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.

Guest Blog by Bill Dunlop, Managing Director of Tower Associates - On the edge of a precipice'

The ICM joined forces with P&A Receivables, Experian, AON, and Tower Associates to run an event in London last week looking at practical implications of the Eurozone crisis. I thought - since this was so topical - I'd ask Bill Dunlop, Managing Director of Tower Associates to share his thoughts, and here they are:

"Since early December 2011, I have been working with partners to facilitate a series of workshops to examine the effects of single or multi-country exit from the Eurozone. The purpose of the workshops was to best acquaint our clients with economic, political and social events as they unfolded and what impact country exit would have on operational credit management for businesses having outstanding debts in those countries. They were also to afford the opportunity of considering the areas of operational concern and develop the template of a plan to be implemented in the event of exit occurring.

Despite these workshops being informative, well attended and generating intelligent debate, I am extremely concerned that the rapid deterioration of the economic, political and social situation is not being matched by heightened company awareness, planning and creative thought in response. Since December, the balance of economic prediction has shifted from probable Greek recovery to likely Greek exit within 12 to 18 months. In my opinion the combination of social and political unrest will accelerate this exit and we will be faced with the immediate and predicted 50 to 60 percent depreciation in the new currency. The effect of this on companies trading in Greece will be significant but, possibly because of the size of its economy, in most cases may be manageable. However, many of the pressures faced by Greece are closely mirrored in Portugal, Spain, Ireland and Italy. My greatest fear is that the Greek exit will create contagion to such a level that some or all of these other counties will follow and operate their own currency or effectively create a two tier Eurozone; either way, we will be faced with considerable depreciation of their respective currencies in those.

The effect of this on operational credit management would be close to catastrophic and there are compelling questions, as professionals, we would have to give consideration to before the event -

* Are we likely to be asked for debt forgiveness to the value of the depreciation? Most probably yes!

* How do we quickly 'stress test' our account portfolio to establish that it remains economically viable?

* How do we structure our bad debt provision in response?

* Could our customers invoke 'force majeure' to avoid payment of existing debts?

* Where possible, how do we operate more effective control over our stock in term of repatriation of existing stock or enhanced protection of future stocks?

* What future instruments of security or insurance may be available?

* Does our existing insurance cover this eventuality? Most probably not!

* Should we or can we be considering converting older debt to long term debt or customer loans?

Hopefully, I'm being overly pessimistic, but I think it's better to address these questions before the hypothetical event, rather than after the actual tragedy."