Weekly Blog by Philip King, CEO of the ICM - ‘Making a Difference’

This week has seen the quarterly meetings of the ICM's Advisory Council and Executive Board, and the regular forum of our Regional Representatives. We're into the second year of our governance cycle and that fact, together with a recent conversation with the editor of our Credit Management Journal, have made me think about the need for people to get involved in things.

 

Sean was telling me he'd decided to stand for election to a committee of his professional association (within the world of public relations) and questioning whether he'd be able to make a difference. My response was that he'd certainly make more difference if he stood than if he didn't, assuming of course that he was successful in the election! Stating the obvious I know but true nonetheless.

 

The reality of course is that organisations like the ICM depend on volunteers for effective governance and so much more. The willingness of individuals to give up their time and brain power is both valuable and vital. Seeing our governance in action this week has reminded me of how big a contribution they make. At times our members who get involved locally and/or nationally must question whether they make a difference but trust me they do, and their contribution and commitment are invaluable. Locally they run our network of regional branches and nationally they influence and shape our direction and strategy. In both cases they are enriching the ICM credit community and making it more powerful.

 

The countdown to next year's elections is some months away yet but let me plant a thought in the minds of those who might want to make a difference. My message is simple: when you see the invitation to stand for election to our Advisory Council early next year, please don't assume it's directed at someone else. It could just be your chance to make a difference!

Weekly Blog by Philip King, CEO of the ICM - 'Stepping out of the bath'

After the good personal news I shared in my blog last week, there's been some heartening news on the economy this week.

The CBI's latest quarterly poll shows that the services sector, which accounts for two thirds of the UK economy, is growing at its fastest rate for six years. Last week, the Office for National Statistics lifted its second-quarter estimate for GDP growth from 0.6 per cent to 0.7 per cent. The EEF, the manufacturers' organisation, said that for the first time more members were reporting that the cost of new borrowing lines was falling than those reporting it was rising. The Bank of England's Deputy Governor suggested the Bank was sending a 'clear signal' that interest rates would not be raised any time soon reiterating the commitment made early in his reign by the new Governor Mark Carney.

 

The editor of our own magazine, Credit Management, drew attention to a number of other positive indices in his column in the September issue which hit doormats at the end of last week so perhaps the CBI is right in interpreting their numbers as evidence of a further build-up of momentum. Certainly, the conversations I'm having with businesses and organisations suggest an underlying sense of confidence that was missing a few months ago.

 

Few people seem to be overly buoyant but they do at least seem to  be moving from A glass half-empty to glass half-full mentality. In the early days of this recession when the debate was raging as to whether it would be V or U shaped, I remember one economist saying it would be bath-tub shaped, with the economy bouncing along the bottom for a prolonged period. It was a description I shamelessly stole and has proved to be pretty accurate.

 

I don't think we're off the bottom yet but I think we're looking upwards now rather than constantly looking behind us, and it does feel like momentum is building. Knowing how important confidence is to achieving recovery, let's do our bit by talking ourselves out of the bath tub.

Weekly Blog by Philip King, CEO of the ICM - 'New Directive leaves authorities doing the maths'

So, the deadline for transposition of the EU Late Payment Directive 2011/07/EU finally arrives this Saturday and the UK government has met the deadline and even issued a Users’ Guide that can be found here.

 

I don't want to go into great detail about the Guide, Directive or Statutory Instrument here, but one paragraph in the Guide has really caught my attention. The paragraph in question within the 'Payment between public authorities and business' section says: ‘If you are a Public Authority..........If you do not pay within the deadline, you are obliged to automatically pay the outstanding amount that includes daily interest for every day payment is late based on 8 percentage points above the Bank of England’s reference rate plus the fixed amount, depending on the size of the unpaid debt. The onus is on you to pay your supplier on time and the supplier is not obliged to remind you that payment is outstanding."

 

The public authority customer is therefore expected to proactively recognise that it is paying late, calculate the late payment charges/interest and add the amount to the remittance regardless of whether the creditor asks for the amount or not! Now, I don't want to be a cynic but what are the chances of this actually working in practice? I can see all sorts of issues and difficulties: how, for example, are authorities going to know they are expected to do this? Who is going to make the calculation and approve the additional payment? How is the increased value going to be matched to the original purchase order? I'd be interested to hear views from readers with their opinion of how they see this working. Please email me at ceo@icm.org.uk or go to the ICM Credit Community LinkedIn group, or the Discussion Forum on the ICM website members area’ and let me know.

