Weekly Blog by Philip King, CEO of the ICM - 'EU directives, Eire misery, and meaningless forecasting'

Having recently returned from a meeting of FECMA (the Federation of European Credit Management Associations) in Paris, it's interesting, as always, to catch up with my colleagues and share their experiences. There was much animated conversation about the new EU Late Payment Legislation, particularly with French and Spanish delegates who now have real experience of domestic legislation that sets a statutory limit on payment terms of 30 days. I accept this is anecdotal rather than hard scientific evidence, but their views are crystal clear: the legislation hasn't made the slightest difference.

They found that businesses experiencing late payment are still reluctant to take action against their customers for fear of upsetting them and losing future contracts. There's a lack of real knowledge about how the legislation should be applied, and businesses that want to exploit their suppliers will find a way of doing so, legislation or not!

The legislation will still be some time coming; there are nearly two years before the Directive has to be implemented by member states. We need to use that period to explore long and hard how we might further improve payment and business culture across the UK. I have a meeting with Mark Prisk, Minister for Business & Enterprise, next month and this is one of the subjects that I plan to raise. I've already highlighted the failings of the Directive, but let's see if some good can come of it.

Meanwhile I note that the latest Bank of England Inflation Report, published under the guidance of the Monetary Policy Committee, has some almost amusing words in its overview which ends: "...the chances of inflation being either above or below the target by the end of the forecast period are judged to be roughly equal."

I understand the complexities involved in putting such reports together, and the challenges in making accurate forecasts. But am I alone in thinking that experts should at least have a view? This just feels like a classic case of 'hedging your bets' or 'sitting on the fence' to me!

And finally, over to Ireland - metaphorically, not physically! What a sorry story, and a worrying one too for the people who live there, the businesses that trade there, and the businesses that trade with it.

I've been saying consistently to anyone who will listen that businesses in the UK are underestimating the negative impact of our public spending cuts. But I fear the pain we're going to feel is incomparable to the misery that our neighbours now face.

Weekly Blog by Philip King, CEO of the ICM - 'Uncertainty demands quality' -

At the start of the week, Vince Cable and Mark Prisk announced a new 40,000-strong network of business mentors as part of their Global Entrepreneurship Week: http://bit.ly/cSbrsp. The rationale, they said, is that the best people to advise new entrepreneurs and existing businesses are those who have already started and run successful companies.

The ambition is to nurture new talent as well as increasing productivity and growth among existing businesses. It is a laudable ambition, and I am hesitant to pour cold water on what appears to be a compelling proposition. My concern, however, is how they are going to make it work in practice? It is a legitimate concern, but should not stop us as an Institute from engaging with the programme and encouraging our members to add their considerable skills and expertise in cashflow management.

Elsewhere I note that Graeme Leach, Chief Economist at the IoD, is predicting that "...after a very abnormal recession it would be foolish to rule out the possibility of a very abnormal recovery as well." http://bit.ly/aLz8Q7. It will be interesting to see if he is proved correct. What it does prove, however, is that there is still plenty of uncertainty ahead of us which makes the contribution of professional credit managers even more important.

This week has been a good one for Cabot Financial, and I was delighted to present their Chief Executive and the management team with the Quality in Credit Management (QiCM) Award. It is significant for many reasons, not least of which being that this is the first award to be given to a business in the debt purchase sector. It's an impressive company with clear focus on its people, on customers and quality. They are to be congratulated on all that they have achieved. http://bit.ly/6uVCxM.

'Storm clouds brewing' - Weekly Blog by Philip King, CEO of the ICM

It has been yet another busy week, starting with the award to Geopost of its QiCM accreditation, an accreditation that the team had to work hard to achieve. In these challenging times, when good credit management is needed more than ever, it is pleasing to see (and present the award to) a team that is so focused, so enthusiastic, so organised and so committed and - as a result - is delivering real value to the organisation.

It has also been a week of much discussion, from the analysis of the ICM Technical Committee into the latest consultations and technical issues that affect credit professionals on a practical and day-to-day basis through to the round table with Bacs, agreeing - and disagreeing - about the issue of late payment and how it can best be addressed.

There was a similarly healthy debate at an event hosted by Hays where I was able to share my passion for all things 'credit management' with about 70 professionals eager to listen, discuss and share about issues that affect their everyday working together to create a single credit 'community'. I know I've said it before but this community is a really important element of what we do.

Finally I note that new figures suggest insolvencies and personal bankruptcies are falling - http://www.bbc.co.uk/news/business-11701334?utm_source=twitterfeed&utm_medium=twitter on the face of it this is good news, but I'm not changing my long held - and often stated - view that we're still in a lull before a horrible storm. I remain convinced we're going to see a surge in corporate insolvency, for a number of reasons including: the tightening up of the HMRC deferred payment scheme is going to leave businesses having to find cash; as the economy starts to recover, the need for cash is going to increase and, historically, insolvencies have always risen as we've come out of a recession; and lastly that the impact of the public sector cuts (as previously discussed here) is going to be far worse than many realise.

Weekly Blog by Philip King, CEO of the ICM - 'Ignorance is damaging'

I was in illustrious company earlier in the week when I was invited as one of the leading business organisations to the Small Business Summit at the Department of Business, Innovation and Skills (BIS) - http://bit.ly/9mG8bs.

Vince Cable, Mark Prisk, Lord Young, Francis Maude and Grant Shapps were all in attendance and lending their support to an initiative that has three key commitments to small business: to improve access to finance; to make it easier to do business with the public sector; and to allow social tenants to start up their business at home.

It is encouraging that the Government is working hard to support small businesses; they are clearly going to be key to the recovery. But such efforts are only going to work if businesses are aware of the initiatives in the first place, and know where they can go for help.

One of the long-standing criticisms of the EFG (Enterprise Finance Guarantee) Scheme, for example, is that small businesses, banks and business organisations have seldom known enough about the scheme, and its details, with the result that demand has been depressed. Similarly, banks have many products to help small business - not just the ubiquitous overdraft - but these businesses either don't understand them or have never been told what other products may be suitable.

That ignorance extends to understanding the basic principles of cashflow management. Business owners, and especially micro business owners, are too busy making sure their businesses survive to worry about getting - or even looking for - advice, even when that advice is the very stuff they need to stay in business!

There have now been more than 185,000 downloads of the ICM's Managing Cashflow Guides. These numbers are very encouraging, and we are rightfully proud of what we have achieved to date. But we have to balance this success with the fact that there are 4.8 million small and medium businesses in the UK that employ less than 250 people, and when we compare our downloads to the potential target audience, there is still much work to be done.

Government needs to make a concerted and focused effort - including working further with organisations like the ICM - to educate businesses and make them aware of the basics that will sustain them into the future.

http://www.creditmanagement.org.uk/bisguides.htm

http://www.icm.org.uk

http://twitter.com/philipkingicm