Weekly Blog by Philip King, CEO of the ICM - 'Things to look forward to.....'

It has been quite a bit calmer this week after the frantic round of meetings and conferences since the beginning of December, but then the world of credit management never stands still for long.

I was delighted on Monday to meet with Mark Prisk, the Minister for Business and Enterprise, who is already establishing himself as a champion of the SME cause. It was clear from our discussion that the Minister is keen to continue working with the ICM in promoting the importance of cashflow to a growing business.

There was acknowledgement that even with the good work that has been done before between BIS and the ICM, there is still much to do to change the payment culture in the UK and that the Government had a key role to play in supporting and reinforcing the delivery of specific key messages. It wasn't a case of trying to find new initiatives on which to hang our cashflow 'hat', but rather doing more to promote schemes that already exist such as the Prompt Payment Code. I certainly came away with the impression that Mark Prisk means business, and look forward to working with him and his team closely next year.

Yesterday I spent the morning signing off the final proofs for the next issue of Credit Management magazine, and this is probably one of the best issues yet. We lead with the ongoing bank lending saga and research that contradicts the story from the banking community that they have plenty to lend, but no demand. In terms of consumer credit, the editor also takes a detailed look at what lies ahead for the debt sale and purchase sector in 2011.

So unless anything especially momentous happens next week, this is probably me signing off for 2010. It remains only for us all at the ICM to wish you a Merry Christmas and let us all look forward to a prosperous New Year.

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Weekly Blog by Philip King, CEO of the ICM - 'Disagreements and mixed messages'

As I mentioned last week, the momentum over the Doing Business Together initiative is gathering pace. The Business Secretary, Vince Cable, has clearly thrown his support behind DBT and the meeting last week in Richmond brought some real heavyweights to the table from the world of business and credit. But there are some issues.

There are, for example, some mixed messages coming out, especially from the politicians. On the one hand, the Government support EU moves to cut red tape for SMEs by reducing their obligations over the detail of financial reporting, while on the other they believe that financial data is essential for granting credit and therefore facilitiating growth.

Businesses need to be educated about the importance of producing, using and sharing information: they need to produce accounts, because in doing so they will be able to manage their businesses better; they need to use the information they have, and so identify how and where they can free up cash in their business; and they need to share that information to access finance or negotiate better terms with their suppliers.

I was also invited this week to the ABFA (Asset Based Finance Association) Conference, sharing the platform with my colleagues from the FSB and FPB among others in an event chaired by Fiona Bruce. The conference created a vigorous debate about late payment legislation. I disagreed entirely with the FSB position: legislation really won't change anything even though we might all wish it would.

Finally, I note an interesting thread on the ICM Bulletin Board this week about alternative approaches to cash collection. It touched on one of my soapbox themes: good credit management adds value across the entire business - creating profitable sales, improving the quality of the organisation at all levels, retaining customers AND maintaining vital cashflow; knowing - and understanding - our customers is a vital element if we are going to be successful and if we're going to make the contribution to our businesses that we can, and should!

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Weekly Blog by Philip King, CEO of the ICM - 'Information leads to finance'

Although you might not believe it, there has been quite a bit going on this week, apart from the weather. Perhaps the biggest news is around the progress of Doing Business Together, an initiative in which the ICM played an important role as part of the steering group that drafted and agreed the Operating Principles prior to their launch at the CBI in October. An event tomorrow will add to the momentum already created http://bit.ly/eTz8lO.

The aim of the Doing Business Together group is to help SMEs manage their own businesses better and obtain the finance and credit they require for a successful trading relationship.

The operating principles (http://www.doingbusinesstogether.org/) are designed to ensure that the relationship between SMEs and their finance and trade credit providers, is one of profitable partnership through a shared commitment to the principles of honesty and transparency. Put simply, they are designed to help get Britain back on its feet.

Trade credit supplies more finance to business than bank loans and overdrafts, and credit professionals are therefore key to the recovery that we all so desperately want and the country needs. In order to make informed decisions, we need information that is timely, relevant and accurate.

Credit professionals have a major part to play in encouraging businesses to produce, use and share information that will support their business, keep supply channels open, and aid the provision of finance. Getting management accounts from our customers can no longer be the exception. If we are really going to know our customers as we should, and be able to manage the relationship and risk effectively, access to such critical material must become the rule.

Weekly Blog by Philip King, CEO of the ICM - 'EU directives, Eire misery, and meaningless forecasting'

Having recently returned from a meeting of FECMA (the Federation of European Credit Management Associations) in Paris, it's interesting, as always, to catch up with my colleagues and share their experiences. There was much animated conversation about the new EU Late Payment Legislation, particularly with French and Spanish delegates who now have real experience of domestic legislation that sets a statutory limit on payment terms of 30 days. I accept this is anecdotal rather than hard scientific evidence, but their views are crystal clear: the legislation hasn't made the slightest difference.

They found that businesses experiencing late payment are still reluctant to take action against their customers for fear of upsetting them and losing future contracts. There's a lack of real knowledge about how the legislation should be applied, and businesses that want to exploit their suppliers will find a way of doing so, legislation or not!

The legislation will still be some time coming; there are nearly two years before the Directive has to be implemented by member states. We need to use that period to explore long and hard how we might further improve payment and business culture across the UK. I have a meeting with Mark Prisk, Minister for Business & Enterprise, next month and this is one of the subjects that I plan to raise. I've already highlighted the failings of the Directive, but let's see if some good can come of it.

