Weekly Blog by Philip King, CEO of the ICM - 'The power to make a difference'

I was privileged to chair the 5th National Consumer Debt Conference, organised by Utility Week, in Birmingham on Tuesday. It was a full and interesting day with the order of subject matter judged exactly right.

 

The first section focused on the economic landscape looking at issues around ability to pay, the implications of the current welfare reforms including Universal Credit, and the mechanics of the government's Green Deal scheme. The second section looked at customer management including the use of analytics to identify the most vulnerable in our society, and a cross section of good practice examples of customer-driven strategies. The final part of the conference addressed billing and collections, exploring areas as diverse as fraud and meter-tampering, landlord web-portals, risk management strategies, and smart metering.

 

You'll probably guess from some of the subject matter above that the delegates were largely from the utility and energy sectors where there are some particular credit management issues. The water industry's problems arising from the obligation to supply, and difficulty in identifying customer details, particularly in tenancies, for example, are well known and equally well documented.

What always strikes me at events like this, however, is just how many themes are common across industries and sectors. While each has its own peculiarities, trends, and concerns, the principles and elements of good credit management practice are largely shared.

 

At the end of the conference day, I hosted an interactive workshop where we discussed, amongst other things, what best practice looks like. One of the common themes that emerged was the need to drive professionalism within organisations through the engagement and development of credit professionals within them.

 

Driving that professionalism is one of the key objectives of the Institute of Credit Management and I'm always proud to hear examples of where we're succeeding, and to be playing a part in raising standards and performance as a result.

 

 

 

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 - 'The importance of being individual'

I had the privilege and pleasure of presenting the ICM's Meritorious Service Award to Laurie Beagle earlier this week at one of his forums. For those who don't know, the Institute of Credit Management introduced the Meritorious Service Award in 1982 to recognise people who have made a notable and commendable contribution to national or local Institute activities. Normally, two awards are made each year and the list of recipients includes some well-known and influential figures from across the credit industry.

Laurie is a worthy recipient given that he has been a member of the Institute since 1983 and a Fellow for over 20 years. The credit forums he organises and runs through P&A Receivables play a significant role in building and developing the wider credit community, which is why the ICM is happy to support them, and there are numerous credit professionals who would attest to the help Laurie has given to them in their jobs and professional development.

Reflecting on the award reminds me of how important our individual contributions can be. I often talk and write about the value of good credit management and the importance of professionalism but that professionalism, and the value that accrues from it, comes from individuals and we can all choose whether our contribution and impact on those around us is positive or not. We know the impact of 'one rotten apple' and we will all know people who brighten a room when they enter it, and others who seem to depress the mood by their very presence. This is a bit deep and philosophical for me but I remember being told as a child that I always had a choice as to whether to have a good impact or a negative one.

 

Sometimes we forget the influence we have and those of us who have been around for more years than we care to remember could do worse than remind ourselves of this. I've just resolved to try harder to stay positive and encourage those around me!

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.

Weekly Blog by Philip King, CEO of the ICM - A journey of discovery'

My contribution this week is going to be short and sweet, or perhaps not quite so sweet, and it's about a payday loans company. But I'm not adding to the many column inches and hours of airtime devoted to the subject in recent weeks. Indeed, the OFT's announcement a couple of weeks ago that it has launched a review of the sector makes me think it's best to wait until the outcome of that review is known - and the dust has settled from the publication of the BIS Select Committee's report this week - before adding my two pennyworth to the debate.

My comments relate instead to a story in The Times on 17 February after Cash Converters UK had issued its results for the six months ended 31 December 2011. It said that 'it's nascent lending business had shown a big rise in bad debts' rising from 9% to 11% between 30 June and 31 December. The company said: 'The UK business reviewed its lending criteria in November 2011 and as a result has made certain adjustments to their procedures. This action, combined with the appointment of a new collections manager, should reduce the bad debt percentage going forward. Over time, as the new business matures and our customer information database improves, we would be targeting a significant decrease in the level of UK bad debts.

'Cash Converters appears to have discovered what many of us already know: that tightening lending criteria, having better customer information, and appointing a new collections manager reduces bad debts. While it seems to be stating the obvious, I'm pleased it reinforces my view that professionalism is vital and adds real value. When good practice is applied to policy and process, and good credit professionals are employed, then businesses can only benefit. This is the message at the heart of everything the ICM stands for and drives.

