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.

 

 

Guest blog by Sue Kettle, Director of Membership and Support Services of the ICM - 'Love and Passion? Can this really be credit management?'

As Philip’s guest blogger, I deliberated long and hard on the theme and title of my blog. Would it be appropriate? Will it be taken in the context it’s meant? 

 

It didn’t take me long to feel at ease when I spotted a recent discussion posted on LinkedIn by a fellow colleague entitled ‘I love…’. With a smile and no real surprise I began to read the responses to the post that confirmed my thoughts. “I love the challenge” and “I love making a difference” to quotea couple.

From day one of joining ICM, and for the past 14 years, it has been so apparent from conversations with our members that the passion, commitment and excitement for credit management is boundless.

 

My early career was spent in a variety of industry sectors and I can honestly say the only passion and love I ever saw in those days was from an 11 o’clock diet coke break or an early finish.

 

One story that has always stuck with me, and I won't mention any names, was during my early days in membership when an individual who as applying to become a Member, who was so passionate about his job and his enthusiasm to join the credit community, he felt the need to call me from the bath to tell me he had reduced the companies DSO to 12 days, would this contribute to him achieving recognition as a credit professional?  To this day, he is now a long serving Member, I can't look at him with a straight face!

 

I feel, from my experience, I can honestly say credit professionals love their jobs with a passion and they are a breed that are not precious about their knowledge they have a longing desire to share and help others develop in the same way they have.

 

To all in the credit community let's nurture the professionals of the future to continue this infectious passion.

 

Yes, this really is Credit Management.

 

Sue Kettle

Director of Membership and Support Services

 

Guest blog by Charles Mayhew FICM, Director of Moreton Smith Limited –‘Brass Bands and Bacon Rolls’

I was delighted to be asked to be a guest blogger by Philip some months ago, and was wondering what I could write.

How the late payment act is working? Perhaps some interesting stories about collecting debts in the Middle East and so on? So while I was reflecting on a topic, I started remembering all the fascinating people I have met in our Industry, and of course being involved in International collections, many different nationalities.

I was recently made a Fellow of the ICM and a very proud one also. So therefore, having been the recipient of what should be perceived as an Oscar, I am hoping to thank a few people and share some stories of my 20 years in Credit - so far! It’s not over by any means.

It all started in 1994 just after I returned from living and working in Abu Dhabi with my wife and two (then) young children. I was interviewed by a distinguished American Gentleman, Stanley Tulchin of STA Associates who introduced me to the collections industry. His favourite saying was “Volume without yield is an unnecessary expense”. Wise advice from a wise man. Stanley was a great supporter of the American Collectors Association and also the NACM in the USA and insisted that we became heavily involved with the equivalent UK organisation which of course we did. I was lucky enough to travel to Chicago for the NACM conference, the same as the Annual ICM at Gaydon but much larger.

I compared notes on the ICM with Ted Brown, who was spotted in window of the Hotel opposite me in a John Cleese type moment. We couldn’t believe the massive brass band marching through the exhibition halls, the amount of people in attendance, and the lavish stands that many companies had invested in. I also attended the New Orleans NACM conference a few years later, and that was an experience. Then coming back to the UK I remember well the Liverpool and Merseyside conference and Lynne Mills enticing us all to arrive promptly with the lure of Bacon Rolls, which were delicious. It was 1998 before I became an MICM and I actually remember saying to my older brother, himself a Lieutenant Commander in the Royal Navy, that I eventually had letters after my name.

My Mum was also impressed! I joined Richard Moreton and Mark Smith in 2003 and was grateful for my time at STA but the bright lights of London beckoned, and the opportunity to become a shareholder in a growing business. Again my previous colleagues at STA were household names, who I gained invaluable experience from. Colin Thomas and Kevin Terrel, all with great sayings such as “companies owe money but people pay bills” (I don’t think that’s copyrighted though).

Philip King, Brenda Linger, Stuart Hopewell, Larry Coltman were all encouraging me along with Richard Seadon especially to apply for my fellowship. 

I am delighted that I did, it has made me even more passionate about the industry we work in, and what it has always allowed me to do is to reflect on how many good people have had an influence on my career so far. Over the years and travelling around to see many credit managers as I do, people are always quick to give an opinion on the ICM. Another saying is you only get out what you put in.

I will continue to support our professional body, and perhaps even more importantly the people who are in our industry. Socialising with them is also a healthy part of it, we call it networking. Have a great summer.

Charles Mayhew FICM

 

Next week Philip King’s guest blogger will be Sue Chapple, Head of Revenue Management of EDF Energy Plc.

