Weekly Blog by Philip King, CEO of the ICM - 'Harnessing support for exports'

You might have seen that this is Export Week designed to draw attention to exporting and the need for businesses in the UK to do more of it. The government has set some ambitious targets for 2020: achieving exports totalling £1 trillion and having 25% of businesses exporting, the current level is 20%.

By coincidence, the guest speaker at the ICM's Credit Industry Think Tank on Tuesday was Robert Hurley from UK Trade & Investment who shared some interesting information and facts about particular export markets and the work of UKTI, interspersed with some personal anecdotes from his long experience in exporting before joining the government organisation.

UKTI works with UK-based businesses to ensure their success in international markets and provides support in four key areas: business planning, market research, market promotion & publicity, and market visits. Although I've had significant contact with the organisation over recent years, I hadn't realised the depth or breadth of the service and support they offer.

One particular service that caught my attention was the 'Business Opportunity Alerts'. A business can register on the website stating its sector and the markets it is interested in, and it will receive alerts of any relevant opportunities that arise. I don't know how many of the 4.8 million businesses in the UK have registered for the service, and I don't know how many businesses are even aware of the facility, but I'd hazard a guess that for both it's a pretty small proportion, and that's a shame.

Exporting is a really good way to grow our economy, and it's good for business generally, so services like this need a high profile. I've talked in previous blogs and elsewhere about the disappointing lack of awareness among the business community of various government schemes and this is another example.

A huge amount of good work is put into supporting businesses, especially the small and medium ones, and it's a pity when that effort goes to waste. More needs to be done to bring such things to the attention of business owners and government needs to get smarter. In the meantime, if you know a small business that's even thinking about selling into overseas markets then you could do worse than point them to www.ukti.gov.uk

 

Weekly Blog by Philip King, CEO of the ICM - Facing facts'

I've been following the recent furore about Tesco's trial of face-scanning technology in its 450 petrol stations with interest. Apparently, the technology allows the camera to identify the customer's gender and approximate age and then deliver an appropriately targeted advert.

The targeting of adverts on web sites based on previous surfing history is well documented, the monitoring of spending through loyalty cards allowing targeted promotions has been around for several years, and the offering of free Wi-FI to facilitate the capture of data and routes to market is becoming ubiquitous. For a long time we've been told that the average person is viewed on CCTV an estimated 70 times each day even if the awareness falls into our subconscious.

This somehow seems to be a step further but is surely no surprise in an age of ever increasing technological sophistication and complexity. Just this week, I realised I'd left home without putting my pen in my suit pocket. Did I panic? No, I realised that almost all my note-taking, planning and writing is on my iPad and I rarely use a pen these days. I'd never have believed that would be the case even a couple of years ago but I genuinely couldn't imagine anything different now.

And so it is with credit management. I was at the ICTF conference recently which brings together credit professionals from across Europe. One of the sessions there was a workshop looking at the use of technology and how to identify and source the best solutions. As I travel around talking to credit people I'm made aware of the advances in the software and tools being used and, equally importantly, of its integration into legacy systems, processes and procedures. In most cases, it's about more than being increasingly efficient or saving cost, it's about being more effective and adding more value to the business.

Whether we like it or not, the evolution will continue and - to some extent at least - we have to embrace it if we want to maintain our position as individuals and organisations. Do I care if Tesco is working out my age and gender so that it can show me an advert I'm more likely to be interested in? When I think about it rationally, not really!

Weekly Blog by Philip King, CEO of the ICM - 'Neither borrower nor a lender be?'

I was in Basel earlier this week for the ICTF Conference. It's always a good opportunity to catch up with credit professionals from around Europe and beyond, and great to hear some of the issues being faced and how they're being addressed.

 

Flights and travel gave me the opportunity to read the FCA's recently published consultation: 'Detailed proposals for the FCA regime for consumer credit'. We'll be providing the opportunity for members to submit comments through our November ‘In Brief’, and I won't go into any detail on the 193 pages, nor the 387 pages of the Appendices here. I do though want to make just one comment about the FCA's stated intention to focus on the Payday Loans sector.

 

I've written several blogs over recent months arguing that the OFT should, in its final year, take action over the absence of evidence that affordability tests are being adequately carried out by payday lenders. I've consistently asserted that this is the key failure of the market and should be addressed with vigour. It should, after all, be the determinant in all credit decisions regardless of sector, size or nature.