  

Finally, I have to mention Start-Up Loans. I'm privileged to have been involved on the Board of the company since its launch and I'm incredibly proud of its success as demonstrated by the announcement this week that the scheme has exceeded expectations as 2,000 aspirational young entrepreneurs have now received support (a loan supported by mentoring) to help get their business venture off the ground. The scheme has already reached its £10 million pilot spend, and a further £5.5 million injection of funding was approved this week in Parliament to fulfill its pipeline until the end of the month. The Government has made £117.5 million available to fund the Start-Up Loans scheme up to 2015. Amidst all of the sometimes dubious schemes our government has come up with in recent times, this is one where it appears to have got it right.

Weekly Blog by Philip King, CEO of the ICM - 'Tangible examples of best practice'

One of my most enjoyable tasks is presenting the ICM's Quality in Credit Management Award to companies that have achieved the challenging accreditation. And it is happening with increasing regularity: we now have 29 accredited organisations and many more underway. This week I was privileged to present the award to the team at Venn Group in London.

Every organisation I visit is a demonstration of best practice but one thing in particular stood out for me at Venn Group: the way in which credit management practice and principles are integrated into the entire business. At the presentation of the award, the owners of the business and directors from every function were present and it was apparent that credit management isn't just a function within the business. Rather, cashflow is recognised as vital and every activity across the organisation from those who acquire business onwards recognises the importance of contributing to its management and control. I often talk about the importance of credit management sitting at the heart of the business and it's great to see a tangible example of it in practice.

 

On Monday, I presented at the launch of the ICM's partnership with Bank of America. The partnership is ground-breaking in the way it has been created. It will deliver an opportunity for all members of the Credit Risk Management team to develop skills, gain qualifications, and contribute to the validation of the quality of its operation. The excitement, passion and commitment of the team in Chester was fantastic to see and truly inspirational.

 

It's been another great week and I'm trying hard to forget the fact that I had to decline an invitation to Buckingham Palace on Monday for an event hosted by the Duke of York to launch the Start-Up Loans Company Ambassadors Scheme!

Weekly blog by Philip King, CEO of the ICM -'An added perspective'

I wrote in my blog last week about the danger of imposing prescriptive maximum payment terms on UK businesses and mentioned, by way of example, the reported offering by Canon and Nokia of favourable credit terms in their bid to keep Jessops' shops open as a route to market. 

This weekend the press suggested that the music and entertainment industry is falling over itself to keep HMV outlets open with The Sunday Times carrying the headline: "Music giants rush to keep HMV alive". The report ran: "The world's biggest music labels and film studios are assembling a multi-million pound rescue package to prevent HMV from going out of business. Universal Music, Warner Music and Sony are set to cut the price of CDs and DVDs, and give the retailer generous credit terms……."

Thinking on this reminds me of the wider role that credit professionals play in their businesses beyond risk mitigation and cash collection. When I address 'credit' audiences, I frequently remind them of the value they add to their businesses by contributing to, and in many cases even driving, the sales effort and activity. I refer to examples in my own career when I used a variety of tools and tactics (perhaps archaic by today's standards!) available to me at the time ranging from a credit reference agency to identify and pre-approve business customers for a number of mobile phone connections as a way of driving sales, to creative financial packages to allow my employer (a computer manufacturer) to supply product. We had a network of dealers, few of whom were good – on a credit basis – for any supplies on open account terms at all. Escrow accounts, back-to-back deals, end-user guarantees and many more solutions enabled us to ship product that would otherwise have remained unsold in the warehouse.

And this is where credit management comes into its own; where we can demonstrate real value. It is why credit management is such a challenging and rewarding career. In my 34th year as a credit professional I still get a huge kick out of it and even greater pleasure from leading an organisation of which I'm so proud and which remains committed to delivering the vital support our members need to deliver the cash.

Weekly Blog by Philip King, CEO of the ICM - 'A Christmas wish'

I asked a question on the ICM Credit Community group on LinkedIn recently and have had some interesting responses.

