201504 CM April

credit

THE CICM JOURNAL FOR CONSUMER AND COMMERCIAL CREDIT PROFESSIONALS

CREDIT MANAGEMENT CM THE CICM JOURNAL FOR CONSUMER AND COMMERCIAL CREDIT PROFESSIONALS APRIL 2015 WWW.CICM.COM £10.00 WAXING LYRICAL ROYAL APPROVAL FOR THE CICM CREDIT INSURERS SPEAK THEIR MINDS


12 great reasons why you should join CICM today... 1. CICM is the recognised standard in the industry 2. Get qualified – get letters after your name 3. Career progression 4. Keep up-to-date 5. Networking 6. The magazine 7. Support and reference material 8. CICM Best Practice Network 9. Profile and influence 10. The CICM British Credit Awards 11. Social media interaction 12. Not-for-profit CICM Credit Community CICM_HQ CreditManagement CICM_HQ Get the full picture online at www.cicm.com Tel: +44 (0)1780 722900 Email: info@cicm.com The recognised standard in credit management


CONTENTS CM Credit Management magazine for consumer and commercial credit professionals APRIL 2015 www.cicm.com Governance President Stephen Baister FCICM Chief Executive Philip King FCICM CdipAF MBA Executive Board Gerard Barron FCICM Laurie Beagle FCICM - Vice Chair Larry Coltman FCICM - Treasurer Victoria Herd FCICM Bryony Pettifor FCICM(Grad) - Chair David Thornley FCICM Advisory Council Sharon Adams MCICM(Grad) Gerard Barron FCICM Laurie Beagle FCICM - Vice Chair Glen Bullivant FCICM Sue Chapple FCICM Larry Coltman FCICM - Treasurer Jacky Cooper FCICM Eleimon Gonis MCICM Victoria Herd FCICM Neil Jinks FCICM Edward Judge MCICM Carole Morgan FCICM Jason Pallister FCICM Salima Paul FCICM Bryony Pettifor FCICM(Grad) - Chair Charlie Robertson FCICM Chris Sanders FCICM Richard Seadon FCICM David Thornley FCICM Peter Whitmore FCICM Paul Woodward MCICM(Grad) The recognised standard in credit management REGULARS 4 Editor’s column 6 News 16 CICMQ News 40 International Trade 46 HR Matters FEATURES 11 INSOLVENCY NEWS David Kerr summarises the Insolvency Service’s annual report 12 INTERVIEW Sean Feast caught up with the outgoing President of R3 and reflects upon a busy time for the insolvency profession. 18 CREDIT INSURANCE Special feature Ian Selby, Risk Underwriting Manager at NEXUS CIFS, winner of a CICM British Credit Award, looks at Special Purpose Vehicles and their role. 21 EXPECTING THE UNEXPECTED Sean Feast seeks the views of some of the major players in the credit insurance industry in the wake of recent business failures. 24 HOLDING A GRUDGE Andy Moylan, Managing Director, EFCIS Trade credit insurance brokers, winners of a CICM British Credit Award, looks at how credit insurance can move from a grudge purchase to a business builder. 26 CONSUMER CREDIT Amanda Hulme gives an overview of all the goings on in the world of consumer credit. 28 OPINION Karen Young looks at what it takes to be a successful credit manager. 30 FOLLOW MY LEADER Special feature In the second of a new series, Vicky Bailey of Delphinus tmc considers the benefits of being a proactive and reactive leader and which style is more effective. 32 ROYAL CELEBRATION The Queen's Representative, current and former Presidents, Fellows, Chairs and other VIPs gathered for the formal unveiling of the Royal Charter. 34 HOUSE RULES Rosanna Bryant considers the treatment of mortgage customers who fall into arrears in the light of recent FCA findings. 50 Branch News 52 Forthcoming Events 58 New members 60 Cr£ditWho? directory 63 Crossword 31 38 PAYMENT TRENDS Jason Braidwood MCICM(Grad), Head of Sales Ledger Consultancy at Creditsafe Business Solutions, analyses the latest monthly business-to-business payment performance statistics. 43 SOAPBOX CHALLENGE New feature Glen Bullivant FCICM has an issue with smartphones, or rather smartphone users. 44 NORTHERN ROCK Peter Walker reviews a recent case to see if borrowers could claim the same recompense as others following the collapse of Northern Rock. 48 LEGAL HELP FOR CICM MEMBERS The CICM’s legal partner Freeths provides legal advice for CICM members and their employees. 53 EDUCATION Is it time to educate your boss? 23 www.cicm.com April 2015 3


CREDIT MANAGEMENT CM THE CICM JOURNAL FOR CONSUMER AND COMMERCIAL CREDIT PROFESSIONALS Publisher Chartered Institute of Credit Management The Water Mill Station Road South Luffenham OAKHAM LE15 8NB Telephone: 01780 722900 Fax: 01780 721333 Email: editorial@cicm.com Website: www.cicm.com CMM: www.creditmanagement.org.uk Managing Editor Sean Feast Assistant Editor & Designer Andrew Morris 01780 722910 Editorial Team Imogen Hart Iona Yadallee Alex Simmons Advertising Anthony Cave 0203 603 7934 Printers Warners (Midlands) Plc 2015 subscriptions UK: £85 per annum Overseas: £105 per annum Single copies: £10.00 CREDIT MANAGEMENT CM You’ll find it at www.cicm.com Just log on to the Members’ area, and click on the tab labelled “Credit Management online”. Reproduction in whole or part is forbidden without specific permission. Opinions expressed in this magazine do not, unless stated, reflect those of the Chartered Institute of Credit Management. The Editor reserves the right to abbreviate letters if necessary. The Institute is registered as a charity. The mark ‘Credit Management’ is a registered trade mark of the Chartered Institute of Credit Management. ISSN 0265-2099 Audit Bureau of Circulations July 2012-September 2013: Average net circulation 7073 the Editor’s column RAISING A GLASS TO BETTER PAYMENT BEHAVIOUR BIG companies are often criticised for the way they treat their smaller suppliers and they don’t come much bigger than Diageo. Last month, the drinks giant sent out a letter to its suppliers that set the alarms bell ringing. It implied that the firm was looking to move its payment terms from 60 days to 90 days (from receipt of invoice), and appeared to justify the change by benchmarking its future model with the behaviour and culture of ‘… a number of industry and large organisations…’ Perhaps not surprisingly, the letter was quickly leaked. Concerns were raised within the media, with a particular emphasis on Diageo’s status as a signatory to the Prompt Payment Code (PPC). The Code, administered on behalf of the Government by the Chartered Institute of Credit Management (CICM), has been much in the spotlight of late. The Government, as reported in this magazine, has only recently announced a series of changes that enhance the Code’s enforcement powers, and this was its first major test. On being approached by the CICM Diageo, to its credit, quickly sought to clarify its position and its commitment to treating the supply chain fairly. It insisted that its standard supplier terms were not changing, and that no supplier would be required to move to longer payment terms to secure future business. The CICM, for its part, later praised Diageo for clarifying its position, describing it as ‘a victory for Diageo, its suppliers, and all those that seek to create better behaviour, culture and understanding of payment issues.’ (see news page 9). Diageo’s actions may not be judged so benevolently, and with such understanding, by others. Indeed its people might yet be accused, perhaps unfairly, of executing something of a climb down. But does it really matter? Detractors of the PPC have tended to say that the Code lacks ‘teeth’. That it has ‘failed’. Really? Despite it being a voluntary Code, Diageo thought it of sufficient importance to become a signatory, one of 1800 firms who have so far come to the same decision. It has also subsequently defended its right to remain, and go on record to confirm its 60-day terms. That sounds like a Code that is working to me. The CICM, for its part, later praised Diageo for clarifying its position, describing it as ‘a victory for Diageo, its suppliers, and all those that seek to create better behaviour, culture and understanding of payment issues ... 4 April 2015 www.cicm.com The recognised standard in credit management


