Weekly Blog by Philip King, CEO of the ICM - 'Making a date with Destiny'

My Executive Assistant at ICM HQ, Tracy Carter, is also responsible for driving our social media strategy and activity. Last week she started a discussion on LinkedIn that has generated a riveting discussion. The question she posed was: "I had an interesting conversation with my 13 year old nephew about choosing a career, and he asked me if a career in credit management would be good and if it is important? How would you answer?"

There have been plenty of long-standing credit professionals like me saying what a brilliant career credit management is. They have highlighted positive aspects of the profession such as the variety it brings, the different skills it develops, the fact that it touches every part of the business, and delivers real value in many ways.

Some, including much younger contributors than me I'm pleased to say, have recognised that the role will become more strategic and less operational as technology continues to change the way we work. Others have stressed the need for personal and professional development as a way of building what is an interesting and satisfying job into a real career.

As with all discussion forums, the debate deviates from the original question and there is some disagreement, but the divergence of views adds to the vibrancy of the thread and I'm pleased to note that the underlying mood has remained positive. It should do so because many of the very senior people in credit I know could vouch for the career prospects as they have reached the top of their chosen profession and become key players within their own businesses.

As I write these words, I'm preparing for the latest quarterly meeting of the ICM Credit Industry Think Tank, the participants on which are all a testament to the opportunities afforded by credit management as a profession. Credit management is a dynamic and thriving profession and Tracy's nephew can be assured that it would be a good career choice. But let's not kid him. The reality is that it will be down to him to take hold of the opportunity with both hands and make the most of it. As one of the contributors to the LinkedIn discussion said: "....each individual is responsible for their own destiny."

Weekly Blog by Philip King, CEO of the ICM - 'Whistling in the wind'

If you've read the latest (May) edition of the ICM's Credit Management magazine, you'll have seen mention of a survey finding that 42% of SME respondents had never heard of any of the current Government or bank-led initiatives to support small businesses. The recent news about funding through the Business Bank and the increase in length and breadth of the Funding for Lending Scheme is great news but only if businesses are aware of the help that might be available.

 

I was pleased that, of all the schemes, awareness was highest for Start-Up Loans. Regular readers of my blog will know that I'm privileged to sit on the board of Start-Up Loans and I know how much work has gone into raising public awareness, not least by James Caan (the Chair) who has used his personal profile and networks to such great advantage.

 

There have been numerous other initiatives supporting small business in recent times such as the National Loan Guarantee and Enterprise Finance Guarantee Schemes as well as the 17 introduced by the British Bankers' Association (BBA) Task Force in 2010. But none of these serve any purpose unless businesses, banks and others are aware of their existence.

 

One of the BBA initiatives was the creation of an independent appeals process for when loan applications were declined. Russel Griggs, who chairs this, has done good work and his reports show the effectiveness of the idea but I've seen recent examples demonstrating clearly that awareness is woefully inadequate.

 

I heard in the last few days from a business that had thrown in the towel after its current bank had withdrawn facilities despite a 37 year positive relationship, loan applications to other banks had been declined, and engagement with the Financial Ombudsman Service, MPs and numerous others had failed to have any impact. What astounds me is that at no point in this whole process was the business pointed towards the very appeals process that might have helped, or at least allowed it to understand the various banks' position.

 

Surely some of the parties involved would have heard of the appeals process and could have signposted to it? Not long ago I was at a presentation by a senior regional manager from one of the major banks and he was totally ignorant of it, so perhaps not!

 

In this age when we can communicate in so many different ways, and when instant communication is the norm, I find it sad and strange that getting important messages communicated and understood is so difficult. I guess it's incumbent on all of us to ensure we are well informed and up to date with what's going on in the business world and that we play our part in passing important messages on to those who might benefit from them.

 

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 - 'The value of true leadership'

The Financial Times reported this week that "if the International Monetary Fund's latest forecasts are right, then meaningful growth looks set to elude Britain for another two years." So stagflation is here to stay.

 

I've been listening to Jim Collins' 2011 book 'Great by Choice' and the results of this research are fascinating. The sub-title is 'Uncertainty, chaos and luck – why some thrive despite them all' and, following his standard research approach, Jim (together with his colleague Morten Hansen) looks at truly successful businesses and compares and contrasts them with a direct competitor which they have out-performed by a factor of at least ten times over a defined period. I'm only half-way through the book but what is already apparent is that the successful examples are, to a great extent, the result of having a great or enlightened leader. He talks about three common elements: Fanatic Discipline, Empirical Creativity, and Productive Paranoia but comes back to an individual that led the business' approach and made a real difference.

 

The early part of the book is a captivating comparison of the attempts by Captain Scott and Roald Amundsen to reach the South Pole. He argues and demonstrates that they were both operating in similar environments but that the difference was their approach both before and during their expeditions. For Amundsen it was a race to victory and a safe return home while, for Captain Scott, it was a devastating and tragic defeat. Events that date back to 1911 have some strong and powerful lessons for today.

If we're in a prolonged period without growth then the approach we take to our roles and to our businesses will determine the outcome and – wherever we sit within an organisation – we can have an impact and have to choose whether it will be positive or negative. I know I'm currently looking closely at what I need to do differently in the months ahead.

