BVDC

AN ANALYSIS OF THE BUDGET POLICY AND CONTROL OF A NON-STOCK AND NON-PROFIT EDUCATIONAL INSTITUTION 1
CHAPTER 1
INTRODUCTION
Preface
The start-up game is a risky business, and for many entrepreneurs navigating the
competitive landscape and securing the funding needed to survive is a significant hurdle
that isn’t easily overcome. The truth is, there is a limited amount of funding available to
start-up founders and innumerable new ventures born every day that will be competing
for it.
To raise the money to finance these activities, many of them go to lending firs instead of
the commercial banks. This is because lending firms are more lenient in their
requirements, offer lower interest rates, and process loan faster. Many entrepreneurs set
up a lending business to take advantage of thus demand for easier credit.
SPCBA RESEARCH CENTER

Today’s lending company in the Philippines differs in their credit and collection policy.
Having an effective credit and collection policy also means the money of the entity are
being circulated properly.
The objective of this study is to provide an improved and effective credit and collection
policy. This is to provide the entity a proposal that will help them to avoid collection
related problems in the future.
Company Profile
Baclaran Vendors Development Cooperative was organized as an off shoot of the
problems encountered by the stallholders at the Mariano Nocom Maarket who were
informed to vacate their stalls for the purpose of renovating the said market, but later on
found out that the management of the said market has no-intention of restating their stall
rights. Since vending is the only source of their income they need to look for new stall or
market but unfortunately because of lack of capital, most of the stallholder dispersed and
majority became vendors in the flea market because no financial institution like bank trust
on them in granting loan as their fresh capital. So they become victim of so called FIVE-

SIX(5-6). Since 5-6 has high interest rate, it become a burden to the vendors because most
of their income goes to the high expenses of their borrowings. There were times that they
cannot send their children to school because of low income.
With the help of the so called CUATRO CANTOS, they organize the vendors and informed
them that for them to uplift their living and not to become victim of high financing they
need to form a cooperative. In a week time, 250 vendors attended the orientation and
agreed to became a full pledge registered cooperative in 1977. It was organized for the
purpose of serving the common needs of the small vendors affected by the demolition of
the above mentioned market who are continuously needing capital and fall victims of loan
sharks or money lenders conducting business surrounding the Shrine of Our Mother of
Perpetual Help popularly known as the Redemptorist Church.
Their initial capital come from the Php. 100.00 share capital contribution of 250 vendors
and some of them gave Php. 200.00 and they collected a total amount of Php 34,000.00
as the initial capital of the cooperative. All vendors/members of the cooperative
encourage themselves not to patronize the loans sharks or 5-6 and let the cooperative
provide them their capital needs. They also encourage all members to participate in the
capital build-up and since then the cooperative eventually improve their lives. They can
send their children to school and because of the cooperative they have now legitimate

stalls. It brings impact to the community and the reason why majority of the vendors in
Baclaran joined the cooperative.
In the early 80’s, BVDC was one of the fastest growing cooperative in the country. Having
Php 700,000 share capital in 1980 it became Php 3.5 Million in the next two years. In 1986
it acquired its own lot and built a 4 story building. At that time only few cooperatives have
established its own building came merely from the share contribution of its member and
BVDC is very proud of it.
From there BVDC expands its services to its members because aside from providing loans
to members for productive and providential purposes, it provides stall and space rental
and storage facilities for the first and second floor of its own building.
Now, Baclaran Vendors Development Cooperative accepts membership from the
community in the whole area of Baclaran, including its nearby areas wherein the services
of BVDC can accommodate them, especially those individual entrepreneurs who need
additional capital for them not to become a victim of high financing institutions.
BVDC also provides benefits to its members like Damayan Program, Hospitalization
Program, and Health Care Benefits. On this Health Care Program, the member, including
his immediate family can avail unlimited check-up at BVDC’s own clinic located at their