Meanwhile I note that the latest Bank of England Inflation Report, published under the guidance of the Monetary Policy Committee, has some almost amusing words in its overview which ends: "...the chances of inflation being either above or below the target by the end of the forecast period are judged to be roughly equal."

I understand the complexities involved in putting such reports together, and the challenges in making accurate forecasts. But am I alone in thinking that experts should at least have a view? This just feels like a classic case of 'hedging your bets' or 'sitting on the fence' to me!

And finally, over to Ireland - metaphorically, not physically! What a sorry story, and a worrying one too for the people who live there, the businesses that trade there, and the businesses that trade with it.

I've been saying consistently to anyone who will listen that businesses in the UK are underestimating the negative impact of our public spending cuts. But I fear the pain we're going to feel is incomparable to the misery that our neighbours now face.

Weekly Blog by Philip King, CEO of the ICM - 'Uncertainty demands quality' -

At the start of the week, Vince Cable and Mark Prisk announced a new 40,000-strong network of business mentors as part of their Global Entrepreneurship Week: http://bit.ly/cSbrsp. The rationale, they said, is that the best people to advise new entrepreneurs and existing businesses are those who have already started and run successful companies.

The ambition is to nurture new talent as well as increasing productivity and growth among existing businesses. It is a laudable ambition, and I am hesitant to pour cold water on what appears to be a compelling proposition. My concern, however, is how they are going to make it work in practice? It is a legitimate concern, but should not stop us as an Institute from engaging with the programme and encouraging our members to add their considerable skills and expertise in cashflow management.

Elsewhere I note that Graeme Leach, Chief Economist at the IoD, is predicting that "...after a very abnormal recession it would be foolish to rule out the possibility of a very abnormal recovery as well." http://bit.ly/aLz8Q7. It will be interesting to see if he is proved correct. What it does prove, however, is that there is still plenty of uncertainty ahead of us which makes the contribution of professional credit managers even more important.

This week has been a good one for Cabot Financial, and I was delighted to present their Chief Executive and the management team with the Quality in Credit Management (QiCM) Award. It is significant for many reasons, not least of which being that this is the first award to be given to a business in the debt purchase sector. It's an impressive company with clear focus on its people, on customers and quality. They are to be congratulated on all that they have achieved. http://bit.ly/6uVCxM.

'Storm clouds brewing' - Weekly Blog by Philip King, CEO of the ICM

It has been yet another busy week, starting with the award to Geopost of its QiCM accreditation, an accreditation that the team had to work hard to achieve. In these challenging times, when good credit management is needed more than ever, it is pleasing to see (and present the award to) a team that is so focused, so enthusiastic, so organised and so committed and - as a result - is delivering real value to the organisation.

It has also been a week of much discussion, from the analysis of the ICM Technical Committee into the latest consultations and technical issues that affect credit professionals on a practical and day-to-day basis through to the round table with Bacs, agreeing - and disagreeing - about the issue of late payment and how it can best be addressed.

There was a similarly healthy debate at an event hosted by Hays where I was able to share my passion for all things 'credit management' with about 70 professionals eager to listen, discuss and share about issues that affect their everyday working together to create a single credit 'community'. I know I've said it before but this community is a really important element of what we do.

Finally I note that new figures suggest insolvencies and personal bankruptcies are falling - http://www.bbc.co.uk/news/business-11701334?utm_source=twitterfeed&utm_medium=twitter on the face of it this is good news, but I'm not changing my long held - and often stated - view that we're still in a lull before a horrible storm. I remain convinced we're going to see a surge in corporate insolvency, for a number of reasons including: the tightening up of the HMRC deferred payment scheme is going to leave businesses having to find cash; as the economy starts to recover, the need for cash is going to increase and, historically, insolvencies have always risen as we've come out of a recession; and lastly that the impact of the public sector cuts (as previously discussed here) is going to be far worse than many realise.

Weekly Blog by Philip King, CEO of the ICM - 'Ignorance is damaging'

I was in illustrious company earlier in the week when I was invited as one of the leading business organisations to the Small Business Summit at the Department of Business, Innovation and Skills (BIS) - http://bit.ly/9mG8bs.

Vince Cable, Mark Prisk, Lord Young, Francis Maude and Grant Shapps were all in attendance and lending their support to an initiative that has three key commitments to small business: to improve access to finance; to make it easier to do business with the public sector; and to allow social tenants to start up their business at home.

It is encouraging that the Government is working hard to support small businesses; they are clearly going to be key to the recovery. But such efforts are only going to work if businesses are aware of the initiatives in the first place, and know where they can go for help.

One of the long-standing criticisms of the EFG (Enterprise Finance Guarantee) Scheme, for example, is that small businesses, banks and business organisations have seldom known enough about the scheme, and its details, with the result that demand has been depressed. Similarly, banks have many products to help small business - not just the ubiquitous overdraft - but these businesses either don't understand them or have never been told what other products may be suitable.

That ignorance extends to understanding the basic principles of cashflow management. Business owners, and especially micro business owners, are too busy making sure their businesses survive to worry about getting - or even looking for - advice, even when that advice is the very stuff they need to stay in business!

There have now been more than 185,000 downloads of the ICM's Managing Cashflow Guides. These numbers are very encouraging, and we are rightfully proud of what we have achieved to date. But we have to balance this success with the fact that there are 4.8 million small and medium businesses in the UK that employ less than 250 people, and when we compare our downloads to the potential target audience, there is still much work to be done.

Government needs to make a concerted and focused effort - including working further with organisations like the ICM - to educate businesses and make them aware of the basics that will sustain them into the future.

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