Weekly Blog by Philip King, CEO of the ICM - 'Making a date with Destiny'

My Executive Assistant at ICM HQ, Tracy Carter, is also responsible for driving our social media strategy and activity. Last week she started a discussion on LinkedIn that has generated a riveting discussion. The question she posed was: "I had an interesting conversation with my 13 year old nephew about choosing a career, and he asked me if a career in credit management would be good and if it is important? How would you answer?"

There have been plenty of long-standing credit professionals like me saying what a brilliant career credit management is. They have highlighted positive aspects of the profession such as the variety it brings, the different skills it develops, the fact that it touches every part of the business, and delivers real value in many ways.

Some, including much younger contributors than me I'm pleased to say, have recognised that the role will become more strategic and less operational as technology continues to change the way we work. Others have stressed the need for personal and professional development as a way of building what is an interesting and satisfying job into a real career.

As with all discussion forums, the debate deviates from the original question and there is some disagreement, but the divergence of views adds to the vibrancy of the thread and I'm pleased to note that the underlying mood has remained positive. It should do so because many of the very senior people in credit I know could vouch for the career prospects as they have reached the top of their chosen profession and become key players within their own businesses.

As I write these words, I'm preparing for the latest quarterly meeting of the ICM Credit Industry Think Tank, the participants on which are all a testament to the opportunities afforded by credit management as a profession. Credit management is a dynamic and thriving profession and Tracy's nephew can be assured that it would be a good career choice. But let's not kid him. The reality is that it will be down to him to take hold of the opportunity with both hands and make the most of it. As one of the contributors to the LinkedIn discussion said: "....each individual is responsible for their own destiny."

Weekly Blog by Philip King, CEO of the ICM - 'The value of true leadership'

The Financial Times reported this week that "if the International Monetary Fund's latest forecasts are right, then meaningful growth looks set to elude Britain for another two years." So stagflation is here to stay.

 

I've been listening to Jim Collins' 2011 book 'Great by Choice' and the results of this research are fascinating. The sub-title is 'Uncertainty, chaos and luck – why some thrive despite them all' and, following his standard research approach, Jim (together with his colleague Morten Hansen) looks at truly successful businesses and compares and contrasts them with a direct competitor which they have out-performed by a factor of at least ten times over a defined period. I'm only half-way through the book but what is already apparent is that the successful examples are, to a great extent, the result of having a great or enlightened leader. He talks about three common elements: Fanatic Discipline, Empirical Creativity, and Productive Paranoia but comes back to an individual that led the business' approach and made a real difference.

 

The early part of the book is a captivating comparison of the attempts by Captain Scott and Roald Amundsen to reach the South Pole. He argues and demonstrates that they were both operating in similar environments but that the difference was their approach both before and during their expeditions. For Amundsen it was a race to victory and a safe return home while, for Captain Scott, it was a devastating and tragic defeat. Events that date back to 1911 have some strong and powerful lessons for today.

If we're in a prolonged period without growth then the approach we take to our roles and to our businesses will determine the outcome and – wherever we sit within an organisation – we can have an impact and have to choose whether it will be positive or negative. I know I'm currently looking closely at what I need to do differently in the months ahead.

 

When it comes to great leaders, there's been a huge amount written following the recent death of Margaret Thatcher. It's been interesting to listen to commentators and contemporaries, some of whom are great supporters and others vociferous detractors, all share one view. She was passionate in her beliefs, she was fiercely loyal to her country, and she has left a lasting legacy on British politics. In an era when bland sound-bytes and immediate short-term company results are too often the focus, real leaders are few and far between and we need more of them driving us back to growth.

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 - ' The long and the short of it'

I've been to some interesting meetings this week but one, in particular, reminded me of the importance of looking at both the short and the long term.

Businesses often make decisions that seem right at the time but can then look back two, five, or even 30 years later and realise how flawed their thinking must have been.  I was reading a book recently that reminded me that, in 1982, IBM didn't buy Microsoft because - at $100 million – it was too expensive, and there are countless other examples of businesses failing to take, or turning down, an opportunity that would have been transforming.  I've been listening to Steve Jobs' autobiography in the car over the last few weeks; Nolan Bushnell's decision not to invest $50,000 in return for 33% of a company that recently hit a valuation of $600 billion must stand out as the biggest of all big missed opportunities (although he's done pretty well out of speaking in public about that missed opportunity)!

It's all too easy to make decisions for the short-term that fail to cater for the long term needs of the business and we often see very senior people lose their jobs (football and FTSE100 companies are primary examples) because short term results are not good enough.  The problem with this is that short-term expediency ends up driving the organisation and that often isn't best for the business, its people, or the economy.  CIMA published a fascinating report recently called Rebooting Business: Valuing the Human Dimension.  The report draws on the experience and views of a number of senior business leaders and to quote from the summary:

"If they get the human dimension right, companies will be able to focus their resources on the right things and create value for the long term.  One of the greatest challenges to realising the potential of the human dimension is the level of focus on quarterly reporting and short-term results. The value that people add will not appear in the quarterly reports and may not be apparent in the short run, but it must be given its due if we expect to make the right decisions.  Adopting strategies that will sustain success for a business is not a 'nice to have'………….."

One of the ICM's key priorities is to work with organisations and individuals to raise the value of the human dimension in business by developing the careers of credit professionals and by raising the performance of the teams they work in and run.  It's great to hear serious business leaders recognising that people are as important as numbers, and need to be a priority for sustainable business.

Weekly Blog by Philip King, CEO of the ICM - 'Setting the future agenda'

I attended the ICM's 15th Regional Roadshow yesterday. Held at The Royal Armouries in Leeds, the attendance was excellent and so was the content. Gerry Barron focused on the concept that this is the time for credit managers, whereas James Perry, a solicitor from DWF, talked about what credit professionals can do to improve the chances of recovery in legal action to recover debts. I also shared my thinking about the credit management profession and the professionalism of those working within it.

The event prompted three thoughts to stand out in my mind: firstly, Gerry's statement that credit managers should be setting their own agenda in the current economic times; secondly, that we should be proud of our professionalism and the real value we add; and thirdly, that we should be smarter in the way we communicate to the audience beyond the credit professional.

Gerry worked through an example showing how the profit on a simple debt of £50 was eroded by late payment or, worse, non-payment and set out in absolute terms the impact to the business. The Benchmarker module for ICM Online Services available at: http://www.icmos.org.uk/ has a profit erosion calculator that demonstrates the same realism. It's a good way of making you think, and would be usefully shared with colleagues across our organisations as an indicator in real terms of the value we add. There is, after all, a positive impact to contrast with every negative impact - the opposite of profit erosion is profit generation - and that's where our professionalism can make a real difference!

The first and third thoughts are linked: if we're going to set the agenda, we also need to communicate in the right way and using the right language. All too often, we talk about DSO which means everything to a credit audience and almost nothing to anyone else. I believe strongly that DSO is a good and useful measure, especially on a trend basis, but it's rarely appropriate for a wider audience who would understand alternatives such as the amount of available cash collected for the additional amount of cash released into the business. Guess what, if we use graphs for the last two, an upward line is good news that matches the graphs used by our colleagues in almost every other area of the business. Credit people are, by their very nature, good communicators and a simple, subtle change to language and presentation could generate an exponential rise in the way we're perceived in our own organisations. It's time for us to set our own agendas!