building. The BVDC is also now a partner of PHILHEALTH, SSS, and PAG-IBIG Home and
Mutual Fund not only as an agent but also by helping its member in facilitating their
membership. The Cooperative also introduced the educational savings, wherein the coop
helps its members to assure for the education of their children. BVDC also enter in market
management in which the cooperative acquires other markets for its members. They
acquire a new market located at Bayanihan Street that can serve 86 stalls for their
members. This is the start of their goal to provide stalls for all of their ambulant members.
The cooperative also provides car loan and property acquisition loan. It also open Salary
Loan to non-entrepreneur or salary based members for their provident needs and help
them to start business by providing livelihood trainings and initial capital. With these new
services we can say that cooperative is the wealth creations of its members.
The cooperative as part of its social responsibility and concern for the community is giving
‘Pamaskong Handog’ to more or less 500 indigent residents of Baclaran and nearby areas
yearly, aside from conducting Free Medical, Dental and Optical Mission during its
anniversary. BVDC is also extending relief goods and assistance to victims of calamities
and tragedies. BVDC is also a partner of Barangay Baclaran in their Health Program and
one of them is the Regular Feeding Program and sponsoring and funding 60 malnourished
children for one year.

The cooperative is extending livelihood programs not only to its members but also other
interested parties within the area of operation through sponsorship of livelihood,
technical trainings and education. On the past three years, the cooperative has numerous
livelihood trainings like Hair cutting, Soap Making, Basic Reflexology, Candy making,
Urban Gardening and now Flower Arrangement/Business is on the process. These
trainings are with coordination with the Paranaque Livelihood Resource Management
Office. The Basic Reflexology has certificates of graduates from TESDA.
Cooperative is the number one partner of Barangay Baclaran in uplifting the way of living
of its constituent. As a matter of fact, BVDC has a set in Barangay Development Plan and
it is active in supporting Barangay Projects.
BVDC has also lots of sponsorship and supports on the youth and other groups and
individual like donations, solicitations, and gift giving.
BVDC also promotes cooperatives on youth especially in Baclaran. It gives “alkansya” to
students in Baclaran to encourage them to save for their future. It conducts contests like
essay writing contest, poster making contests and other to all schools in Barangay
Baclaran to enhance and explore the talents of the students every three years.

BVDC is very active in promoting the cooperative in the city of Paranaque. All activities
that need support of the cooperative, BVDC is always present.
BVDC is one of the initiator or incorporator of different secondary cooperative like
NAMVESCCO, PQFCC, PQCUC, and Surety Fund.
Now cooperative has 315 Million in Assets with 6,018 members or a ratio of around Php
52,300 per member (average). The cooperative also expands its operation with two
satellite offices located in Pasay and Zapote, Bacoor and aims to add at least 1 new office
a year.
Mission Statement
Baclaran Vendors Development Cooperative is committed to utilize the cooperative
resources, strengthen advocacy and good governance thru capability building to attain
total human development.
Vision Statement
A strong and viable cooperative that respond to the socio-economic welfare and
development of its member and community.

Research Issue
During the visit of the researchers to the principal place of the business some problems
have been observed. Some of those are;
1. The cooperative shows lack of adaptation of new technology needed to provide much
better service to its members.
Their traditional way of recording the current loans and collections is not efficient. We
observed that they do not recognize the more accessible way of data gathering and
presentation of records if they use modern technology.
2. Not all members are being reached.
Relates to their way of communication which is via phone calls, they are really having hard
time to reach members because not all of them are responding. And even the exact
location of the cooperative is not easy to locate, especially if you are not familiar to the
place.

3. Effect of weak supervision.
Each collectors and members have their own booklets which serves as their proof if one
member fulfill their obligation to pay for their own credits. The collector will sign it with
the use of ballpoint pen which can forge by the member. We discovered that the bylaws
of the cooperative is only for formality which causes the internal control weakness.
4. Over exposure to loan.
It is one of the common issues of a cooperative. They are offering extreme loads of
loans which we think they can accept but they can’t supervise because of the amount
of needs of people who are residing to Barangay Baclaran.
Focal Issue
As from the above researches, we chose the first one which is The cooperative shows lack
of adaptation of new technology needed to provide much better service to its members.
The main problem with this study is Baclaran Vendors Development Cooperative do not
focuses on the new method of acquiring datas and filing records. Having said that, it
would bring more cost and more time to do work, it also need more manpower to