 

The question was: if Father Christmas were to bring you one gift that would really help you and/or your team be more effective in 2013, what would it be? There's still time for you to respond at http://www.linkedin.com/groups?gid=94851&trk=hb_side_g but posts so far can be split into three broad categories: practicalities; economic outlook; and professionalism.

 

The first comprises a wish-list including such things as: a crystal ball; a dictionary and thesaurus; more time; a cure for arthritis; better management systems; paying clients; sight of customers' management information; and a tool to force people to tell the truth! The second includes a wish for a steep economic upturn and a positive, optimistic view of the world. And the third, professionalism, covers: the desire for more networking; investment in the recruitment, retention and development of good credit people; and the resulting improvement that such investment delivers.

 

I'm afraid the ICM's ability to deliver some of the aspirations in the first category is limited, particularly in the field of arthritis (a cure for which I would certainly welcome if it were possible) but I'm pleased that our members are able to influence the second through our contact with the business/political community. I'm even more pleased that we're able to play a significant role in achieving the desires expressed in the third.

 

As I've often said in these blogs, we are all about driving professionalism, and developing services to support this ambition. As the recognised standard in credit management, our motivation is to raise the professionalism of people working in credit management by providing them with the opportunity to develop their skills, knowledge, and expertise in such a way that credit management is seen more and more as a profession in its own right.

 

I'll share some more thoughts from the discussion next week and also the wishes of the senior management team at ICM HQ; in the meantime I'm off to prepare for the ICM's Regional Roadshow in Milton Keynes where I'm looking forward to meeting a large number of our members and learn from an excellent panel of speakers.

Weekly Blog by Philip King, CEO of the ICM - 'Stand and be recognised'

I wrote last week about the importance of aspiration and referred particularly to the contribution of ICM members in helping to formulate our aspirations as an Institute. One of those aspirations is to achieve recognition of credit management as a profession in its own right. We want to be able to hold our heads up as equals alongside accountants, lawyers, architects and other professions. In some organisations we do but there is some way to go in others.

 

Two events this week have reminded me of this and of its importance. The ICM was strongly represented at a ‘Dods’ conference on Monday: Tackling Debt Owed to Government. We presented to two breakout sessions, had a stand in the exhibition area, and I was pleased to be able to present to an audience of over 200, mostly public sector employees and management, in the afternoon. My message was simple and clear: if Government wants debt to be taken seriously within the public sector and wants collection to be effective, then Debt Management must be seen as a profession and not simply 'doing a job in the Civil Service'. To achieve that culture shift, the value of the contribution of the role must be recognised, the impact of it being done well must be recognised, and professionalism in the Debt Management teams must be promoted and recognised.

 

Yesterday, I hosted an ICM Regional Roadshow in Exeter that was combined with a Quality in Credit Management Best Practice event. What did I see and hear about there? Professionalism in practice; examples of organisations that are best in breed and demonstrating the very professionalism I'd been talking about on Monday, and an audience of credit professionals who were eager to develop their knowledge and skills so that their contribution could increase and become even greater.

 

If you look up 'professionalism' in a thesaurus, you'll see words like competence, knowledge, and expertise but you don't need to find alternative words. Professionalism means exactly what it says and it's what we're all about.

Weekly Blog by Philip King, CEO of the ICM - 'Meeting the aspiration of members'

Having attended two of the main party conferences in the last few weeks, they all bring home the importance of grass roots support, and understanding your audience. Much of what I saw and heard resonated with our own position: the need to understand our membership, from those just starting out in a career in credit management, to those who might already be at the top of their profession.

 

As I write, I have just heard David Cameron talk about the need for us to become an ‘aspiration nation’, and yet I witness this aspiration every day in talking to our members. Our members aspire to great things, both personally and in their professional lives, and recognise the role that the ICM plays in helping them achieve their ambitions.

 

There is a clear recognition of the Institute of Credit Management as a serious and professional organisation befitting the role of a professional membership body, and this position has been helped significantly by our ongoing engagement with Government and other like-minded professional bodies, and through our consistent profile in the national press.

 

There is recognition too of the importance of our Qualifications, and having a clear career development pathway for credit professionals to support them throughout their years in practice.