DO YOU KNOW THE TRUE IDENTITY OF YOUR CUSTOMERS? Our AML check will confirm it in 5 seconds! Business checks take a little longer, taking 1-2 minutes. Sanctions & PEP screening is fully automated, thereafter we monitor all our client’s customers every day. We also automate their enhanced due diligence. Let us show you how! Call us now to book a free demonstration on: 0113 333 9835 Or visit us online: SMARTSEARCHUK.COM Powered By THE ONLY AML RESOURCE YOU NEED SmartSearch delivers UK and International Business checks, plus Individual checks along with Worldwide Sanction & PEP screening, daily monitoring, email alerts and full enhanced due diligence intelligence. BUSINESS & INDIVIDUAL AML SANCTIONS & PEPS DAILY MONITORING & ALERTS ADVERSE MEDIA ENHANCED DUE DILIGENCE RETROSPECTIVE PROCESSING BROWSER, API & SINGLE SIGN ON INTERNATIONAL SANCTIONS & PEPS


CICM NEWS CMNEWS A round-up of news stories from the world of consumer and commercial credit. By SEAN FEAST RISE IN COURT FEES AGAINST THE PRINCIPLES OF MAGNA CARTA THE legal and credit industries have reacted with dismay and some anger to the decision by the House of Lords to agree to the Ministry of Justice’s proposal to increase fees for money claims, and the speed with which the proposals will come into force. From 9 March, a new tariff was introduced changing the way fees are charged in both ‘specified’ and ‘unspecified’ money claims, primarily impacting proceedings for the recovery of money on claims worth £10,000 or more. In certain values of claims, fees have increased by a staggering 622%, an increase roundly criticised by the Law Society as being ‘tantamount to selling justice contrary to the principles of Magna Carta’. Law Society president Andrew Caplen said that the Government's policy on 'enhanced court fees' amounts RESEARCH published by the Financial Conduct Authority (FCA) reveals that some vulnerable consumers seeking help from financial providers are meeting ‘a computer says no’ approach, putting them at risk of further detriment. The FCA's Occasional Paper on Consumer Vulnerability is described as the first step in a conversation with firms to determine how the regulator and industry can work together to address issues around vulnerability. The UK’s aging population, as well as changing trends in public health and society, means that developing more to a flat tax on those seeking justice: 'The government's hikes will price the public out of the courts and leave small businesses saddled with debts they are due but unable to afford to recover,” he said. “State provision for people to redress wrongs through the courts is the hallmark of a civilised society.” Charles Wilson FICM, Chairman and Managing Director of Lovetts, agrees that a civilised society supports its legal system so that all can get access to Justice. But, he says, such swingeing increases threaten all SMEs because the business user and creditor (who is already paying more than cost) may be denied access to justice for a major debt which might destroy their livelihood. “It is inevitable that creditors will be directed towards going straight into Insolvency proceedings (as it is currently cheaper) which will clutter up our FIRMS CHALLENGED TO REVIEW APPROACH TO VULNERABILITY inclusive policies will become increasingly important. The FCA’s research shows that many consumer protection policies are designed for a ‘typical’ consumer and sometimes not flexible enough to capture individual situations. Therefore, if frontline staff can recognise the signs of potential vulnerability, they can more easily refer customers to specialist support where appropriate. Consumer organisations have also told the FCA that they are seeing people in difficult circumstances inevitably struggling ‘traditional’ court systems with volume claims that they were not designed to carry,” he says. “This means that the tactics of how to recover debt cost-effectively become even more important, and hence, the advice at an early stage from skilled specialists will be even more necessary for the credit manager.” Philip King, Chief Executive of the Chartered Institute of Credit Management (CICM), is especially concerned about the speed with which the new fees have been introduced: “The level of opposition from a broad range of bodies suggests the consequences haven’t been fully thought through,” he said. “The legal process should provide a vehicle through which creditors can recover unpaid debt and increases of this magnitude may serve simply to undermine that process.” with rigid policies within some firms, exacerbating already stressful situations. The FCA’s research suggests that most problems relate to poor interaction or systems and that some consumers are overwhelmed by complex information and find it hard to distinguish between marketing and important product messages. The Occasional Paper includes a Practitioners’ Pack to support firms’ understanding of how they can generate better outcomes and develop more inclusive services for vulnerable consumers. fca.org.uk/consumer-vulnerability. 6 April 2015 www.cicm.com The recognised standard in credit management


DRINKS GIANT FORCED TO CLARIFY PAYMENT TERMS THE Chartered Institute of Credit Management (CICM) has welcomed the decision by Diageo, the global drinks company, to clarify its payment terms to suppliers and commit to a maximum 60-day payment terms for all SMEs in the UK. The decision follows a series of meetings and discussions between Diageo and the CICM which administers the Prompt Payment Code (PPC) on behalf of the Department for Business, Innovation and Skills (BIS) and whose chief executive, Philip King, is the co-Chair of the newly formed PPC Advisory Board. Diageo is one of more than 1,800 signatories to the Code, but was criticised for appearing to change payment terms to suppliers without consultation, and therefore not acting in the spirit of the code and at risk of breaking it. The CICM intervened to seek clarification after concerns were raised and Diageo’s status as a signatory was challenged. David Cutter, President, Supply and Procurement for Diageo said that Diageo acknowledged that an original letter sent to suppliers caused confusion and reaffirmed its commitment to its suppliers and its desire in particular to support SMEs: “We want to clarify that our standard supplier payment terms have not changed and no supplier would be required to move to longer payment terms in order to secure future business. “We fully recognise the importance of SMEs to the UK economy and to the sustainability of our own business and therefore we will commit to a maximum 60 day term for all SMEs in the UK.” Mr Cutter also clarified concerns over Diageo’s supplier financing offering: “Our offer of supplier financing is not connected in any way to payment terms,” he continued. “Since launching the scheme in November 2012 it has been, and it will continue to be, available to suppliers on 60 day, or indeed fewer days.” Mr King says that the drinks firm risked becoming the first major business to be de-listed from the Code: “The Prompt Payment Code has been strengthened recently to give it greater enforcement ‘teeth’ and this was its first major challenge,” he said. “I am pleased that Diageo has sought to clarify its position and confirm its commitment to treating the supply chain fairly. It is a victory for Diageo, its suppliers, and all those including the CICM and BIS that seek to create better behaviour, culture and understanding of payment issues.” The recognised standard in credit management www.cicm.com April 2015 7