accomplish things. The researchers believe that the cooperative needs to adapt new
technology, as a modern technology really helps in maintaining the efficiency and
effectiveness of everyday duties. To achieve this, they should invest in people who are
willing to upgrade their knowledge about the technology. Because we believe that they
do not need to start with the technology, but with the people, instead.
Scope and Limitations
The study was conducted to evaluate the proposal of improving the credit and collection
policy for Baclaran Vendors Development Cooperative. The purpose of an improved credit
and collection policy is to establish an easier and effective way of recording payments to
the collector.
The scope of this study is as follows:
1. A system that will be used for managing money owed by the vendors
2. A system that will be used to improve cash collection
3. A system that will help the entity to keep track of all the collection balances and
possible uncollected receivables from the customer.

The limitations of the researchers were bound on time, expertise, the availability of the
sources and resources. Thus, the outcome of the results has been based on the accuracy
of the gathered information and knowledge of the researchers.
Definition of Terms
The following terms have been used by the researchers throughout the conduct of the
study:
Credit. Money loaned.
Collection. The act of receiving payment for goods and services. It occurs on the spot in
cash sale while it may occur some weeks of even months later in a credit sale.
Loan Receivable. It contains the current balance of all loans owed to it by borrowers. This
is the primary asset account of a lender.
Interest Income. The interest earned on money loaned.
Share Capital. The value of issued shares which have been paid for.

Statutory funds. It is a fund established in the records of a life insurer and relates solely
to the life insurance business of the life insurer or a particular part of that business.
Investment Property. Land and/or buildings held to earn rentals or for capital
appreciation or both.
Accrued Expenses. Expenses incurred in one fiscal period but not paid until a later fiscal
period.
Cash and cash equivalents. The value of assets that can be converted into cash
immediately, as reported by a company. Usually includes bank accounts and marketable
securities, such as government bonds..

CHAPTER 2
REVIEW OF RELATED LITERATURE
This chapter presents foreign and local literature taken from the internet, and studies
conducted by other research groups. The researchers wanted to help the cooperative for
the said problem, so here are some foreign and local literature reviewed that will
contribute a deeper understanding for each researcher and an essential in enriching the
knowledge of the researchers.
Review of Related Literature
According to Kogitas (2018), a smartphone is now a ubiquitous gadget of modern life and
this offers a great opportunity for a more effective collection process. Many people have
their phones with them nearly round-the-clock which increases the likelihood of contact.
Access to mobile payment apps means that payments can be actioned at the moment
which increases the likelihood of successful collection.He also stated some of the benefits

of using mobile apps in the collection process. First, Working On The Go. Debt collection
apps allow employees to work anywhere and anytime as collection related information
can be exposed to mobile phones and tablets. This allows collectors to be more
productive if they are out of the office for onsite account visits or have flexible working
arrangements. Second is Mobile Reporting Gives More Power To Staff. When staff has
more information and data at their fingertips, any industry is destined to be more
efficient. With mobile technology, staff uses a mobile device to share key information
with their customers in face-to-face meetings. No more shuffling through paper printouts
or navigating through spreadsheets! Next, Individual Account Management. A mobile app
will allow you to display and update individual account information quickly and
securely.Next, Debt Collection Via Payment Apps. The use of a mobile banking apps or
payment apps can assist when collecting outstanding debts from consumers. There is no
need to visit the bank, log onto a website, or ‘put the cheque in the mail’ as consumers
can make payments from their mobile devices. Lastly, Messaging Is The New Form of
Communication
There is now a generation of debtors where ‘messaging’ is a more common method of
communication than using a phone to make a voice call or sending an email. If you are

chasing debt from a generation that is mobile-centric then it is likely that you will need to
contact them using more modern forms of communication.
The rise of cryptocurrencies – both the number available as well as the financial returns
– have dominated the financial headlines in 2017. However, underpinning the various
digital currencies is blockchain technology. In 2018 the news is becoming more about the
application of the underlying technology to industries other than currencies. How can
blockchain technology be applied to the collections process?
The present way that credit card companies and banks store personal customer
information isn’t transparent and it’s open to hacking. In contrast, blockchain technology
is decentralized, which means that it’s more secure, harder to hack and more transparent.
This means that it’s a lot easier for collection teams to keep track of what is actually true
– in other words, who has signed and paid for what and when.
This improves customer trust, and it’s an important point. Due to the sheer amount of
personal data breaches in recent years, customers might be wary of providing alternative
methods of payment. Because blockchain technologies are globally distributed digital
ledgers and are decentralized, committing fraud and hacking into a blockchain is almost
impossible without most of its members working together to tamper with the system.
This bolsters their security and can help to build trust among customers.

