Weekly Blog by Philip King, CEO of the ICM - 'feeding the sausage machine'

Rachel Bridge, the Enterprise Editor of The Sunday Times, wrote a really interesting article at the weekend about credit insurance. It talked about a sausage maker in Devon which took out credit insurance a few years ago after suffering a bad debt of £22,000. The finance director was quoted as saying that "if our credit insurer will provide cover up to a certain limit, then we will trade. If not, we will think again. We either do not do business with that customer, or we trade on different terms, perhaps asking for money upfront".

The article went on to outline how the amount of cover provided by the big three insurers has increased over the past year, and how some have introduced new measures and more user-friendly policies. Fabrice Desnos, Xavier Denecker, and Marc Jones from Euler Hermes, Coface, and Atradius respectively were all quoted and - since all three are good friends of the ICM - it made me read the article more carefully.

It was a useful and practical guide to what is a difficult product for many SMEs to understand and, indeed, for government ministers to get their heads around. I remember many conversations a couple of years ago trying to explain how credit insurance works without ever feeling I was making much progress. Credit insurers were coming in for some pretty bad press at that time, some of it deserved, but the sector has moved on, and so too its products. Credit insurance in the right circumstances can be a really useful tool for business, including small ones, and I'm pleased to see it being explained by a respected journalist to whom SMEs will listen.

There's been a recent interesting debate on the ICM Credit Community LinkedIn group about whether credit managers who have no bad debt are the good ones. My view is that good credit professionals understand the balance of risk and reward and accept bad debts as a price of profitable sales activity, but that doesn't alter the fact that the impact of a bad debt - particularly to small businesses and especially if it is relatively disproportionate - can be devastating. Anything that helps SMEs to understand better how to manage credit and risk is to be welcomed.

LinkedIn ICM Credit Community

Weekly Blog by Philip King, CEO of the ICM - 'Debate is good, and so is information!'

My blog last week was about Vince Cable's announcement that he was going to remove the need for small businesses to produce audited accounts. At the same time we heard of the plan to increase the threshold for filing full accounts. Those who know me will know how passionate I get about things like this which - in my view - are hugely potentially damaging to business and the economic recovery. The ICM also issued a press release http://bit.ly/fMjfjP on the same subject and I shared my frustrations in a letter to all the broadsheet newspapers and it was published by the Sunday Times, Independent and Guardian.

I've had a surprisingly large number of responses. Many have supported my arguments and agreed with my position; a few have disagreed, primarily on the grounds that audits aren't worth the money they cost, add little value, and are - to all intents and purposes - meaningless. There may be an element of truth in this but it doesn't detract from the argument that looking at - and monitoring the performance of - their own business more carefully can only be a good thing for business owners, and sharing information in a more transparent way has to contribute to the assessment of risk more accurately and effectively. Wherever you sit, I'm glad to have added to, and fuelled, an important debate.

The ICM's new database and website went live last Thursday and we've suffered from the inevitable infrastructure and technical teething issues. It's been a challenging few days, and there are no doubt further challenging days ahead, but watching events unfold in Japan has put into perspective just how unimportant such matters are when compared to disasters on this scale. Our thoughts are with all those affected both directly and indirectly.

Weekly Blog by Philip King, CEO of the ICM - Plan for survival and late payment

The Sunday Times recently carried a number of articles that caught my eye. First among them was a piece by the Economics Editor David Smith, a name familiar to many of us in the world of credit management. In his economic outlook column, David quoted the former economic adviser at the Department for Business, Innovation and Skills (BIS) who had apparently said: "most firms are in denial about the impact the [public sector] cuts will have on their business".

At the time of writing, the spending review is imminent, but if the forecast cut in gross capital spending by government from £69bn last year to £43bn in 2013-14 is accurate, the impact will be significant. And the impact will not simply be on the public sector and public sector jobs. The private sector is going to feel pain from the cuts just as badly, and we must all, therefore, be planning to sustain our businesses through the undoubtedly difficult times ahead.

The second piece that caught my attention - partly because I was expecting it - was an article by the Small Business Editor Rachel Bridge. The angle was one of late payment, and specifically how larger customers are withholding payment to small suppliers.

The piece used as a case study National Property Solutions in Wakefield, a business owned and managed by ICM Fellow Rob McTiffin. Rob told of how too much of his time was spent trying to get his clients to pay sooner, rather than driving his business forward. It is a familiar story. The Institute itself was well represented in the piece, highlighting in particular our involvement with BIS's Prompt Payment Code http://www.promptpaymentcode.org.uk/ and outlining some of the work we have been doing to help small businesses improve their cashflow.

One feels there will be many more such articles in the months ahead as the full impact of the government's spending review becomes apparent.