CICM NEWS THE Credit Services Association (CSA) has launched a series of bespoke Forums for members to discuss, share and collaborate on key issues regarding compliance. The Compliance Forums, announced at the CSA’s Members’ Meeting and Annual General Meeting in February, will be very inclusive in their nature, according to CSA’s Regulatory and Corporate Counsel Gillian Tiplady: “Our aim is to develop a collegiate approach to compliance amongst the members and provide a broader range of coverage of the developing FCA issues,” she says. The content of each Forum will be partly CSA LAUNCHES NEW COMPLIANCE FORUMS devised by the CSA but also determined by the participants. The CSA will be inviting members to request topic areas or ask specific questions in the lead up to the Compliance Forum. “Members will be asked to complete a pro-forma detailing issues they are grappling with,” explains Gillian, “or areas of compliance where they are not sure of the best approach. The CSA will prepare an agenda for each Forum in response to the current issues, which will be shared with attendees in advance of the meeting to help them better prepare.” The sessions, which will be held every two to three months, are aimed at compliance officers and in-house lawyers, and also those studying at Level 3 and 5 Diploma level. Each session will involve a presentation on an agreed subject area, and where appropriate an FCA spokesperson will be invited to answer members’ concerns. The format of the meeting will follow the issues raised as the agenda, working through them as a group and giving people the opportunity to contribute their views. The first meeting was held on 10 March. For more information, contact Claire Aynsley at claire.aynsley@csa-uk. com or Gillian Tiplady at Gillian.tiplady@ csa-uk.com. BIG FIRMS SHOULD PAY SMALL SUPPLIERS IN 30 DAYS THE Government-backed Prompt Payment Code, administered by the Chartered Institute of Credit Management (CICM), will now promote 30-day payment terms as standard, with signatories committing to pay within a 60-day maximum limit. Unless these firms can prove exceptional circumstances, they will be removed from the Code. The change will be rigorously enforced by the new Code Compliance Board, which will include individuals from business representative bodies who will investigate challenges made against signatories to the Code by their suppliers. The Compliance Board will remove signatories found to be in breach of the Code’s principles and standards. More than 1,800 businesses and public authorities have so far committed to these principles, which include paying suppliers within an agreed timeframe and communicating with them effectively. Business Minister Matthew Hancock says making small businesses wait an unreasonable time for payment is entirely unacceptable: “I know first-hand the great burden that late payment can place on firms – and how it can strain family finances – which is why I am committed to stopping it. “Big companies should lead by example and pay small suppliers within 30 days. I have already written to the FTSE 350 urging them to sign up to the Prompt Payment Code.” The change follows a Downing Street summit and a meeting of the Prompt Payment Code Advisory Board, which was co-chaired by Matthew Hancock and Philip King, Chief Executive of CICM. Businesses will be actively encouraged to start complying with the strengthened Prompt Payment Code with immediate effect and this will complement the tougher reporting laws in the Small Business, Enterprise and Employment Bill. These new laws will force the UK’s largest companies to publish their payment terms, increasing transparency and empowering small businesses. The Code Compliance Board will be able to use this data to review the status of signatories to the Code and challenge those that either do not pay their suppliers promptly or insist on excessively long standard terms. Philip King says the Prompt Payment Code has had a significant impact in challenging payment practices and creating a debate and dialogue around the behaviour and culture of late payment that did not previously exist – a fact borne out in the recent joint CICM/BIS survey: “I am delighted that we have now agreed to further strengthen the Code, giving it more structure and introducing a Compliance Board to build on the success of challenges to date. “The 60-day maximum is also to be welcomed, and the decision of the Advisory Board is an indication of how far the debate and sentiment has moved since the Code was launched, leading to a recognition that ethical treatment of the supply chain should be an imperative.” A joint CICM/BIS survey in December 2014 found that 72 percent of signatory responses supported the introduction of a maximum payment target and 63 percent of these thought that the term should be 60 days. Introducing a maximum payment term to the Prompt Payment Code had been raised during Parliamentary debates of the Small Business, Enterprise and Employment Bill. NEWS IN BRIEF RIMILIA TO LAUNCH NEW SUMMER COLLECTION Rimilia, the credit management software business, has hinted at the launch of a new suite of cash allocation products that take advantage of Robotic Process Automation technology. Speaking exclusively to Credit Management, Rimilia Commercial Director, Steve Richardson, said that the new products would feature intelligent decision making and software that would continually ‘learn’: “We have taken lessons from gaming software to develop new cash allocation products that will be both easy and intuitive to use, and where the return on investment can be quickly realised,” he said. Mr Richardson suggested that as high as 95 percent of all cash allocation decisions would be automated, and the user given ‘prompts’ to determine how and where the remaining five percent should be allocated. “We see the credit management world as a gateway to sales and supporting a company’s future growth,” he added. Details of the new products are expected to be announced in the early summer. A NOVEL AFFAIR Pictured is Christine Laird FCICM, the winner of the CICM UK Credit Managers' Index for Q4 2014 participants’ draw for a Kindle HD, kindly donated by Corporate Partner, Tinubu Square. 8 April 2015 www.cicm.com The recognised standard in credit management