I've given up hoping that the OFT is going to take any serious action on this in its final days but I was encouraged to read these words in the consultation: "Our proposals.........are based on the principle that money should only be lent to a consumer if the consumer has the ability to repay and in a sustainable way." And in his foreword, FCA Chief Executive Martin Wheatley says: "The OFT affordability guidance is good, but the OFT’s own research shows too few firms implement it. We will put it into our rules and guidance, and enforce this."

 

Martin's last two words are the most important - let's hold the FCA to account and ensure it delivers.

 

 

Weekly Blog by Philip King, CEO of the ICM - 'Unearthing a hidden gem'

The government published its Information Economy Strategy last week (it can be found here: https://www.gov.uk/government/publications/information-economy-strategy).  The 57 pages set out the vision for a "thriving UK information economy enhancing our national competitiveness with, among other things, a strong, innovative, information sector exporting UK excellence to the world; UK businesses......confidently using technology, able to trade online, seizing technological opportunities and increasing revenues in domestic and international markets".  The intent and programme are ambitious yet vital if we are going to stay at the forefront of technological change and make the most of the opportunities that change will present in the years ahead.  I count myself among those who remember computer printouts being introduced as working tools in the late 1970s and I'm still struggling to grasp the concept of 3D printing as a form of manufacture so, like you, I've experienced the huge change over the past few years.  Indeed, it's not so long ago that the idea of me writing these words on an iPad sat in a car would have seemed the stuff of science fiction!

Anyway, back to the government report which has a real gem hidden away on page 23. It says government wants to make it easier for suppliers by encouraging the use of electronic invoicing.  Its aim is for central government to use electronic invoicing for all transactions.  While not mandating suppliers at this stage, it will look at ways to spread best practice and will track progress.  It goes on to say that, to realise the full benefits of e-invoicing, it is important that systems are easy to install and use, and the pricing is flexible enough to suit the needs of diverse businesses.

The ICM is increasingly engaging with the UK National e-Invoicing Forum which pulls together a number of e-invoicing providers, business organisations, and others with an interest in promoting the use of e-invoicing.  One of the interesting outputs from the Prompt Payment Code (hosted and administered for BIS by the ICM) is that the majority of complaints against signatories end up identifying administrative issues in either the raising and submission of the invoice, or the authorisation process at the recipient's end. I regularly talk to SMEs, and particularly micro-businesses, who still appear to fail to see the importance of raising invoices promptly and in line with the requirements of the paying organisation.  It can be a pain to jump through hoops to meet exacting demands of a customer but that pain fades into insignificance when set against the pain of running out of cash!

Implementing e-invoicing systems may seem daunting but, once in place, the whole process can become seamless allowing payment to hit on the agreed and expected day without further intervention.  The report is right in identifying that systems must be easy to install and use, and it's encouraging that providers have committed to look at ways to improve interoperability and accessibility.  Anything that helps add to the certainty of payment is good for business and will help support economic growth through improved cashflow.  The Prompt Payment Code (www.promptpaymentcode.co.uk) drives better payment behaviour.  Good credit management practice is vital, and e-invoicing too can play its part.  I'm looking forward to working with the UKNEF and the e-invoicing providers in the months ahead as their products evolve and awareness is raised.

Weekly blog by Philip King, CEO of the ICM -'An added perspective'

I wrote in my blog last week about the danger of imposing prescriptive maximum payment terms on UK businesses and mentioned, by way of example, the reported offering by Canon and Nokia of favourable credit terms in their bid to keep Jessops' shops open as a route to market. 

This weekend the press suggested that the music and entertainment industry is falling over itself to keep HMV outlets open with The Sunday Times carrying the headline: "Music giants rush to keep HMV alive". The report ran: "The world's biggest music labels and film studios are assembling a multi-million pound rescue package to prevent HMV from going out of business. Universal Music, Warner Music and Sony are set to cut the price of CDs and DVDs, and give the retailer generous credit terms……."

Thinking on this reminds me of the wider role that credit professionals play in their businesses beyond risk mitigation and cash collection. When I address 'credit' audiences, I frequently remind them of the value they add to their businesses by contributing to, and in many cases even driving, the sales effort and activity. I refer to examples in my own career when I used a variety of tools and tactics (perhaps archaic by today's standards!) available to me at the time ranging from a credit reference agency to identify and pre-approve business customers for a number of mobile phone connections as a way of driving sales, to creative financial packages to allow my employer (a computer manufacturer) to supply product. We had a network of dealers, few of whom were good – on a credit basis – for any supplies on open account terms at all. Escrow accounts, back-to-back deals, end-user guarantees and many more solutions enabled us to ship product that would otherwise have remained unsold in the warehouse.