 

We recently asked our members what we are doing well and what else we might be doing to even further enhance the value of membership. We listened, and we are acting but the process is constantly evolving. I would like to thank all of those hundreds of members who have taken part so far, and strongly urge those who are currently sitting by the sidelines and watching to take part in the discussion. There are many challenges ahead, but by facing those challenges together, we can be sure that our Institute – and our members – can equally attain the goals to which we all aspire.

Weekly Blog by Philip King, CEO of the ICM - 'Shuffling the pack'

 

I'm always fascinated by arguments about correct usage of words and I was amused by a debate on the Radio 4 Today programme on Tuesday about whether, since the bulk movement of Ministerial appointments was the first by David Cameron, it should actually be called a shuffle rather than a reshuffle. A complete irrelevance but nevertheless quite fun!

 

More interesting has been the debate about the real reasons for the changes and whether they are to achieve policy shifts, to recognise good or poor performance, to change the political spin brought to specific areas of government activity, or simply to change the shape or style of the ministerial team. There are many and diverse views about this, and I suspect the reality is that it is a combination of all four and some more besides.

 

Speaking personally, I'm sorry to see Mark Prisk move from his role as Minister of State for Business and Enterprise. Although I haven't always agreed with him, he is tuned into business and seems to understand well the challenges they face. It will be interesting to see whether Michael Fallon maintains the momentum started by Mark but the inactivity caused by ministerial transition is always frustrating even though it's nothing new and expected.

 

Whatever the motivations for the changes, many issues remain and require resolution, one of which is the amount of debt owed to central government estimated to cost the public purse £7-8billion per year. Earlier this year, the interim report 'Tackling Debt owed to Government' was issued by the Cabinet Office's Fraud, Error and Debt Taskforce and since then the Institute has continued its engagement with the task force and the Debt Expert Panel in identifying how professionalism in debt management across government can be enhanced and improved. As part of that work, we are pleased to be working in association with Dods who are delivering a conference in London on 15 October considering the issues raised by the report, reviewing the activity underway, and looking to the future. If you're involved in working in, or with, the public sector in any way and want to attend, please register here, and I'm pleased to say ICM members can gain a £200 discount from the standard conference fee.

 

 

Guest blog by Tracy Carter, Executive Assistant to Philip King, Institute of Credit Management

I was happy to accept the invitation to be a guest blogger until I realised that my blog would be following Nigel Fields’, a member of the Institute of Credit Management whose blog included the line “I have the best job in the world in ‘the movie business’ at Twentieth Century Fox”!  How do I follow that?  Well, I also feel that I’m lucky in my role; I work as part of a vibrant, enthusiastic and driven senior management team, for an Institute whose staff and members are completely committed to the work of the Institute and the credit management profession.

 

In addition to my varied executive assistant role, I’m also responsible for driving the Institute’s social media strategy.  I am truly passionate about social media, and particularly the benefits of social media as a communication tool for the ICM; our LinkedIn Group (ICM Credit Community) and Twitter account (@ICMorg) are good examples of how we can share what we’re doing, enter into discussions, and listen to credit management professionals.

 

Over recent months I’ve had the opportunity to speak, share ideas and offer advice to organisations, ICM branches, ICM members, and other professional bodies who are driving social media – the common feeling I’ve encountered is nervousness.  My advice is to ignore the nerves – start as an observer – sign up to LinkedIn and Twitter and watch for a while - you’ll soon discover a new world that you may even want to converse with.

 

Social networking is here to stay, and just like the arrival of email, it’s a communication tool that everyone can utilise – it’s happening with or without you! 

  

If you’d like to read Philip King’s weekly blog and other guest blogs click here or visit our Twitter page http://twitter.com/ICMorg.  You can also follow me on Twitter @TracyCarter.

Weekly Blog by Philip King, CEO of the ICM - 'The case of the pickled onion'

I belong to a Vistage Chief Executives Group which provides its members with the opportunity to hear expert speakers, to share issues with other Chief Execs from different unrelated sectors and industries, and coaching. I attended a session yesterday with a workshop on negotiation run by Malcolm Smith.  He was one of the best speakers I've heard and his style, passion and energy were very impressive.  A couple of things seem worthy of mention.