Weekly Blog by Philip King, CEO of the ICM - 'Setting the future agenda'

I attended the ICM's 15th Regional Roadshow yesterday. Held at The Royal Armouries in Leeds, the attendance was excellent and so was the content. Gerry Barron focused on the concept that this is the time for credit managers, whereas James Perry, a solicitor from DWF, talked about what credit professionals can do to improve the chances of recovery in legal action to recover debts. I also shared my thinking about the credit management profession and the professionalism of those working within it.

The event prompted three thoughts to stand out in my mind: firstly, Gerry's statement that credit managers should be setting their own agenda in the current economic times; secondly, that we should be proud of our professionalism and the real value we add; and thirdly, that we should be smarter in the way we communicate to the audience beyond the credit professional.

Gerry worked through an example showing how the profit on a simple debt of £50 was eroded by late payment or, worse, non-payment and set out in absolute terms the impact to the business. The Benchmarker module for ICM Online Services available at: http://www.icmos.org.uk/ has a profit erosion calculator that demonstrates the same realism. It's a good way of making you think, and would be usefully shared with colleagues across our organisations as an indicator in real terms of the value we add. There is, after all, a positive impact to contrast with every negative impact - the opposite of profit erosion is profit generation - and that's where our professionalism can make a real difference!

The first and third thoughts are linked: if we're going to set the agenda, we also need to communicate in the right way and using the right language. All too often, we talk about DSO which means everything to a credit audience and almost nothing to anyone else. I believe strongly that DSO is a good and useful measure, especially on a trend basis, but it's rarely appropriate for a wider audience who would understand alternatives such as the amount of available cash collected for the additional amount of cash released into the business. Guess what, if we use graphs for the last two, an upward line is good news that matches the graphs used by our colleagues in almost every other area of the business. Credit people are, by their very nature, good communicators and a simple, subtle change to language and presentation could generate an exponential rise in the way we're perceived in our own organisations. It's time for us to set our own agendas!

Weekly Blog by Philip King, CEO of the ICM - 'Stating the obvious'

The Tribunals, Courts and Enforcement Act 2007 contained provisions for the regulation of bailiffs and followed a White Paper published in 2003. Since then, I have been to numerous meetings to discuss the issue and the Ministry of Justice has been repeatedly promising a consultation on detailed proposals for a new regulatory regime. When Justice Minister Jonathan Djanogly announced this week the release of updated 'National Standards for Enforcement Agents', he also promised that the Standards are 'the first step towards tackling this issue (unscrupulous bailiffs), which will be followed shortly by proposals for a new regulatory regime.' I'm heartened that at last something seems to be happening but, although I understand the consultation is expected in Spring, I'm always nervous when I see the use of words like 'shortly'. I remember the importance of SMART objectives being used in business and I sometimes wish the public sector would apply the principles by putting a specific and measurable date on actions rather than using vague descriptors like 'soon' and 'shortly'.

Anyway, back to the updated Standards. They can be found here but don't expect to be overwhelmed by their content. Creditors' responsibilities include, among other things, that they should be aware of their own responsibilities, must not seek payment in order to secure a contract, must notify the enforcement agent if the debtor pays or contacts them, and must forewarn the debtor of impending enforcement action. The section 'Professionalism and conduct of the enforcement agent' says they must act within the law at all times, must not be deceitful by misrepresentation, must not act in a threatening manner, should always produce relevant identification, must not discriminate, and a few other similar instructions.

In short, there is little in the Standards that any credit professional or enforcement agent couldn't have written on the back of an envelope if asked to suggest what they should be. As the document says, they are not legally binding, but offered as a 'helpful tool for the industry and for creditors.' As Colin Naylor, Co-Chairman of CIVEA (the Civil Enforcement Association) points out: "these are the Industry's own standards......all the signatories are already committed to the practices and standards contained in the document........and most CIVEA members already publish similar creeds of professional behaviour."

So will they have any effect on 'unscrupulous' bailiffs? I think not, and I wish the time and effort in producing them had been spent on drafting the long-promised proposals for a new regulatory regime so that the consultation can get under way and we can see some real progress.

Weekly Blog by Philip King, CEO of the ICM - 'Being proud to be a professional'

I was at the fifth CCRi Conference this week and what an excellent event it was. With more than 400 credit professionals gathered at the Guoman Tower Hotel in London, it proved a great opportunity to network with colleagues, and provided plenty of learning to take away. I shared a quote I'd seen the night before in my brief comments at the beginning of the day that 'Leadership and learning are indispensable to each other'. How true those words are. Standing still is not an option because, if we don't grow and develop, the world moves on and leaves us behind!

