Weekly Blog by Philip King, CEO of the ICM - 'The importance of being individual'

I had the privilege and pleasure of presenting the ICM's Meritorious Service Award to Laurie Beagle earlier this week at one of his forums. For those who don't know, the Institute of Credit Management introduced the Meritorious Service Award in 1982 to recognise people who have made a notable and commendable contribution to national or local Institute activities. Normally, two awards are made each year and the list of recipients includes some well-known and influential figures from across the credit industry.

Laurie is a worthy recipient given that he has been a member of the Institute since 1983 and a Fellow for over 20 years. The credit forums he organises and runs through P&A Receivables play a significant role in building and developing the wider credit community, which is why the ICM is happy to support them, and there are numerous credit professionals who would attest to the help Laurie has given to them in their jobs and professional development.

Reflecting on the award reminds me of how important our individual contributions can be. I often talk and write about the value of good credit management and the importance of professionalism but that professionalism, and the value that accrues from it, comes from individuals and we can all choose whether our contribution and impact on those around us is positive or not. We know the impact of 'one rotten apple' and we will all know people who brighten a room when they enter it, and others who seem to depress the mood by their very presence. This is a bit deep and philosophical for me but I remember being told as a child that I always had a choice as to whether to have a good impact or a negative one.

 

Sometimes we forget the influence we have and those of us who have been around for more years than we care to remember could do worse than remind ourselves of this. I've just resolved to try harder to stay positive and encourage those around me!

Guest Blog by Bill Dunlop, Managing Director of Tower Associates - On the edge of a precipice'

The ICM joined forces with P&A Receivables, Experian, AON, and Tower Associates to run an event in London last week looking at practical implications of the Eurozone crisis. I thought - since this was so topical - I'd ask Bill Dunlop, Managing Director of Tower Associates to share his thoughts, and here they are:

"Since early December 2011, I have been working with partners to facilitate a series of workshops to examine the effects of single or multi-country exit from the Eurozone. The purpose of the workshops was to best acquaint our clients with economic, political and social events as they unfolded and what impact country exit would have on operational credit management for businesses having outstanding debts in those countries. They were also to afford the opportunity of considering the areas of operational concern and develop the template of a plan to be implemented in the event of exit occurring.

Despite these workshops being informative, well attended and generating intelligent debate, I am extremely concerned that the rapid deterioration of the economic, political and social situation is not being matched by heightened company awareness, planning and creative thought in response. Since December, the balance of economic prediction has shifted from probable Greek recovery to likely Greek exit within 12 to 18 months. In my opinion the combination of social and political unrest will accelerate this exit and we will be faced with the immediate and predicted 50 to 60 percent depreciation in the new currency. The effect of this on companies trading in Greece will be significant but, possibly because of the size of its economy, in most cases may be manageable. However, many of the pressures faced by Greece are closely mirrored in Portugal, Spain, Ireland and Italy. My greatest fear is that the Greek exit will create contagion to such a level that some or all of these other counties will follow and operate their own currency or effectively create a two tier Eurozone; either way, we will be faced with considerable depreciation of their respective currencies in those.

The effect of this on operational credit management would be close to catastrophic and there are compelling questions, as professionals, we would have to give consideration to before the event -

* Are we likely to be asked for debt forgiveness to the value of the depreciation? Most probably yes!

* How do we quickly 'stress test' our account portfolio to establish that it remains economically viable?

* How do we structure our bad debt provision in response?

* Could our customers invoke 'force majeure' to avoid payment of existing debts?

* Where possible, how do we operate more effective control over our stock in term of repatriation of existing stock or enhanced protection of future stocks?

* What future instruments of security or insurance may be available?

* Does our existing insurance cover this eventuality? Most probably not!

* Should we or can we be considering converting older debt to long term debt or customer loans?

Hopefully, I'm being overly pessimistic, but I think it's better to address these questions before the hypothetical event, rather than after the actual tragedy."