At the start of the week I hosted and chaired the latest ICM Think Tank. It was our most well attended to date, with some 25 senior representatives from all parts of the credit industry coming together to share their thoughts and views and join in a lively debate around the key issues of the day.
Among the delegates was Mike Chambers, Managing Director of Bacs, and it was most interesting to hear his views around the proposed withdrawal of cheques by 2018. The next two years, it would seem, will tell us a great deal about the preparedness of the banks, businesses and the consumer in migrating to alternative payment methods.
The issue of late payment was also discussed, particularly in light of new EU legislation that I commented on in an earlier blog, but perhaps the main topic of discussion was around the provision of data, and specifically the provision of debtors' payment data as a prerequisite for future adequate and meaningful risk assessment. It is inherent within our business culture, it would appear, to jealously guard what financial data we possess, even if in sharing that data we might all ultimately benefit.
The Think Tank also provided the forum for discussing the preliminary findings of our new Credit Managers' Index (CMI). Although it is still very early days, there are some interesting trends emerging, and work is now underway in preparing for the next survey in December to enable the first comparisions - and therefore the first 'index' - to be drawn.
In what has been a busy week, I was delighted to have been actively engaged in CCR-i which seemed to be the most successful yet. Our commitment as the ICM is to further build CCR-i to become the foremost national event for the credit industry, and it was most encouraging to see so many credit professionals - and ICM Members in particular - taking time out of their busy schedules to attend.
On the day, I chaired the Commercial Credit Strategy stream with various presentations from credit professionals sharing their own 'front-line' experience as opposed to theory. It gave delegates much food for thought in terms of reinforcing their own current practices and/or learning of new techniques to deploy.
Sharing with credit professionals from across the industry, and a range of sectors, with different perspectives gave those present a real sense of the power of belonging to - and engaging with - the wider community through organisations like the ICM http://www.icm.org.uk.
Showing posts with label late payments directive. Show all posts
Showing posts with label late payments directive. Show all posts
Thursday, 7 October 2010
Thursday, 23 September 2010
4th Weekly Blog by Philip King, CEO of the ICM: EU - support or overkill?
The European Union agreed new rules last week to update the existing EU Late Payments Directive. The agreement now needs to be approved by the full Parliament and is likely to be put to a plenary vote at the October session in Strasbourg.
Four key points were settled in the negotiations. The first placed a 60-day cap for public authorities; only in exceptional circumstances can the payment period be longer than 30 days and never beyond 60. The second fixed the statutory interest rate for late payment as the reference rate plus 8% and fixed a sum of 40 Euros as compentation for recovery costs.
For public entities providing healthcare, it was agreed that Member States may choose a deadline of up to 60 days, and finally that the verification period for ascertaining that the goods or services comply with the contract terms is set at 30 days.
I have no argument with making things as simple as possible and I have always said that arbitrary imposition of extended payment terms on small suppliers by large organisations in unacceptable and unethical, particularly when retrospectively applied. But whilst the EU may be pleased with its negotiations, I find a number of questions appearing in my head. For example:
- What happens when I have some obsolete stock to clear and giving very extended terms would have persuaded a customer to take that stock and sell it over time?
- What happens when I'm negotiating particular contract details and either I or the other party has some specific requirements where longer - or shorter - payment terms might have been one of the areas on which flexibility would help deliver a solution?
- What happens when an invoice is disputed and remains unpaid either justly or as a means to avoid payment?
- Will businesses that fail to meet invoicing requirements - or delay invoicing - be any better off?
As always the devil will be in the detail but I've watched with interest the introduction in France of the Modernisation Law in the last year and - anecdotally at least - I don't get the sense that there has been a huge positive impact. Credit Managers I speak to seem to be spending an inordinate amount of time trying to manage through the bureaucracy and confusion about what terms apply when and to whom.
I'd be the first to agree that the current situation is poor but I need to be convinced that this will be the panacea that's being suggested by Barbara Weiler and others. Good credit management practice can resolve many of the issues that arise and I fear we might end up with overkill that - with the best of intentions - stifles free enterprise.
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