Weekly blog by Philip King, CEO of the ICM - 'Firing the imagination'

I talked last week about the flurry of consultations being launched by government ahead of the summer holidays and, guess what, there have been even more since I wrote those words.  It feels like I have spent every waking hour of the last ten days ploughing through page after page of government documents and preparing questionnaires and summaries to share with our members so they can comment and offer their views.

The latest to hit my inbox was HMRC's consultation document: 'Sharing and publishing data for public benefit', a set of proposals that "form a significant development in HMRC's Open Data Strategy".  Judged by the title, you wouldn't imagine this has much to excite credit professionals but ­ as is so often the case ­ there are nuggets hidden away that are very interesting.  Indeed, I would go far as to say that this one has genuinely excited my imagination. Why is that?

In amongst the detail, the paper suggests the possibilities of releasing of basic non-financial VAT registration data as public data, and sharing more detailed VAT registration data on a more restricted and controlled basis for specific purposes, such as credit referencing.  It also considers whether VAT registration data could provide a foundation for private sector business registers.  It is this last point that lights my fire! I'm old enough to remember the Business Names Register (I think it was called) which allowed a supplier to identify a business.  It ceased to exist years ago and no doubt someone reading this will remember better than me the background as to why, and when.  Since its demise, the ability to identify a business that trades as a sole trader or partnership has been incredibly difficult, and the proportion of businesses on which the credit reference agencies are able to report is incredibly low because of the dearth of data available to them.  I know the VAT threshold is currently £79,000 so the smallest businesses wouldn't be picked up but it would still be a huge step forward.  According to HMRC, around 800,000 VAT registered businesses are not incorporated so making basic information available to credit reference agencies would at least enable a business's existence, location, legal status, and trade classification to be verified.

Of course we'd prefer to have financial information as well but let's keep our feet on the ground; that's not going to happen any time soon.  In the meantime, please let me know what you think (the ICM In-Brief newsletter published on 14 August will have a link to the document but it can also be found here so we can make HM Government aware of our views.

I'm off to Scotland for my summer break shortly and I'm grateful to Charles Mayhew, Sue Chapple, and Sue Kettle who've agreed to do me the honour of writing guest blogs while I'm away.  If you too are heading for some time of relaxation in the coming weeks then make the most of them.  This is the only time in the year when I genuinely turn off emails (despite what I may tell Mrs K at other times!).  I'll look forward to returning refreshed and re-charged.

Weekly Blog by Philip King, CEO of the ICM -'Kill or cure the zombies'

On Monday the Financial Times ran a story with the headline "Institutions urged to kill or cure the zombies" which talked about "zombie" businesses, to describe those that can pay interest on their debts but has no viable means of repaying the principal over the long term. The article highlights the fact that many businesses are passed the point of no return but are staying afloat because of low interest rates, HMRC's discretionary Time to Pay arrangements, and/or banks keeping businesses in "intensive care" rather than allowing them to fail. It is little comfort to see a respected newspaper making the very same arguments that I have been saying for at least the last two years in my public assertions that there is a spike of corporate insolvencies waiting just round the corner. I recognise that it has taken longer to reach the corner than I anticipated but I continue to maintain that we are going to see a substantial increase at some point. Too many businesses are in a state of denial and it is only going to take a change in one factor to push them over the edge, be that the rent quarter day this week, a negative response to a request for an extension to the HMRC Time to Pay arrangement, an increase in interest rates, or another factor such as a large customer failing or failing to pay sufficiently promptly.

If you watched Dragons Den this week you might have seen the director of a twenty year old business seeking £100,000 investment to help his business grow. Upon questioning, it became apparent that the business had been loosing money in three of the last four years, had a very low balance sheet net worth and, if current forecasts were met, would be technically insolvent at the end of the current financial period. The argument that sales next year would be much better and would see a return to profit seemed to have little substance and, not surprisingly, there were no takers among the dragons. It's obviously difficult to see the whole picture from a few edited minutes on TV but the scenario of a business thinking tomorrow will be better without realising the reality of its financial situation today is not uncommon.

In the FT article, Christine Elliott, Chief Executive of the Institute of Turnaround said "she would like to see institutions that have potentially viable businesses under their care change their mindset. They should either recognise non-viable businesses and deal with them through insolvency or put in place a transformation plan to achieve their potential". We credit professionals have a very similar task: to recognise viable businesses and help create profitable sales for our own organisations, and to recognise non-viable businesses and ensure exposure is minimised. Sometimes we to have to decide whether to kill or cure the zombies.

'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.