CICM WELCOMES MOVE TO BRING GREATER CLARITY ON IPs FEES THE Chartered Institute of Credit Management (CICM) has welcomed the announcement by the Business Minister Jo Swinson that will oblige Insolvency practitioners (IPs) to provide upfront estimates of the cost of working on insolvency cases, thus ending the uncertainty of unlimited hourly charges. Philip King, Chief Executive of the CICM, said that the news was a victory for common sense: “The CICM has been vocal in wanting to see up-front estimates for work undertaken so the element of surprise is removed further down the road in the insolvency procedure,” he says. “The introduction of new rules is therefore to be strongly welcomed as are any well-considered actions that help to bring greater confidence to creditors and transparency in the fees that are charged.” In a busy time for the insolvency profession, Philip also welcomed an initiative by R3, the insolvency trade body, to launch a website designed to guide creditors through the insolvency process. HMRC has released its long-awaited statistics on the cost to taxpayers of operating the controversial UK antiavoidance measure. But the information HMRC is able to provide only covers half the story, says the ACCA (the Association of Chartered Certified Accountants). Jason Piper, ACCA’s tax technical manager, says that the wider costs of IR35 are beyond what HMRC has the remit or resources to reasonably investigate: “Government has clearly identified a risk that it wants to address, but it’s important to make sure that the mechanisms used are the best that we can craft,” he said. BUSINESSES in the UK received an all-time high £19.4 billion of funding through asset based finance in Q4 2014, an increase of £1.6 billion on the same period a year ago, says the Asset Based Finance Association (ABFA). This jump in the use of invoice finance and asset based lending is now primarily driven by businesses funding growth plans rather than replacing their use of traditional term loans or overdrafts. According to the research, businesses are now using 38 percent more asset based finance than at the height of the recession in December 2009, when £14.1 billion was provided. 80 percent of asset based finance is invoice finance, while the other 20 percent represents the fast-growing area of AVOIDING THE ISSUE The site, www.creditorinsolvencyguide. co.uk, explains in simple terms how creditors can engage with the insolvency process to increase their chances of seeing money returned to them, approve insolvency fees, and see action taken against fraudulent or negligent directors or bankrupts. Built with the support of the CICM, Philip presented at the formal launch of the site on March 3rd: “Insolvency can be seemingly complex and difficult to understand,” he says, “but a vital part of the process is in encouraging creditors to engage with insolvency practitioners to help maximise recoveries. “Understanding how insolvency procedures work, and the terminology used, is key to successful engagement, and the CICM has been pleased to support this initiative by R3. It is a major step forward in demystifying insolvency and provides practical, pragmatic advice that will be welcomed by our members and the wider business community.” ALL-TIME HIGH FOR ASSET BASED FINANCE asset based lending. Jeff Longhurst, Chief Executive of the ABFA explains that there is also another £20.5 billion of unused facilities agreed with businesses which they could draw down if they required it: “Having finance in place that allows you to move faster than your competitor allows you to fill orders quicker, make quicker hiring decisions, secure those new premises and take market share quicker. “So getting your request for funding approved with a rapid turnaround is really important. With invoice finance you can rapidly scale up or down the amount of money you borrow. With other funding products it can take months before you can get finance approved and the funds in place.” Giles Frampton, R3 president, agrees that creditor engagement is integral to the smooth running of insolvency processes: “It is a core part of a strong, fair, and trusted insolvency regime,” he says. “The more creditors get involved, the more effective the insolvency process is. “The insolvency profession, government, and creditor groups have been determined to make it easier for creditors, particularly small businesses, to engage in insolvencies. This website is an important part of that effort.” Creditors are invited to provide key information about directors’ and individuals’ behaviour, help locate hidden assets, and help oversee the work of insolvency practitioners: “The UK has a world class insolvency regime, but it is always open to improvement," Giles adds. The new website contains a step-by-step guide on how different insolvency processes work, a guide to insolvency terminology, and tips on how to help oversee the running of the insolvency process. (see interview page 12). NEWS IN BRIEF HAVE YOUR SAY P&A Receivables Services is launching its 2015 Global Credit Survey on 7 April with the results being published on 1 June. Running for its fourth year, the survey monitors overseas trading issues and concerns, trading experiences, payments, requests for extended terms, risk management and the outlook for future business. P&A is being supported this year by the Institute of Financial Accountants (IFA), the Chartered Institute of Credit Management (CICM), Sheffield Hallam University, Hays Recruitment and The Association for Credit in Central and Eastern Europe (ACCEE). https://www.surveymonkey.com/r/SDM83K5. WHEELS IN MOTION FIGURES released by the Finance & Leasing Association (FLA) show that consumer new car finance volumes fell by three percent in January 2015 compared with the same month in 2014, but remained 11 percent up in the 12 months to January. The percentage of private new car sales financed through dealerships by FLA members reached a new high of 76.2 percent in the 12 months to January 2015. Consumer used car finance volumes grew by three percent in January and by 12 percent in the 12 months to January 2015. The recognised standard in credit management www.cicm.com April 2015 9


LATE PAYMENT CONTINUES TO RESTRICT GROWTH LATE payment to construction firms is the top issue stifling the industry’s growth, according to a survey by Bibby Financial Services (BFS). The Planning for Growth report – produced in conjunction with construction specialists The Vinden Partnership (TVP) – saw 53 percent of SMEs citing late payment as a key challenge. Helen Wheeler, Managing Director of Construction Finance at BFS, says the issue threatens the survival of many viable companies in the UK: “Our research shows that there are substantial barriers for subcontractors and small construction firms to overcome. “This has a huge impact throughout the entire supply-chain and will undoubtedly affect the performance of the construction sector this year.” Almost half of construction firms (47 percent) see a shortage of skilled workers as one of the biggest threats to their business, with many (39 percent) citing increasing levels of red tape as a serious concern. “There are opportunities available in the construction sector, but many firms are unable to take on work due to a lack of working capital. Late payment causes significant cashflow issues and exposes businesses to risks brought about by the inability to pay suppliers and workers.” New statistics from Nucleus Commercial Finance, however, suggest signs of a further strengthening of the construction sector and a return to increased confidence. Not only did Nucleus, a CICM British Credit Awards winner, see the volume of deals triple in the last 12 months, but more importantly it saw the turnovers of clients within its construction portfolio increase by an average of 25 percent, allowing more cash for investment to be released. Chirag Shah, Chief Executive of Nucleus Commercial Finance, says that Construction firms are clearly enjoying a period of sustained recovery: “An increase in turnover demonstrates a clear increase in confidence,” he says, “and an increased confidence in bidding for new contracts. It is one of the real success stories of a recovering economy; success is breeding further success.”Nucleus reports demand for cash from all elements of the construction industry and the construction supply chain, and especially in ‘pure’ construction – namely scaffolders, groundworks providers, plasterers, brick makers etc. NEWS IN BRIEF MAS ACCREDITATION CICM Money and Debt Advice qualifications, which are Ofqual regulated, have now achieved accreditation against the Money Advice Service (MAS) Quality Framework for Initial Contract, Support Work and Advice Work. This means that learners who achieve these qualifications will have met recognised benchmark standards for the debt advice industry. There is a range of MAS accredited training available to support preparation for the qualifications (see MAS website for details). Also learners will be able to purchase a CICM study guide for the CICM Award in General Money and Debt Advice from May on Amazon. TRAILBLAZER APPRENTICES BIS has approved an employer bid to develop a Credit Controller Trailblazer Apprenticeship standard. Apprentices will gain knowledge about all aspects of credit management from credit application processing and credit risk assessment to collections and debt recovery, and skills specifically in telephone collections. CICM encourages employers to provide feedback on emerging arrangements and to contact the Chartered Institute if they are interested in taking on apprentices in January 2016. PAYDAY LENDERS FAILING CUSTOMERS IN ARREARS THE payday industry is beginning to take a more customer-focused approach to its business, but a review of the first 12 months of the Financial Conduct Authority’s (FCA) regulation of the sector has shown that too many firms have been failing to meet the requirements to treat customers in arrears fairly. In March 2014 the FCA announced it would carry out a thematic review into how payday lenders and other high cost short term credit providers collect debts and treat borrowers who experience financial difficulty. The review, which covered 60 percent of the market, revealed unacceptable practices from many lenders, including failures to recognise customers in financial difficulty, failure to direct people to free debt advice and firms offering inflexible repayment options. However, the FCA’s work also showed that many firms have taken steps over the past 12 months to change behaviour and ensure that they are able to meet the FCA’s requirements. These include changes to senior management, training staff to deal with struggling customers and improving monitoring, compliance and managing risk. The FCA found serious non-compliance and unfair practices in all firms that it reviewed, leading to poor outcomes for many customers and in some cases, serious detriment and financial loss. Reviews of three firms revealed a backlog of letters and documentation, including from vulnerable customers who had fallen behind in repayments. This documentation included medical evidence and letters from debt advisors providing crucial information about why some customers were failing to pay. Upon further investigation it was revealed that some of these customers were still being pursued by collection agents. CICM IN BRIEF This month’s CICM Brief includes... details of the Credit Risk and Compliance Masterclass, the latest Credit Managers' Index, and the Success with Technology Solutions Masterclass. 10 April 2015 www.cicm.com The recognised standard in credit management