Blockchain has already been called a “new architecture of trust,” and that’s largely
because, as well as boosting efficiency and eliminating middle men, blockchain
technology focuses on establishing a long-term human relationship between the
company and their customers.
Blockchain can – and is – changing the way that business is performed. Customers have
the power of choice when it comes to getting credit. Peer to peer lending is one example.
Its aim is to establish a peer to peer, digitalized community that has more on-time
payments and fewer loss factors. As this becomes more mainstream it will have a positive
impact on how organizations credit score their customers and reduce the level of bad
debt.
Although some of the above technologies feel relatively new they are starting to be
adopted by many industries. In particular, labour-intensive processes are becoming
automated, customers are expecting more transparency and security, and most people
now expect to be able to work on the go. We believe that a combination of these
technologies will be key in transforming the collection of debt and provide the process a
much-needed makeover.

Review of Related Studies
A lot of research work has already been conducted pertaining to the problem of
recoveries and overdues related to credit collection. A few of them, which the researcher
has come across, are as follows:
A study was made by R.Sivalingam 1 [1970] namely ‘An enquiry into the extent and causes
of overdues in th e agricultural credit societies in Kadanad Panchayat area’. This study
revealed that overdues were due to various factors. The main factors were [i] Crop failure
[ii] Borrowings from money lenders and [iii] Size of the family. A study team was
appointed un der the chairmanship of C.D.Datey 2 [1972] by the RBI in December, 1972
to study the position of overdues at various levels of the three 74 tier cooperative credit
system and to ascertain the causes. It has stated that inefficiency of the management is
one of the important causes for poor recovery and suggested that there should be many
controllable causes, such as timely disbursement of loans, timely recoveries, minimization
of lengthy procedures, etc.

A study by Promila Goel 7 [1984] on the ‘The Managing Problem of Overdues of Credit
cooperatives-An in-depth study of Rajasthan’, highlights tha t the defaulters are mostly
wilful defaulters and the over dues were caused mainly because of weak and inefficient
management of credits by the banks and natural calamities which prevented the
borrower from timely discharge of their loans.
A study by P.T. George and others 8 [1984] on ‘Repayment performance by farmers in
Chenglepet District [Tamilnadu]’ was made in 1984. The main findings of the study were:
[i] Family size influences repayment performance of defaulters and non -defaulters. [ii]
The low caste [Scheduled caste/Scheduled tribe] farmers were compa ratively better in
repaying their loans than middle [Backward caste/Most Backward Caste] and high caste
[Forward caste] farmers. [iii] Old age farmers were more prompt in repayment than young
farmers.
Balister 9 [1984] in his study ‘Primary Agricultural Cooperative credit in Uttar Pradesh,
their progress, performance and problems’ made in 1984, found overdues to be alarming

with the increase in overdue from Rs.43.17 lakhs in 1950 -51 to Rs.10,150.24 lakhs in 1978
-79 due to lack of efforts in collection of loans.
Synthesis
The review of related literature suggests that to make sure that the credit collection
department is working at peak efficiency, the entity should examine the entire process
from top to bottom. When problems are occurring in an area, such as credit management,
it is usually happening because management isn’t aware of those problems and haven’t
taken steps to correct them. Identifying and repairing those problem areas results in a
more efficient credit management and collection process. All the information listed as
related studies and references are both beneficial to the researchers in conducting this
study. Furthermore, a good credit control policy and procedures is an essential
component of the company strategy and it is very important as the sales and profit of the
company. Therefore, the credit control policy should be well thought and must be fully
support though out the company.