Trevor Williams, Chief Economist at Lloyds Bank ended his keynote speech by observing that the future is impossible to predict because there are 'so many imponderables'. If that's true, and I believe it is, then all the more reason why credit professionals must build their skills and knowledge so they can continue to add value to their businesses and help them survive and prosper. What might have worked well a year or two ago won't necessarily work now and, if we assume it will, we could get seriously caught out. The new ICM CPD scheme currently being piloted, ahead of its formal launch for 2012, is well timed, and so is the continuing progress of our learning and development programme. We're demonstrating our commitment to providing the tools to equip people and make them truly effective, and feedback from our members and potential members attending CCRi on Tuesday was universally positive.

Credit management is a profession in just the same way as accounting or law are professions, and those of us working in it must not be afraid to make that point to our colleagues, peers and bosses. Credit management sits at the centre of the business and touches every aspect of the organisation; now is the time for us to stand up, be counted and show pride in our professionalism.

Weekly Blog by Philip King, CEO of the ICM - 'Tug of war with no winner'

There has been some interesting press comment recently about the tug of war between retailers and consumers. One article talked about supermarket promotions that 'rip chunks out of the manufacturers' profit margins' and are unsustainable. It talked about the impact of declining consumer confidence and the impact of consumers feeling poorer. Although we all like a bargain, the vicious cycle of more promotions and price-cutting chasing more difficult-to-achieve sales is not good news. And there's worse!

We've seen in the last week reports of double digit falls in year-on-year quarterly sales from the major electrical and homeware retailers and analysts saying the outlook is bleak as people grow more nervous about their financial security and put off purchasing decisions. Add this to the recent spate of insolvencies and it's clear that the retail sector is under huge pressure.

But it's not just retail; industrial output is suffering too, and there is an interesting contrast between the UK and Germany. The Office for National Statistics reported a drop of 0.2% in industrial output in July; in contrast, industrial production in Germany jumped by 4% that was, apparently, way above expectations. It seems that foreign demand is weak and, coupled with a drop in confidence in the business market, things are not looking good.

Matthew Rock, editor of realbusiness, tweeted recently about a meeting with a board director of major energy business and noted a big change in mood over just six months - "they've moved from talking of growth to 'cost review'," he says.

All this bad news made me think about how credit professionals can add value to their businesses when their skills are exploited. Good credit management is about finding ways to do business that otherwise might not be acceptable. In my career, I have often worked with sales teams and others to engineer ways of taking business that we might otherwise have declined.

Now is the time for credit professionals to step up to the plate and help their businesses through what are, without doubt, difficult and challenging times. If you've ever been called the 'Sales Prevention Officer', you can dispel that myth by working closely and creatively with the rest of the business and demonstrating real professionalism.

Weekly Blog by Philip King, CEO of the ICM - 'Pride in Professionalism!'

A couple of weeks out of the office and I'm back raring to go. I looked at only a few emails, turned off Twitter and was generally very well behaved - I think even Mrs K was surprised! While I was absent, I gave away my daughter on her wedding day which was as perfect as we could have hoped for, spent a few days in the North West of England, and watched the world going mad. Riots in London and elsewhere, the US economy being downgraded, and a possible European financial meltdown as just a few examples. So back to reality and I've decided not to join in the bigger debates that have been going on while I've been away since all the arguments have already been expressed and in better words than I can use.

I do want to share some thoughts on professionalism though. The Institute of Credit Management (ICM) delivers cash for business by empowering credit professionals working in those businesses to be more effective, and a couple of emails received from ICM members during my holiday reminded me of just how important the credit management role is. Members of the ICM are professionals working in the field of credit management who recognise the importance of what they do and are keen to develop their own knowledge and careers, whether that is through qualifications, training courses, keeping up-to-date through reading Credit Management magazine and ICM Briefings, attending regional networking events, participating in online forums, or engaging in other ways. In short, they are showing pride in being professional by belonging to an organisation that supports them, works for them, and encourages them.

And yet I meet many people working in credit management who, although they recognise the value they add, don't see it as a profession in its own right. Many of us would argue rightly that it is a challenging, rewarding and worthwhile profession, and needs to be seen as such. We have made significant strides in recent years in gaining recognition but we need to do more. The new Continuing Professional Development scheme the ICM is piloting is an example. More important though is getting those of us who do the job to make sure our peers and business colleagues (above and below) understand that we're working in a profession we're proud of and is vital to the sustaining and growth of business and the economy.

If you know someone who's working in credit management and hasn't yet got round to joining the ICM, give them a nudge or send me their details and I'll nudge them. The more members we have, the louder our voice will be and I'm on a mission to raise the volume - let's get all credit professionals to show Pride in Professionalism!