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The Association of Credit Professionals

Spring Challenge

Dear ACP Associates, Members and Fellows,

Spring is definitely in the air as we enjoy a welcomed increase in temperatures and it’s a great time for a spring clean!

Before 2007 a lot of companies neglected Credit still referring to us as the sales prevention unit or the ugly step-sister of accounts and still saw us as a back room function.  Who did they run to when the chips where down, the banking sector started to crumble and the economy plummeted?  I am proud of how Credit Management has been able to raise its profile and keep the cash, the lifeblood of a company, flowing.  It is up to us now as Credit Professionals to keep at the top of the list.

As we start to come out of the last 7 years of difficulty, we all need stay ahead of the curve and our competition.  Start by reviewing our processes and my challenge to you is simple, look at everything you do as a Manager or Controller and ask yourself how it impacts on the turnover and profit of your company.

  • Does your underwriting policy allow for more risk to be taken as your customers businesses stabilise?   A more profit focused approach will grease the wheels for sales; adding turnover and profit that may otherwise be lost.
  • Review how you assign credit limits?  Is there a better way?  Can you shorten terms and automate payments to control exposure and allow sales to sell more?  STOP limiting what customers can buy and give them a target to hit, call it a credit line that you can extend when they hit it.
  • Is your in-house collections strategy set to the hard times or does it allow those managing accounts the flexibility to work more with customers when this may not have been possible 6 years ago?  Are you transfixed on DSO instead of growth?
  • Are your targets purely cash driven and are your objectives aligned solely with Finance?  What can you do to restructure and realign to ensure you stay at the forefront of your company and add to the profitability of your business.
  • Is your “further action” strategy too aggressive?  Another piece of interesting feedback recently is the number of customers who don’t pay but then when pushed by a third party agency pay with ease.  Are you still issuing legal proceedings and running up costs?  Consider your options and speak to a DCA or 2 to see how much you could save.

Another thing that has struck from talking to people is the number of businesses who are investing in new IT systems and the trouble that this can bring.  While it’s great to modernise the one thing that still evades some companies is the real core of a business, the one thing that really matters, its people.  Any new or old system is only as good as the operators so we need to focus on recruiting, training and developing the best.  Anytime you are involved in system integration, never forget the people on the ground, doing the job.

Declan Flood asked a great question recently in his e-Zine, “There is a feeling out there that to promote a more positive image for the credit function we need to come up with an alternative title to "Credit Controller" that is often viewed as a negative.”.  Please get in touch with me ([email protected]) to let me know your thoughts and I will publish the results when we are back after Easter.

The ACP exists to serve you so if it’s training you are looking for or advice on selecting a Debt Collection Agency, please do get in touch with me or any member of the Board.

I hope to see many of you at the Madejski Stadium for the Reading Road Show on 29th May!

 

Paul Taylor FACP MCMI FIACP

Chairman - ACP