INSOLVENCY NEWS END OF TERM REPORT THE Insolvency Service (IS) annual report, ostensibly a review of 2014, reads a little like an end of term report. Published just before the pre-election lock down, it summarises a number of different strands of activity, many of which have been in the making throughout the lifetime of this Government. By way of introduction, and perspective, the IS rightly reminds us that most of the regulatory activity is undertaken fairly, professionally and effectively. There is a recognition though that a lack of understanding of the regime by stakeholders can mean that much of the good work is in danger of being eclipsed by unfulfilled expectations. In particular here I think the IS is referring to some complainants, whose demands may be unrealistic. All the regulators will have had experience of cases in which the deployment of resources has been disproportionate to the degree of alleged misconduct. Those cases divert effort away from more serious matters. The key to addressing this is in part transparency. More publicly available information, centralised and easily accessible, for example regarding outcomes involving some form of sanction, will help. This will highlight any major differences between regulators, and the IS has a key role to play here in making sure there is a level playing field. The Bills before parliament include measures to introduce regulatory objectives and sanctions against regulators, but the real impact of those will depend on the IS's willingness to tackle departures from the standards it sets. The annual report shows there are some inconsistencies that have yet to be ironed out. The existence and continuation of some apparently material differences is disappointing in a mature regulatory regime. It seems there is much still to be done, and the longer the present situation persists, the greater is the prospect of calls for use of the Bill’s backstop provision for a single regulator. That is contrary to the IS’s stated intention of seeing the present regime work well, but how well it works is in some respects down to the IS itself, in its capacity as oversight regulator, as well as of course the individual regulators. Physical meetings Other measures in the Bill include removal of physical meetings of creditors as a default position in insolvencies. At one level this might look like a sensible red tape measure, but it flies in the face of other objectives around creditor engagement and removes practitioner discretion. A better approach would be to let practitioners make a professional judgement on a case-by-case basis. The de-regulation Bill will see partial licensing for practitioners who want to specialise in personal or corporate work. The IPA supports that move, as it increases choice. Subject to safeguards that can be built into the examination structure, this is a low risk innovation. Practitioner fees receive only a passing mention in the report but the IS has published its plans for fee estimates, based on representations made by the profession and others. More on that in a later edition. Pre packs continue to absorb a lot of time and effort. Interesting to note that there were 250 connected party translations in 2014. The new prepack pool should be up and running shortly, and CICM, R3, IPA and other regulators along with some other stakeholders wrote to Vince Cable to confirm support for and a commitment to the new system. A new SIP16 should be out by the time you read this. Standards setting through the Joint Insolvency Committee chaired by Philip King continues its work, and issued new guidance on Reservation of Title last year. Complaints were made through the gateway for the whole of 2014, its first full calendar year of operation. Seventy five to 80 percent of the complaints made were passed to regulators for further enquiry, the remainder being rejected by the IS gateway staff. IVAs accounted for about 1/3 of complaints in 2014. Nearly half of all complaints were from debtors, and this represents a significant change, as historically the majority of complaints have come from creditors. PPI-related complaints have featured strongly. This year will see changes to the regulatory environment, with one or more of the current regulators probably withdrawing and some consequent rationalisation in the insolvency market. Legislative changes in October, to be followed by Rules consolidation in early 2016, provide plenty of scope for debate in the coming months. The real challenge comes in the perceptions of creditors and others about the effectiveness of the regime, and that is an open question. David Kerr MCICM is the Chief Executive of the Insolvency Practitioners Association (IPA). CREDIT MANAGEMENT CM The recognised standard in credit management www.cicm.com April 2015 11


INTERVIEW THE SINGING DETECTIVE Sean Feast caught up with the outgoing President of R3 and reflects upon a busy time for the insolvency profession. THERE is something about the insolvency profession, and investigation work in particular, that has excited Giles Frampton from the beginning. He sees it as a challenge: “Finding out what happened, why it happened, and where the money went is a rewarding intellectual exercise,” he explains. “I have been involved in cases where the behaviour of individuals has been so strange, and so unbelievable, that even now I am disinclined to say more. Both as an investigating accountant, and as an IP, you will always be alert to fraud, but for everyone who is caught, there must be many others who simply get away with it.” It would be wrong to say that Giles ‘fell’ into accountancy, or insolvency, but it would be equally misleading to suggest it was part of a grand plan. As the son of a naval officer, born in St George’s Hospital at Hyde Park Corner, Giles lived the peripatetic life familiar to all children born of Service parents: “Name a county on the south coast and I have probably lived there,” he jokes. After schooling in Nottingham and Chester (his father had worked for Rolls Royce for a time, giving the young Giles his first experience of receivership) he won a place to study Philosophy, Politics and Economics at Christ Church, Oxford, a contemporary of Howard Goodall CBE, the English composer, and the MP David Willetts among others. He remembers it as a happy time, not least because it gave him the chance to indulge in his great passion. Music. “I enjoyed Oxford very much,” he says. “Most of my time was spent playing my violin and singing, although I did do just enough work to get a second!” It was while he was at University, however, that he first became interested in accountancy: “As a young man I always wanted to be a lawyer but my plans changed,” he says. “I opted for PPE because it interested me. Then in my second year I spent six weeks at the accountants Peat Marwick Mitchell in Birmingham and was fascinated by it all. These were the days when sales ledgers were enormous books with inked entries in green, blue and red, and you had to remember which colour to use for that year's audit.” While he was there, he helped to uncover a fraud, discovering an invoice for £25,000 ‘for services supplied’ but no other detail. It was the start of an interest that has sustained a career for more than 30 years. Giles went down (in the Oxbridge parlance) in 1979, determined to become an accountant: “I knew I did not want to enter academia and wanted to earn some money,” he jokes. “I knew that a qualification was important, and saw with accountancy that it opened the door to a world of opportunity. I also recognised later in life (at the risk of upsetting any careers masters) that you don’t need to do an accountancy degree to become an accountant. Indeed you probably shouldn’t!” Giles trained as a Chartered Accountant with Thomson McLintock, and joined the Plymouth office of Peat Marwick Mitchell in 1984 to focus on insolvency work. (“I came in with the 1986 Act!”) His first major insolvency case was the Berkeley Applegate liquidation, one that is still cited in case law on a regular basis. He obtained his insolvency licence in 1989 and became a Partner in what had then become KPMG in 1991, before teaming up three years later with a former Grant Thornton Partner, Richard Smith, to form Richard J Smith & Co, specialising solely in corporate and personal insolvency work and in forensic accounting . One of his most challenging – and personally rewarding – cases concerned the liquidation of Ford Park Cemetery. The business responsible for running the 12 April 2015 www.cicm.com The recognised standard in credit management