CHAPTER 3
METHODOLOGY
This chapter discussed the approaches and techniques the researchers used when
collecting data. These include the research design, data gathering procedures and data
processing method.
Research Design
In order to gather the necessary data, the researchers used the descriptive method. It
was a method of collecting information by interviewing some of the staffs of the
cooperative and observation through some of their cooperative performances. In this
study, the researcher chose this design because there are questions with regards to
their policies and rules inside their company which could bring effect to the cooperative
development. Researcher's questions that have been directly asked the interviewees,

the cooperative staffs, was answered properly. Hence, the researchers believe that the
answers are true and are reliable.
Data gathering procedure
We, researchers, collected credible and well-founded source to accumulate data. We
talked to the Chief Executive Officer, Mr. Sonnyboy Regencia, who is known personally
by one of the researchers. We start asking for permission then as soon as we are
approved to enter the premises we start asking questions directly to the Head of the
Accounting staff and other reliable people inside. Though interviewing can be more time
consuming, there is an absolute and plausible result to gather data.
Data processing method
After we obtain sufficient information, we arrived at summarizing all data acquired and
understanding more of the objectives of the research study. The qualitative research

method is done by interviewing the subjects considering the perceptions of our target
audiences. Also, we manually processed all data from raw information gathered to
produce output in a way to show the complexity of all data.

BVDC

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AN ANALYSIS OF THE BUDGET POLICY AND CONTROL OF A NON-STOCK AND NON-PROFIT EDUCATIONAL INSTITUTION 1

up a lending business to take advantage of thus demand for easier credit.

SPCBA RESEARCH CENTER

being circulated properly.

related problems in the future.

Baclaran Vendors Development Cooperative was organized as an off shoot of the

SPCBA RESEARCH CENTER

cannot send their children to school because of low income.

Perpetual Help popularly known as the Redemptorist Church.

as the initial capital of the cooperative. All vendors/members of the cooperative

SPCBA RESEARCH CENTER

Baclaran joined the cooperative.

BVDC is very proud of it.

Now, Baclaran Vendors Development Cooperative accepts membership from the

SPCBA RESEARCH CENTER

children for one year.

SPCBA RESEARCH CENTER

interested parties within the area of operation through sponsorship of livelihood,

Urban Gardening and now Flower Arrangement/Business is on the process. These

Office. The Basic Reflexology has certificates of graduates from TESDA.

it is active in supporting Barangay Projects.

individual like donations, solicitations, and gift giving.

BVDC also promotes cooperatives on youth especially in Baclaran. It gives “alkansya” to

SPCBA RESEARCH CENTER

that need support of the cooperative, BVDC is always present.

BVDC is one of the initiator or incorporator of different secondary cooperative like

NAMVESCCO, PQFCC, PQCUC, and Surety Fund.

Baclaran Vendors Development Cooperative is committed to utilize the cooperative

total human development.

development of its member and community.

SPCBA RESEARCH CENTER

have been observed. Some of those are;

better service to its members.

presentation of records if they use modern technology.

2. Not all members are being reached.

SPCBA RESEARCH CENTER

3. Effect of weak supervision.

4. Over exposure to loan.

of needs of people who are residing to Barangay Baclaran.

SPCBA RESEARCH CENTER

technology, as a modern technology really helps in maintaining the efficiency and

Scope and Limitations

The scope of this study is as follows:

2. A system that will be used to improve cash collection

possible uncollected receivables from the customer.

SPCBA RESEARCH CENTER

of the gathered information and knowledge of the researchers.

Credit. Money loaned.

is the primary asset account of a lender.

Interest Income. The interest earned on money loaned.

SPCBA RESEARCH CENTER

immediately, as reported by a company. Usually includes bank accounts and marketable

securities, such as government bonds..

SPCBA RESEARCH CENTER

REVIEW OF RELATED LITERATURE

knowledge of the researchers.

Review of Related Literature

SPCBA RESEARCH CENTER

or navigating through spreadsheets! Next, Individual Account Management. A mobile app

There is now a generation of debtors where ‘messaging’ is a more common method of

SPCBA RESEARCH CENTER

contact them using more modern forms of communication.

blockchain technology be applied to the collections process?