 

 

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 - 'Reading, writing and credit management'

Back in February the government announced a new draft National Curriculum for England that would see financial education embedded in both mathematics and in citizenship education, making financial capability a statutory part of the curriculum for the first time. The draft programme of study for citizenship would include the functions and uses of money, the importance of personal budgeting, money management and a range of financial products and services in Key Stage 3, and wages, taxes, credit, debt, financial risk and a range of more sophisticated financial products and services in Key Stage 4.

 

This week, following a period of consultation, Michael Gove published the revised Curriculum and the financial education has been further strengthened by the inclusion of 'risk management' into Key Stage 3 and 'income and expenditure, credit and debt, insurance, savings, pensions' at Key Stage 4. Recognition is due to pfeg for its work in pushing for this enhanced content.

 

Providing education that allows children to leave school with financial literacy can only bode well for the credit profession in the years ahead if it means consumers are more financially aware. None of us wants to see people in financial difficulty through ignorance because they weren't sufficiently aware or informed.

 

In my blog last week I called for the OFT to ensure that affordability tests were genuinely being carried out by payday lenders to avoid the vulnerable being caught in a vortex of indebtedness. An interesting discussion has unfolded in response on the ICM Credit Community LinkedIn group (you can find it here) I don't agree with all the comments - simply outlawing payday lending could carry serious unintended consequences involving a growth in back street loan sharks, for example - but action in the short term is needed and, for the longer term, education will also play its part. Now we need to make sure teachers are provided with adequate tools to deliver the proposed curriculum content.

Weekly Blog by Philip King, CEO of the ICM - 'Testament of Youth'

There was an interesting article in the Financial Times about youth unemployment on Monday. Hot on the heels of the recent revision by the Office for National Statistics (ONS) that has cast doubt on last year's UK double-dip recession, it served as a timely reminder of how dangerous it can be to rely on statistics or to accept them at face value.

 

Both the OECD and the United Nations have recently warned that the spiralling rates of youth unemployment across many advanced economies will have severe consequences following the latest reported figures showing that nearly a quarter of European under-25s are now unemployed. A truly terrifying statistic, particularly in Greece and Spain where the figure is over 50%, and Italy and Portugal where it is 40%, until we get beneath the headline, and let me quote the FT's Kate Allen in explaining.

 

"Youth unemployment figures are meaningless without understanding what proportion of a country's young people are economically active."  "Unemployment figures only reflect the proportion of the population who are economically active ­ i.e. looking for a job, but unable to find one."

 

'Youth' in this context is defined as young people aged 15-24 and inactivity rates can be expected to be very high with many in education or training.  Taking this into account the FT calculates the true youth unemployment rate in Spain to be marginally over 20%, Greece about 17%, Portugal 15%, and Italy 11%.  Indeed, on this basis the unemployment figure for European young people is fewer than 10% rather than the reported almost 25%.

 

There are conflicting opinions about who originally said "lies, damned lies and statistics" but, whoever it was, we should bear their words in mind when we read or hear numbers being quoted in support of a view or argument. Context can be all-important!

 

 

 

Weekly Blog by Philip King, CEO of the ICM - 'Going for growth'

Lord Young published his Growing Your Business - A report on Growing Micro Businesses on Monday and it's a good read with some insightful views. I've spent some time with Lord Young as part of my involvement on the board of the Start-Up Loans Company, and I never cease to be amazed at his enthusiasm and energy. I'd love to think I will be so sprightly when I am 81! 

 

The report can be found at the link above and three things strike me in particular. Firstly, the proposals regarding public sector procurement starting on page 19. Whatever government might say, or intend, the reality is that many small businesses find procuring for public sector contracts bureaucratic and daunting. Their perception is that large organisations will be favoured in the process and - whether they're right or wrong - we all know that perception is, for them, reality. The removal of the PQQ system for contracts below €200,000 makes very good sense, as does the 'single passport' proposal allowing pre-qualification data to be entered once and then - after approval by one authority - apply to all bids across multiple authorities.

 

Secondly, the recognition that "Few small firms understand the importance of cash flow particularly when applying for a first bank loan." I guess the fact that the ICM/BIS Managing Cashflow Guides have been downloaded more than 450,000 times since they were launched in 2008 and are seeing regular and substantial monthly increases reinforces this point.