I knew that a qualification was important, and saw with accountancy that it opened the door to a world of opportunity ... – GILES FRAMPTON CONTINUES OVERLEAF The recognised standard in credit management www.cicm.com April 2015 13


CONTINUED cemetery, and which had been formed in the 19th Century, could no longer manage its affairs and Giles was appointed as sole liquidator. The cemetery – around 34 acres in the middle of Plymouth – included graves of those lost in the Titanic disaster as well as a number of war dead, and not surprisingly there was huge public interest. Giles found himself stuck between a rock (or should that be tombstone?) and the proverbial hard place: “My duty was to get the best return for the creditors,” he says, “but this was against a particularly horrendous context. The possibility of having to exhume graves to prepare the site for sale was not a pleasant one and the Section 98 meeting at the Ford Park Cemetery Chapel was particularly well attended.” Happily for Giles, and the relatives of the deceased, the cost of clearing the site outweighed the cost of the land, making it financially worthless. “We were therefore able to ‘disclaim’ it,” Giles explains, “and the cemetery passed into the hands of a local Trust that had been set up especially for the purpose.” It was a classic case of the IP being the messenger, although in this case there was a satisfactory outcome. But there are plenty of other occasions in which IPs find themselves in the firing line, accused of charging disproportionate fees or being insensitive to directors of failed or failing businesses. As Giles explains, however, IPs have to deal with the certainty of an uncertain world: “Things can easily go wrong for the IP,” he says, “such as when assets (and especially the debtor book) appear to have a value but are in fact worthless, or when stock that appears to have no ownership or retention of title seems to evaporate in front of your eyes. IPs can spend much time and energy chasing shadows through no fault of their own for issues that they cannot possibly have foreseen, and these are nearly always costs that have to be written off.” Then, Giles says, there are hostile directors and debtors: “Difficult or so-called ‘hostile’ bankrupts can cause all sorts of trouble and make outrageous allegations that are difficult to take,” he says, “but the IP has to grin and bear it.” Impeccable credentials Giles’ credentials for championing the cause of IPs are impeccable. Notwithstanding his experience, Giles has also been at various times the accounting member of the Insolvency Rules Committee, an examiner for the personal insolvency paper of the Joint Insolvency Examination Board (JIEB), and chairman of the Insolvency Licensing Committee of the ICAEW. He is a co-editor of Individual Voluntary Arrangements published by Jordans. He is also, perhaps most importantly, the current serving President of R3, the Association of Business Recovery Professionals. As such he has intimate knowledge of the ongoing work his association is doing to represent its members, often in the case of severe prejudice. He tackles the issue of fees head on: “Justifying your fees is a constant challenge in any profession,” he continues. “It is not something that is unique to our industry. But the Government has now accepted that a cost/time model is the best way forward, as opposed to a percentage of realisations or a fixed fee. This helps IPs to deal with the unknown, and is probably the fairest way of charging. It is also, I believe, a pretty good measure of value. “Estimates are a good idea,” he adds. “Of course they aren’t perfect, but they do give the IP an opportunity to go back to the client after their initial investigation and revise the estimate accordingly.” Giles contests that while fees tend to hit the headlines, the number of complaints in relation to IP fees is minimal, and certainly disproportionate to the media attention they attract. So too the issue of Pre-Packs: “When Teresa Graham went on record as saying that Pre-Packs were a good thing, that was a major advance,” he says. He believes also that the idea of a ‘pool’ of senior business professionals who judge whether the sale of a business to a ‘connected party’ is fair and reasonable is at least one that demands (and is receiving) closer scrutiny. The Government has been especially active in reviewing the insolvency regime in recent years and all parties, the Government, the Insolvency Service, the IPs, creditors and debtors see the value in ensuring that the process is as easy and as streamlined as possible. Few would argue, for example, with the greater use of technology to facilitate meetings, but these should not be at the expense, Giles argues, of the IPs' right to call a creditors’ meeting In 2012, IPs helped rescue 6,100 businesses and helped save 750,000 jobs (ComRes/R3 survey). There are currently around 1,700 insolvency practitioners in the UK, of whom around 1,300 take appointments Since 2010, the insolvency profession has had to respond to more than 20 pieces of legislation or government reviews. in person when the need arises: “We would not want to see this power removed,” he says. “Face-to-face meetings can be incredibly useful to question the directors or debtor in person and to collect and share information with creditors in a way that is just not possible otherwise.” The Small Business, Enterprise and Employment Bill, Giles says, includes many sensible and worthwhile provisions such as a proposal to extend administrations: “That’s a good thing,” he explains. “We would have liked to have seen no limit to the life of an administration, but adding six months to the extra time period which can be approved by creditors will cover the vast majority of cases that need to be extended.” Jackson has, of course, been a key focus for R3 and the Ministry of Justice only very recently backed down on its proposal to remove the exemption for insolvency litigation from the Legal Aid, Sentencing, and Punishment of Offenders Act. It will look at the issue again later in the year. The evidence, Giles suggests, points to the permanent exemption for insolvency litigation as being a good thing,: “Our members want creditors to get a return,” Giles stresses. “It demonstrates that we have done our job properly, and this is especially so in litigation-type cases.” It is the one blot on an otherwise encouragingly sunny landscape. Certainly there are other issues currently in R3’s sights, including the challenge of Super Priority Funding, Collective Redundancies and moratoria. Its recent Personal Insolvency Landscape paper was particularly well received and it would like to see a full review of the personal insolvency regime. It has also developed, with the support of the CICM, a new website to guide creditors through the insolvency process (see news page 7). Since November 2014 Giles and his colleagues have between them met with 30 different parliamentarians and the work continues: “It’s fair to say that R3 has been enormously busy, but we have made real progress and can point to tangible results,” he says. So does he still have time for his music? The violin has been (largely) put back in its case, though Giles still finds the time to sing in several different choirs: “On a good day, my top ‘A’s’ are still acceptable,” he laughs. 14 April 2015 www.cicm.com The recognised standard in credit management