 

When it comes to great leaders, there's been a huge amount written following the recent death of Margaret Thatcher. It's been interesting to listen to commentators and contemporaries, some of whom are great supporters and others vociferous detractors, all share one view. She was passionate in her beliefs, she was fiercely loyal to her country, and she has left a lasting legacy on British politics. In an era when bland sound-bytes and immediate short-term company results are too often the focus, real leaders are few and far between and we need more of them driving us back to growth.

Weekly Blog by Philip King, CEO of the ICM - 'Falling on deaf ears'

I was interested to see the ICAEW (Institute of Chartered Accountants in England & Wales) quoted by James Hurley in the Telegraph last weekend making the same point the ICM had made in its submission to a government consultation in March this year. The consultation related to the implementation of 'Simpler Financial Reporting for Micro-Entities'. The Telegraph article is here and the changes include a reduction in the amount of information filed with Companies House and the opportunity to mix two different types of accounting – the traditional ‘accruals’ approach and so-called ‘cash accounting’.

 

The government claims that the measures will reduce red tape for small businesses making it easier for them to do business. We believe, however, that it will reduce the availability of credit and stifle the economy rather than the claimed positive alternative. Our argument focuses on four key issues. Firstly, to abridge or abbreviate accounts – or indeed any document – you first need to have the full version to work from. Filing less information does not, therefore, reduce the preparation time, indeed if anything it will increase it. Secondly, the presentation of prepayments and accrued income, and accruals and deferred income is vital to understanding the true financial position of a business and to being certain that it is solvent.

 

Thirdly, the absence of reported information will encourage suppliers to simply refuse requests for trade credit rather than go to the trouble of seeking more detailed information from the potential customer, particularly when the amounts involved are small. It is these modest transactions that accumulate into real economic activity and potential growth. Our final argument is that by categorising a business that turns over £440,000 and employs ten people in the same way as a genuine micro-business that might trade solely on a cash basis is ludicrous. What is worse is that the turnover and net assets limits have been substantially increased since the original discussion paper was published in August 2011.

 

Another example of unintended consequences resulting from a failure to listen adequately to the voices of those who live in the real world, I fear.

 

 

Guest blog by Charles Wilson FICM, Managing Director of Lovetts plc - 'Setting Clear Expectations'

Driving to work yesterday after the Easter holiday yesterday, I was listening to the Today programme on Radio 4. The meaning of the new Archbishop of Canterbury’s first Easter message was being debated. In his address, Justin Welby appealed to everyone to adopt realistic expectations for what institutions, or individuals, could achieve. In the end, all humans are fallible, he said. (I suspect even the new Pope might agree, who knows!)

Afterwards, commentators differed in their views. Was he sensibly advising us to manage our own expectations, including our expectations of him? Or was he abrogating, as one suggested, his own responsibility to give us a clear lead from the outset?

If you read the text of his sermon in full, it is pretty clear. He was urging us to be realistic in what we can all achieve, in these terms “Complexity and humanity are ignored, and we end up unreasonably disappointed with every institution, group and policy, from politicians to NHS, education to environment”.

In a time of economic uncertainty, and business difficulty, it is easy to think that others should, or even that we ourselves can, deliver a solution that is “perfect”. Whether you are a Prime Minister, a credit professional, or a business manager, in the end you always have to rely on others. You have to delegate a lot of things. You have to choose what NOT to do. You have to trust others, knowing they may fail.

Some business leaders never take holidays. I commend Philip King for doing so and hope he enjoyed his decorating over Easter. He is not abrogating his responsibilities to the Credit Industry, he’s not given up on us, or on Government, he’s just having a well-earned break!

In fact, it is only as we ‘let go’ of trying to achieve perfection, and subject our plans to human fallibility by sharing them with others, that our world enlarges through them.

As a lawyer, I could tell you all about the Jackson reforms of the legal profession, effective this week. Like the increase of the Small Claims’ limit to £10,000. But any search engine will give you more than enough to read on that.

Most important of all is that we set realistic expectations of what can be achieved by credit departments or third parties on their behalf. As lawyers recovering debt, we try our utmost, but keep realistic. If we don’t, we’re set to disappoint. Despite Government cutbacks, changes and reforms in the Court Service, we must nevertheless all keep trying to influence and effect change for the better. As Justin Welby said, “Setting people or institutions up to heights where they cannot but fail is mere cruelty”. I agree.

Extracts from Archbishop Justin’s sermon by kind permission of Lambeth Palace – see www.archbishopofcanterbury.org

Guest blog by Debbie Tuckwood, Director of Operational Strategy, Institute of Credit Management – ‘Education that sticks’

In my view many miss opportunities because they overlook people.  It’s easy to focus on process improvement and new technology for dramatic savings.  After all people development takes time and investment - both in short supply.  It’s tempting to run token training though hardly surprising when there’s limited long-term benefits.  Deep down most know that without effective people change is difficult, however is people development really achievable given cut backs in training teams and budgets?

I believe it is, given the right strategy and support.  Look at the Institute’s corporate membership scheme for large teams which involves all.  It’s set up to help secure budgets and regular support from an education specialist (20 – 30% discounts help too).  If you focus then on moving 10% through qualification programmes, whether linked to own training or an external provider, you build skills and the appetite for learning.  After all, isn’t people development more about longer cultural change and ‘education that sticks’?