 

Thirdly, the recommendation that the upper age restriction be removed from the Start-Up Loans scheme. Originally set at 18-24, then in January changed to 18-30, this latest suggestion would allow anyone to benefit from what has been a hugely successful initiative. Almost 4,000 businesses have been started, receiving loans totalling nearly £20m, and the creation of a private company to manage the scheme is a radical and

 

innovative alternative to previous government propositions. The businesses receiving funding, support and mentoring have the chance of a real kick-start towards their entrepreneurial vision and aspirations. At the start of 2012, micro businesses (0-9 employees) accounted for 32% of private sector employment and 20% of private sector turnover. Growing the contribution of such businesses can only be good news for the economy and add to the increased confidence that is starting to emerge.

 

The report's 54 pages contain much more, including the proposal for Growth Vouchers encouraging businesses to obtain support and advice, and just as I am proud to have been engaged on the Start-Up Loans Company Board since its inception, I am also proud that the ICM is listed as one of the organisations with which Lord Young engaged in the writing of the report.

 

Finally, it would be remiss of me not to mention the fact that the Institute of Credit Management won another PR award last week. The press release announcing the win can be found here and I'm delighted at the recognition of what we, together with our PR agency Gravity London, have achieved in raising the profile of professional credit managers and the vital role they play in supporting the economic recovery.

 

Next week, I'll be standing down from my blog-writing responsibility for a week and we'll be publishing a guest blog by Professor Russel Griggs OBE who is Lead reviewer of the banks appeals processes and Chair of the Scottish Government’s Regulatory Review Group ahead of the publication of his second annual report in June.

 

 

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 - 'Whistling in the wind'

If you've read the latest (May) edition of the ICM's Credit Management magazine, you'll have seen mention of a survey finding that 42% of SME respondents had never heard of any of the current Government or bank-led initiatives to support small businesses. The recent news about funding through the Business Bank and the increase in length and breadth of the Funding for Lending Scheme is great news but only if businesses are aware of the help that might be available.

 

I was pleased that, of all the schemes, awareness was highest for Start-Up Loans. Regular readers of my blog will know that I'm privileged to sit on the board of Start-Up Loans and I know how much work has gone into raising public awareness, not least by James Caan (the Chair) who has used his personal profile and networks to such great advantage.

 

There have been numerous other initiatives supporting small business in recent times such as the National Loan Guarantee and Enterprise Finance Guarantee Schemes as well as the 17 introduced by the British Bankers' Association (BBA) Task Force in 2010. But none of these serve any purpose unless businesses, banks and others are aware of their existence.

 

One of the BBA initiatives was the creation of an independent appeals process for when loan applications were declined. Russel Griggs, who chairs this, has done good work and his reports show the effectiveness of the idea but I've seen recent examples demonstrating clearly that awareness is woefully inadequate.

 

I heard in the last few days from a business that had thrown in the towel after its current bank had withdrawn facilities despite a 37 year positive relationship, loan applications to other banks had been declined, and engagement with the Financial Ombudsman Service, MPs and numerous others had failed to have any impact. What astounds me is that at no point in this whole process was the business pointed towards the very appeals process that might have helped, or at least allowed it to understand the various banks' position.

 

Surely some of the parties involved would have heard of the appeals process and could have signposted to it? Not long ago I was at a presentation by a senior regional manager from one of the major banks and he was totally ignorant of it, so perhaps not!

 

In this age when we can communicate in so many different ways, and when instant communication is the norm, I find it sad and strange that getting important messages communicated and understood is so difficult. I guess it's incumbent on all of us to ensure we are well informed and up to date with what's going on in the business world and that we play our part in passing important messages on to those who might benefit from them.

 

Weekly Blog by Philip King, CEO of the ICM - 'The power to make a difference'

I was privileged to chair the 5th National Consumer Debt Conference, organised by Utility Week, in Birmingham on Tuesday. It was a full and interesting day with the order of subject matter judged exactly right.

 

The first section focused on the economic landscape looking at issues around ability to pay, the implications of the current welfare reforms including Universal Credit, and the mechanics of the government's Green Deal scheme. The second section looked at customer management including the use of analytics to identify the most vulnerable in our society, and a cross section of good practice examples of customer-driven strategies. The final part of the conference addressed billing and collections, exploring areas as diverse as fraud and meter-tampering, landlord web-portals, risk management strategies, and smart metering.

 

You'll probably guess from some of the subject matter above that the delegates were largely from the utility and energy sectors where there are some particular credit management issues. The water industry's problems arising from the obligation to supply, and difficulty in identifying customer details, particularly in tenancies, for example, are well known and equally well documented.

What always strikes me at events like this, however, is just how many themes are common across industries and sectors. While each has its own peculiarities, trends, and concerns, the principles and elements of good credit management practice are largely shared.