A Credit Manager walks into a bar… …and the Finance Director’s buying. Well, why not? DSO is down, collections run like clockwork and the Credit Controllers spend their time building rapport with customers, not ploughing through chase letters or wrestling complicated spreadsheets. For over 15 years, Credica software has improved cashflow and reduced collection costs for some of the UK’s biggest names. We want to find out how we can help you too. Call us on 01235 856400 or visitt www.credica.co.uk Credit and Query Management Software 01235 856400 • info@credica.co.uk • www.credica.co.uk


CICMQ NEWS STRUCTURAL CHANGES BEHIND IMPELLAM’S CICMQ ACCREDITATION IMPELLAM Group, which provides specialist-staffing services to clients through 19 different leading brands in a range of public, private and not-for-profit sectors, has recently achieved CICMQ accreditation for the first time. The company offers managed services, specialist staffing, and support services to clients throughout the world, is the second largest staffing business in the UK and the 12th worldwide. Although recognising its positive practices and attributes, Impellam felt that the CICMQ process would enhance the 40-member credit team’s strength, whilst continuing to develop resources so that best-practice was evident 100 percent of the time. A number of structural changes at the beginning of 2014, including the bringing together of various credit and billing teams within Impellam’s 19 brands under a unified shared service centre, led Beverly Sage, Billing and Credit Services Manager, to believe it was the perfect time to apply for CICMQ. “Given the number of changes the team had been through it was a great measure to assess where we were and where we wanted to be. The team have felt involved throughout and are extremely proud of their achievements. “We already had some good working practices and a very strong team. Going through the CICMQ process has enhanced this and given us some new ideas and encouraged everyone to work together to ensure we are continually improving.” 16 April 2015 www.cicm.com The recognised standard in credit management


CERTAS ENERGY’S FIRST TIME RE-ACCREDITATION CERTAS Energy UK, the UKs largest independent distributor of fuels and lubricants and whose customer base ranges from domestic consumers to multinational corporations, has achieved its first CICQM re-accreditation. Since their original 2013 accreditation, the 94-strong Credit Control team continues to fully embrace the company’s motto, ‘Doing it right, together, keeps the customer happy’, providing invaluable credit risk and legal support to many industries, including aviation and agriculture. Heather Strachan, Regional Credit Manager at Certas Energy, attributes reaccreditation success to a broad range of factors, paying particular emphasiss on forging a strong relationship with the sales team: “We prioritise mutual understanding within the company, recognising the importance of working together in finding joint resolutions to particular challenges, which ultimately leads to an ever-improving customer experience,” she says. RE-ACCREDITATION SUCCESS FOR MORETONSMITH MORETONSMITH, the international receivables management specialists, has achieved CICQM re-accreditation after displaying excellent customer service. Operating in 120 countries, MoretonSmith has built extensive partnerships formed over its 20 years industry experience, and it continues to recover more of what customers are owed, at a lower cost, and with less hassle. Emphasising the immediate assurance re-accreditation gives new customers, Lauren Carter, Head of Legal Recoveries explained: “We can recover customers debts much faster, as CICMQ proves we are a reliable, trustworthy outfit to new customers, who shorten due diligence processes. “The combination of positive reinforcement alongside future reaccreditation means everyone is motivated to continuously improve their own performance and therefore the business overall.” CICMQ ACCREDITED COMPANIES AB Agri Revenue Management, B2B Marshalls Group Plc SEGRO UK Adecco Aggregate Industries Aimia Foods Limited Anixter Ltd Avnet Technology Solutions Ltd Brother UK BT plc (Group Collections – Business) Certas Energy Computers Unlimited Ecclesiastical Insurance EDF Energy Plc – B2B Majors – Revenue Management Essex County Council Ford Retail Ltd GeoPost UK Limited HSBC Invoice Finance (UK) Limited Hill Dickinson LLP Impellam Group Ingram Micro Intercity Telecom Ltd John Lewis Plc, Partnership Sevices. Lee Baron Limited Lease Plan UK Ltd Linden Foods Matthew Clark Wholesale Ltd MBNA Milliken Industrials Ltd MoretonSmith Muller UK & Ireland Group NHS Blood & Transplant National Grid Plc NEC Ltd npower Industrial and Commercial Pension Protection Fund QA Ltd RS Components Ltd Shell International Downstream SIEMENS SIG Distribution Skyscanner Ltd Synseal Extrusions Talktalk Business Tenet Group Limited Travis Perkins Turner & Co (Glasgow) Ltd Veolia ES UK Plc Virgin Media Walsall Council Westmill Foods Ltd EDF Energy Plc – Multi Sites Local world Ltd Credit Management Xoserve The recognised standard in credit management www.cicm.com April 2015 17


CREDIT INSURANCE IN THE DRIVING SEAT Ian Selby, Risk Underwriting Manager at NEXUS CIFS, winner of a CICM British Credit Award, looks at Special Purpose Vehicles and their role. SPECIAL Purpose Vehicles (SPVs) are becoming an increasingly prevalent method for large companies or investors to manage projects. But while the reputation of SPVs has been tarnished in the past by the opaque world of off-balance sheet funding – think the Enron scandal in 2001 – used properly they are a useful tool in ring-fencing the risks of major projects and new ventures. An individual company may wish to set up an SPV to separate a project from their day-to-day business. The partners for a Joint Venture may wish to set up an SPV to be able to clearly allocate costs and benefits between the partners. Where external funding is needed, lenders will often prefer to take this route to allocate their investment to a particular project to separate it from general funding for the group. When it comes to a sale, an SPV structure gives a tidy legal and operational structure to be sold on. However, they provide special challenges for those seeking to assess their creditworthiness because by definition they have no trading history and the usual business metrics are just not there. In addition SPVs are often established for long-term projects, incurring significant initial set-up costs before any cash flows are generated. Examples might be: property development for large-scale residential projects or shopping centres; environmental energy such as wind and solar collection projects; infrastructure such as transport terminals and new transport links; technology development – where a new 18 April 2015 www.cicm.com The recognised standard in credit management


