Manager
ECLOF Armenia

Dear New Horizons
On the issue of security, the local community is aware that ECLOF Kenya does not handle cash, and this reduces the risk of robbery. Loan disbursements are made within banking halls after prior arrangements with the banks. Clients deposit loan repayments and other fees directly into ECLOF loan collection accounts. The deposit slips are then brought to the office for receipting.

Clients who deposit money on behalf of their group are selected randomly during the group meetings to reduce the chances of ambush on the way to the banks with the money.

Joseph Waithaka
ECLOF Kenya

Dear New Horizons
We in the field do not encourage the handling of cash by credit officers. Members of groups that have received ECLOF loans make their repayments into the ECLOF bank account. We have opened bank accounts closer to our clients to enable them to pay in their money immediately after group meetings. The banking slip is then given to the officer for receipting. We encourage group members to pair up when taking money to the bank to minimise fraud.

Let us hear about the experience of other ECLOF partners.
Jane Nyambu
ECLOF Kenya

Security theory and practice

Dear New Horizons
The concerns over the security of NECs’ resources are very appropriate. Here at ECLOF Brazil we follow a very strict routine that includes the following:

Movement of resources
1. The resources of ECLOF Brazil are either in the credit portfolio or deposited with the Bank of Brazil. This is a state bank with no risk of going bankrupt. Only a small sum of money (presently R$500 per month) remains in the offices of ECLOF Brazil for the payment of small expenses. This is the petty cash.
2. Bank account movements are conducted exclusively by cheque. Two people always sign the cheques.
3. Requests for cheques are made by means of our financial manager computer programme. The password for the operation is restricted to the Executive Director and the managers of each portfolio.

Once the request is accepted, the system issues a document – a cheque voucher – which contains the detailed information required. If there is a problem with the computer programme, the same procedure can be carried out manually. A copy of the order is filed in accounting.

Financial movement with respect to clients
1. No loan disbursements are made in cash.
2. No expenses are paid in cash, except for small expenses paid from petty cash.
3. ECLOF Brazil clients make payments at banks using payment slips provided by ECLOF Brazil.
4. Credit officers do not accept cash from clients. In the case of delinquent loans under renegotiation, clients come to ECLOF Brazil’s office to make their outstanding payments. As many of our Solidarity Group programme members do not have bank accounts, these payments are made in cash. Only the executive director or the manager of the portfolio can accept the money and issue a receipt. On the same day, or the following day if banks are already closed, the money is deposited into ECLOF Brazil’s account. The deposit slip, on which the name of the group and contract number are written, is given to the accountant.

Only one person is authorised to make such deposits. The bank where ECLOF Brazil has its account is 200 metres from its office.

Movement of petty cash
1. The movement of petty cash expenses for a maximum of R$100, are signed for approval.
2. On the last working day of the month, the person in charge of the petty cash enters all the receipts into the financial manager programme, which automatically issues a report to accounting.
3. The petty cash account is closed for the month and the records are given to accounting.

We never transport large sums of money.
Here in Brazil, we know of no type of insurance on financial undertakings of this nature.

If you receive any suggestions on how NECs can improve protection of resources, please notify us. No measure of this nature can ever be considered as excessive.

Elsa Sousa Kraychete
Executive Director
ECLOF Brazil