We hear a great deal about large retailers exploiting smaller suppliers by demanding long and extended payment terms, and one of the things I always say is that this behaviour isn't restricted to the issue of credit. Buying power will manifest itself across all areas including credit terms, margin, price, rebates, packaging and so much more.

Malcolm shared a story from earlier this decade about how a supplier in the US was put out of business by the behaviour of a large retailer.  I don't want to go into too much detail here but, in essence, a small supplier won a contract to supply the retailer with its pickled onions which would retail at their almost standard price.  Buoyed by the prospect of massively increased sales, the company expanded by setting up new processing plants and scaling up to meet the expected demand and everything went well.  Two years later, after a process involving merchandisers, auditors (who were on the supplier's site for eighteen months), and procurement experts, the selling price was reduced to less than half and the quantity for that price was increased from a small jar of a few grams to one the size of an aquarium that was too big to carry in one hand and was branded as a 'gallon jar of pickles for $2.97'.  Not surprisingly, we were told, the company went out of business and I guess it's a case of the classic ‘if it sounds too good to be true, it probably is’.

I understand how difficult it must be to resist the demands of a large customer when that customer might be the gateway to a brilliant future but, if the ultimate price is too great, what's the point?  I've been quoted frequently saying that businesses shouldn't just roll over.  First say no, then get back to the table and negotiate what can be obtained in return, before finally walking away if that's the only option.  Accepting business, however good it seems, at suicidal terms can only be a recipe for disaster.

One of the things Malcolm talked about yesterday was the need to have a list of ‘tradables’ that could be introduced to prevent the negotiation being only about price.  I was delighted that one of the key ‘tradables’ on his list was payment terms – "yes, I can reduce the price by x% if you guarantee to pay me within 14 days rather than your standard 30, 60, or 90 days".  The thing he clearly understands that so many businesses, politicians and others do not is that payment terms are as much a part of the overall business transaction as price, colour, delivery or anything else.  When payment terms are left to be discussed after everything else has been put to bed, the only loser is likely to be the supplier!

Weekly Blog by Philip King, CEO of the ICM - 'The real definition of professionalism'

A month ago I started a discussion on the ICM Credit Community Group on LinkedIn asking: "What does professionalism mean to you?" The question generated some great responses that used words and phrases including: fair; knowledgeable; focused; integrity; confidence; experience; seeing the bigger picture; keeping up to date; reputation; experience; considered judgment; ethics; calmness; credibility; and stability.

Yesterday I spent a long day in a London office meeting a series of people who demonstrated professionalism in credit management in the truest sense - they were credible, competent and could obviously apply their knowledge in the real business world. Although not the strict definition, I believe someone displaying professionalism is someone who exudes a sense of confidence in themselves and to those around them. After all, that confidence comes from all the qualities and attributes mentioned above. If I'm going to rely on someone in any walk of life I'm going to want them to be confident in themselves and I'm going to want to sense that confidence when I'm in contact with them.

The ICM in recent times has been particularly encouraging its members to be proud of their professionalism and not to be 'shrinking violets'. Good credit management is vital to the sustainability and success of businesses and we shouldn't be afraid to say so, nor to broadcast the value we add to our organisations. A recent web clipping of a survey by Marks Sattin, a recruitment organisation, shows that pay rises for credit managers averaged 7% last year and were three times greater than those of other accountancy professionals. The accompanying press release talks about the enhanced significance and greater prominence given to credit management and supports the Institute's argument that the contribution of credit professionals is invaluable and indisputable.

Sadly, we all see examples of people showing a real lack of professionalism (including from time to time by their comments and behaviours on LinkedIn discussion forums and elsewhere) but let's make sure that those individuals remain a small minority and that we can genuinely be proud of our profession. If you're an ICM member and want to demonstrate your pride by wearing an ICM Badge, please simply send an email to members@icm.org.uk quoting your correct email address, saying how many people currently work in your credit department, and telling us the single most important thing you value from your ICM membership.

Finally can I remind you that the ICM Member Survey is still open and you can complete it here. We've been overwhelmed by the response to date but the more responses we have, the better informed will be our future planning. Can I also remind you that the latest ICM UK Credit Managers' Index opened this week - so please join the panel and respond here.