 

At the end of the conference day, I hosted an interactive workshop where we discussed, amongst other things, what best practice looks like. One of the common themes that emerged was the need to drive professionalism within organisations through the engagement and development of credit professionals within them.

 

Driving that professionalism is one of the key objectives of the Institute of Credit Management and I'm always proud to hear examples of where we're succeeding, and to be playing a part in raising standards and performance as a result.

 

 

 

Weekly Blog by Philip King, CEO of the ICM - 'Falling on deaf ears'

I was interested to see the ICAEW (Institute of Chartered Accountants in England & Wales) quoted by James Hurley in the Telegraph last weekend making the same point the ICM had made in its submission to a government consultation in March this year. The consultation related to the implementation of 'Simpler Financial Reporting for Micro-Entities'. The Telegraph article is here and the changes include a reduction in the amount of information filed with Companies House and the opportunity to mix two different types of accounting – the traditional ‘accruals’ approach and so-called ‘cash accounting’.

 

The government claims that the measures will reduce red tape for small businesses making it easier for them to do business. We believe, however, that it will reduce the availability of credit and stifle the economy rather than the claimed positive alternative. Our argument focuses on four key issues. Firstly, to abridge or abbreviate accounts – or indeed any document – you first need to have the full version to work from. Filing less information does not, therefore, reduce the preparation time, indeed if anything it will increase it. Secondly, the presentation of prepayments and accrued income, and accruals and deferred income is vital to understanding the true financial position of a business and to being certain that it is solvent.

 

Thirdly, the absence of reported information will encourage suppliers to simply refuse requests for trade credit rather than go to the trouble of seeking more detailed information from the potential customer, particularly when the amounts involved are small. It is these modest transactions that accumulate into real economic activity and potential growth. Our final argument is that by categorising a business that turns over £440,000 and employs ten people in the same way as a genuine micro-business that might trade solely on a cash basis is ludicrous. What is worse is that the turnover and net assets limits have been substantially increased since the original discussion paper was published in August 2011.

 

Another example of unintended consequences resulting from a failure to listen adequately to the voices of those who live in the real world, I fear.

 

 

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 - 'A reason for good cheer'

As we enter the Christmas break, it's good to pause and reflect on the last 12 months.  Our Regional Roadshow programme, for example, has been really successful and it was great to end the year with a superb event at the premises of Schuco in Milton Keynes.  It was an excellent venue with great speakers, and proved to be a fantastic example of the ICM credit community at its best.

 

Looking at our wider activity, we've had some notable success too.  By the end of the 2012 there will have been 125,000 downloads in the year, over 50,000 more than in 2011, and almost 400,000 downloads in total of the Managing Cashflow Guides that were written and launched in 2008.  The Prompt Payment Code (PPC), which we host and administer for BIS, featured in a November House of Commons debate when the ICM received no less than eight mentions, and we've seen a surge in sign-ups in the last few weeks - particularly from large organisations - with signatories now standing at over 1,240.

 

Even more encouraging however is recent research by Experian showing that the PPC has had a positive effect on payment times.  It found that on average those who had signed up to the Code paid five days earlier than those who had not.  Furthermore, there has been a sizeable improvement over the period amongst PPC signatories who now pay 12 days quicker than in December 2008.

 

The Code was launched late on Christmas Eve, 2008 and, while I accept that there is much much more to be done, it's great to see independent evidence that it is has made some progress in changing the culture it was designed to achieve.

 

I'm looking forward to an exciting 2013.  In the meantime, may I wish you a very happy Christmas and a peaceful, prosperous and productive New Year.

 

Weekly Blog by Philip King, CEO of the ICM - 'No man is an island'

I've just left a board meeting of the Start-Up Loans Company and never cease to be amazed at what can be achieved by a small group of people pulling in the same direction. Indeed, I may have quoted Winston Churchill words in a previous blog: "Never doubt that small groups of people can change the world. In fact it’s the only thing that ever has."

 

The first board meeting was only six months ago and, since then, an infrastructure has been pulled together, Delivery Partners have been appointed, a significant number of loans have been advanced, and some big challenges have been overcome. They've been overcome by a committed group of people pooling their talent and resources, and coming up with solutions, and it's fascinating to see what can come out of a two-hour meeting with real focus.

 

At ICM HQ, we're doing some work here to ensure our management team is as effective as it can be because we know that an effective team can make a real difference. One of my favourite quotations, and one I frequently repeat at HQ, is: "Creative thinking makes it possible; teamwork makes it happen.” Wherever you are, whether you are at work or at home, whether part of a large group or small, we all invariably work as a team. It is teams, more than individuals, which turn ideas into reality.

 

No man is an island after all!