Guest Blog by Josef Busuttil, Director General of Malta Association of Credit Management - 'A Credit Management View from Malta'

The small market economy of Malta has been strong enough to resist and manage the economic and financial turmoil that hit the World, in particular, Europe. Thanks to the Maltese regulators, the financial services sector has remained significantly strong and the banks are still enjoying growth and increase in their profits. 2011 was also a record year for tourism, a sector on which the Maltese economy greatly depends.

This does not mean that all is rosy and that the sun shines 365 days-a-year over this rock. It also rains in Malta! Malta does not live in a vacuum. It forms part of the European Union and the Euro-zone, and it exports its products and services worldwide like any other developed country. Hence, what happens offshore affect the Maltese economy to a certain or greater extent!

One of the factors that has hit the Maltese business community is surely the rationed credit facilities from the foreign principals/suppliers. However, from a local credit perspective, Malta has made stark improvement during the recent past. Since MACM - Malta Association of Credit Management - was established in 2001, it has worked and lobbied for a better credit environment and Maltese businesses have witnessed improvement in a number of pertinent credit areas. This includes the number of dishonoured cheques that has gone down remarkably, the credit-related legal framework which is now in place, the judicial system which is more efficient, and business organisations are today adopting more the credit management practices, tools and systems provided by MACM in order to protect their cash flow and secure their long-term profit.

Nevertheless, MACM is aware that late payment is still a major concern for the Maltese businesses. It believes that authorities should do more to enforce legislation that would help creditors in their cash flow management. MACM suggests that the enforcement of court judgments should not only be efficient but also effective. Besides, MACM still notes that some local firms may not be deploying the proper credit management practices when granting and managing credit. These are some of the challenges that MACM is currently addressing.

In fact, MACM advocates that in today's business, a credit practitioner should do more than crunching numbers. The role of the credit practitioner should focus on how to gain and sustain competitive advantage in the market, whilst protecting cash flow and securing long-term profit. This requires up-to-date credit information and skilled staff supported by their top management team and assisted by the appropriate tools and systems in their day-to-day duties.

To support its members, MACM provides credit information which is updated on a daily basis. This information assists Maltese businesses to identify the most significant 'warning signs', which include:

*history of dishonoured cheques and overdue accounts;

* history of court judgements and executive warrants;

* history of court orders and court notices;

* customer changing banker/auditor;

* companies' information and accounts;

* changes in payment pattern;

* lack of filing of accounts as required by the Registrar of Companies (in case of companies);

*other databases that help businesses to identify their prospective customers.

MACM has also invested to provide education to the people working in the field of credit management. Thanks to the ICM Accreditation, Maltese credit practitioners have the opportunity to read the ICM Diploma in Credit Management and to sit for the relative examinations in Malta.

Credit Management is a peoples' function and having skilled and educated credit practitioners would result in better cash flow management, enhanced long-term customer relationship and improved business perception in the market, which are all required to gain and sustain competitive advantage and market share - which is the name of the game in such a changing global environment.