This supplement is an independent publication from Raconteur MediaFebruary 10 2009
CREDIT MANAGEMENT
It’s time to call in
the professionals
In an increasingly risk-fueled business environment, the need for sound creditmanagement and a professional credit management strategy has never beengreater. Philip King, Director General of the Institute of Credit Management, reports.Never has the issue of credit beenmore widely discussed in the pressthan it has in the past few months.Suddenly, certain credit manage-ment tools such as credit insurance,top-up insurance, and PUT optionsare being discussed openly, and busi-ness media that in the past had little orno time for such seemingly uninterest-ing subjects are now hammering at thedoor, demanding to know more.The government too has been stunginto action, keen to show that it is atleast doing something to help busi-nesses – and particularly small andmedium-sized enterprises – getthrough what most if not all commen-tators will agree is an unprecedentedfinancial crisis. Even those who sur-vived the last recession, and the onebefore that, will admit that they do noteven closely compare with the currentturmoil that has hit the commercialand the consumer world alike.The impact of the crisis is easy to seewith the rising number of businessand personal insolvencies, r risingunemployment, a severe tightening ofcredit, and famous high street namessuch as Woolworths and Whittardsgoing to the wall, and other establish-ments clearly looking over their shoul-ders, worried that they may be next.The importance of the credit managerwithin a business is similarly beinggiven renewed focus. The ‘grey’department, stuck in the back office, isgradually emerging from the shadows.People who may have been once criti-cised by their colleagues as ‘sales pre-vention managers’ are now the profes-sionals who others need to steer themthrough troubled waters, albeit thatsome future business relationshipsmay need to be reviewed.BACK TO BASICSIf there is one thing good to come outof the crisis then it is the new under-standing of the need for professionalcredit management, and professionalcredit managers. Modern credit man-agers do much more than simplydefining the policies and practicesbusinesses follow in collecting pay-ments from their customers – albeitthat this is still an essential task. Todaythey pro-actively and positively inputto many departments, functions andprocedures to improve business flowand customer service, as well as focus-ing on their main role of protectingtheir organisation’s investment indebtors and recovering debt.Breathing life into SMEsVictoria Hartley reports on the plight of smallbusinesses, who are suffocating from a lack ofthe vital oxygen they need – finance.page 4The availability of credit can make or break a business, particularly in today’s economic climate.Their remit of course varies fromorganisation to organisation, andindustry to industry, but is increas-ingly becoming much more strategic,given that large organisations areknown to have strategies for eithernon-payment to help their own bot-tom line profit, or at least significantlydelaying payment causing the suppli-er to finance them at no cost. At itsmost fundamental, a credit managerwill oversee the Sales Ledger function,including raising invoices in a timelyand accurate manner, speedy cashposting and accurate allocation ofthat cash, agreeing invoice formatswith larger customers, and ensuringsales teams are capturing data accu-rately to prevent subsequent invoicequeries. In times of crisis, as now, it isExtraordinary times With UK plc reeling from its most seriousdownturn in two decades, David Smithreviews the extent of the damage. page 8these ‘fundamentals’ that becomemore important than ever.Credit managers may be assessingrisk on new accounts and existing cus-tomers by way of credit informationproviders, reading financial accountsand establishing trading histories,something that is becoming increas-Continued on page 3Credit insurance Credit insurers have received a bad press oflate. Sean Feast interviews three industry lead-ers who redress the balance.page 10