And this is where credit management comes into its own; where we can demonstrate real value. It is why credit management is such a challenging and rewarding career. In my 34th year as a credit professional I still get a huge kick out of it and even greater pleasure from leading an organisation of which I'm so proud and which remains committed to delivering the vital support our members need to deliver the cash.

Weekly blog by Philip King, CEO of the ICM -'Maintaining forward momentum'

 

I've received some criticism of my comment about payment terms quoted in the Telegraph last Sunday. Coverage of the Prompt Payment Code (PPC) included my assertion that the drive by many for a prescriptive maximum 30 days credit terms is misguided. 

I make no apology for my comments and stand by them; my position is clear. Payment terms are one aspect of a trading relationship and, as such, should be open to negotiation in the same way as other factors such as price, quality, service levels, delivery arrangements etc already are. If maximum payment terms are stipulated, then one differentiator is removed. 

I remember in a previous role as Credit Manager of a computer manufacturer using very long payment terms as a carrot to persuade retailers to take obsolete printers that would otherwise have been discarded and destroyed. Offering longer payment terms can be a way of gaining business or obtaining a better price, while shorter terms can help mitigate against higher risk or compensate where competitive pressure demands lower prices.

By way of example, the Sunday Times last weekend reported that Canon and Nikon had offered favourable credit terms to Jessops in their attempts to keep it in business and maintain their vital shop window into the British retail market. I concede that their efforts spectacularly failed but, if maximum payment terms were introduced, they would not even have been able to try.

The day payment terms can't be negotiated between a supplier and customer is the day that a nail is hammered into the coffin of free market trading. I'm not for a minute suggesting that it is acceptable for large customers to exploit their suppliers, and especially smaller ones, by imposing unreasonable payment terms. That is unacceptable, just as refusing to pay a reasonable price for the products being purchased would be unacceptable.

The Prompt Payment Code was intended to drive a change in culture where good practice and paying on time, and to the agreed terms, becomes the norm rather than the exception. It is intended to get us to the point where suppliers have certainty about when to expect payment. It's great to see the increased momentum and visibility, and the increasing number of organisations signing up to the Code, but let's make sure that the debate continues to move us forwards and not back.

To become a signatory visit http://promptpaymentcode.org.uk

To read previous blogs visit http://www.icm.org.uk/home/ceos-blog
 

Weekly Blog by Philip King, CEO of the ICM - 'Just the job'

Some of you who know me will know that, since I spend a fair amount of time on the road, I am an avid listener to audiobook biographies as I drive.  Last weekend I finished listening to the biography of Steve Jobs by Walter Isaacson. The audiobook is unabridged, and on 20 CDs lasting 25 hours so it took a few weeks, but what a listen and what a story!

  

I wouldn't suggest that he was an ideal role model for, in many respects, the book suggests Jobs' style and communication skills left much to be desired.  Nevertheless, he had some qualities without which Apple wouldn't have grown from a start-up in his parents' garage to the world's largest company, and without which the Apple products wouldn't have earned the reputation they have for simplicity, quality and intuitive use.  He brought ideas, art and technology together in ways that invented the future.

  

His ability to focus on a small number of projects or details to the exclusion of everything else allowed him to ensure they received absolute and undivided attention.  His relentless drive for perfection meant he never settled for second best and never compromised any of his design principles.  His ability to see the future for his and other products and predict likely trends enabled him to spot opportunities in the market that would otherwise have missed and indeed were often missed by other players already in those very markets.

  

Some leaders push innovation by being good at the big picture, others by mastering details, but Jobs did both relentlessly and delivered a range of products over 30 years that transformed whole industries.  He quoted Henry Ford as saying "If I'd asked people what they wanted, they'd have said a faster horse; our job is to show people what they can have"; Jobs believed Apple should show people what they were going to want before they knew it themselves; he said Apple's task was to read things that were not yet on the page.  When you look at the graphical interface introduced on the Mac, iTunes music downloads, iPods, the iPhone and, most recently, the iPad, it's hard not to accept that he did exactly that.

  

Perhaps the most interesting aspect of his personality was his frequently cited "reality distortion field' which resulted in him seeing things as he believed they should be rather than as they really were, and in him refusing to accept that something couldn't be achieved.  At the end of the book the author says that almost all the many people he interviewed would share a litany of examples of how badly Steve treated them but end by saying how he got them to do things they never dreamed possible and which they didn't believe they were capable of.

  

If you get the chance, it's a cracking good read (or listen) and has some great good and bad examples from both of which there is much to learn.

To find out more about the Institute of Credit Management visit www.icm.org.uk