FEATURE SPECIAL An individual company may wish to set up an SPV to separate a project from their day-to-day business. The partners for a Joint Venture may wish to set up an SPV to be able to clearly allocate costs and benefits between the partners ... – IAN SELBY NEXUS CIFS initiative might be sponsored by a company and a research institute or establishing a new market. In all of these circumstances the returns may be several years ahead. Special challenges Effective underwriting is all about correctly understanding the various risk factors, not just the financial data. The first things to look at are the obvious items of information in the public domain, such as Articles of Association for the company and the ownership structure. Do the owners have a track record in using SPVs to deliver projects to market? Why are they using an SPV on this occasion? Where there are a number of partners, it is important to understand their role and relationship to one another. It was widely reported last month that Interserve and Atkins have joined forces with China State Construction Engineering Corp to work on Dalian Wanda’s Nine Elms Project in London as part of a drive of Chinese construction groups entering the UK market. Although there may be little track record of these companies working together, this is clearly part of a larger group strategy. The Joint Venture structure is key to allowing foreign companies to ‘dip their toe’ into the UK market with the help of a more established player. Understanding the sources of funding is equally important. A significant capital injection rather than debt is always a good sign. Where there is external debt, understanding the structure and when interest and principal repayments become due can give further comfort if sensibly structured. Also key is to understand where you or your client fits in terms of the supply chain. For example, if a company is providing the foundations of a building then they are likely to be at the top of the payment list when cash is still readily available. Lastly, it is crucial to take a view on the sector the SPV is operating in. Changes in Government regulation or indeed international law may alter the picture of that sector. Shifts in the tax regime could affect project plans. A good example of this is in the recent changes to the way that solar energy projects are treated. Once extremely popular with the Government, their importance has been downgraded and this, coupled with the fall in the price of oil, could have the potential to affect profits dramatically. No magic formula Besides the usual diligent examination of the available information and assessing it with an experienced eye, it can be necessary to undertake additional research to understand exactly how the project has been set up. Diplomatic interviewing of stakeholders is often vital in obtaining the necessary background to be able to make an informed assessment. Ian has been in the credit insurance market since 2005 and joined Nexus CIFS as a Risk Underwriter in 2008. Ian looks after a wide portfolio of policies and has specific responsibility for the construction sector and also has experience in IT and electronics gained from his underwriting role prior to joining Nexus CIFS. ian_selby@creditindemnity. com. The recognised standard in credit management www.cicm.com April 2015 19


Paying bills the easy way. Bills? I misplace them all the time. But I always know where to find my email. Everyone loses a bill once in a while. Forgotten in a pile of paper, stuck in a drawer or who knows where in your house. And unfortunately, your house doesn’t have a search function. AcceptEmails land in your email and stay there. So you can always find them on your laptop, tablet or smartphone. Wherever you are, with AcceptEmail you can view and pay your bills instantly. Find out more at acceptemail.com 20 April 2015 www.cicm.com The recognised standard in credit management


EXPECTING THE UNEXPECTED Sean Feast seeks the views of some of the major players in the credit insurance industry in the wake of recent business failures. TRADE CREDIT INSURANCE PART ONE THE sudden and dramatic collapse of Phones4U in September last year sent shockwaves through the credit insurance industry. The immediate blame for the company’s failure was set at the feet of the country’s biggest mobile phone operator, EE, owner of the Orange and T-Mobile brands, and its decision not to renew a contract to sell its products in Phones4U shops. It was a hammer blow that followed a similar decision by Vodafone and two other operators, O2 and Three. David Kassler, the Chief Executive of Phones4U said simply: “If the mobile network operators decline to supply us, we do not have a business.” Despite revenues of £1 billion, the business was obliged to enter into administration. Sadly, Phones4U was not the only sudden failure last year that impacted the insurance world. City Link, the parcels delivery business, threw in the towel on New Year’s Eve, placing close to 4,000 jobs in jeopardy; while on the international stage, OW Bunker, Denmark’s third largest firm, entered into bankruptcy amid accusations of fraud in its Singaporebased subsidiary. A joint statement from Denmark’s pension funds described the collapse as: “Significant, extraordinary and highly negative.” Such failures, whilst costing the credit insurance industry millions of pounds in claims, ironically serve to support one of the product’s key selling points – protecting suppliers against the unexpected failure of one of their larger customers. They have also resulted in a shift in attitude to underwriting, according to Gerard van Kaathoven, Chief Executive of Euler Hermes for the UK and Ireland: “Whereas we used to be happy to underwrite the subsidiaries of a strong parent company, this is no longer guaranteed,” he explains. Gerard says this is especially true of High Street retail: “We no longer assume that a parent will step in to support a failing subsidiary,” he continues. “They seem more prepared now to let them fail.” CONTINUES OVERLEAF The recognised standard in credit management www.cicm.com April 2015 21


TRADE CREDIT INSURANCE PART ONE CONTINUED The trend towards pre-pack administrations is also a concern and again making the headlines. The failure of USC, the fashion brand owned by Sports Direct billionaire Mike Ashley, is a recent case in point. Republic, another arm of Ashley’s empire, bought the assets of USC in a pre-pack, leaving suppliers out of pocket and some 90 staff redundant. It also left the media and credit insurers scratching their heads: “When a Group opts to pre-pack a subsidiary, it changes the way we look at that Group,” Gerard says. “Indeed we may no longer even look at it as one Group for insurance purposes, but rather more closely examine the individual elements.” Frédéric Bourgeois, Managing Director of Coface in the UK and Ireland, agrees. He describes pre-packs as ‘business as usual’: “For some categories of risk,” he says, “we may now take a different approach with regards to a company’s links to related parties. We would certainly look more closely at groups with Venture Capital (VC) or Private Equity (PE) ownership, looking at their reputation and track record in supporting group businesses.” Frédéric says that maintaining a balanced portfolio is essential: “We do not write cover for the sake of a premium,” he explains. “We need balance in our portfolio so that our support to clients is sustainable, and so that there is no risk of an extraordinary claim that puts us in an awkward position and leads to a knee-jerk reaction that is detrimental to clients. You take risks, of course, but you do not ‘bet the farm’.” Marc Henstridge, Director of Risk Services for Atradius UK and Ireland, is another who agrees that recent failures, and the abuse of pre-packs, is changing the face of credit insurance underwriting: “Whereas pre-packs are a necessary part of the insolvency process, they need to be transparent,” he says. “In the case of USC, it appears a pre-pack was used to allow a major Group to rid itself of unprofitable stores, change its business model and restructure the business and that is not what a pre-pack is intended for. “This was a Group that as an insurer we treated as a Group, a Group that we believed would stand or fall as one. The administration was not something that we anticipated and the suddenness of the actions by the directors does leave a number of unanswered questions.” Such examples, Marc concedes, are rare, but tend to hit the headlines. He has a strong view also on the failures at City Link and Phones4U. The former, he says, was a broken model, and its But the collapse of Phones4U came like a bolt out of the blue: “The company still had significant levels of cash on the balance sheet when it failed,” he says. “Yes it is true that contracts had not been renewed, but there was a long run-off period and therefore plenty of opportunity for the directors to either re-negotiate those contracts or devise a new strategy ... – MARC HENSTRIDGE, DIRECTOR OF RISK SERVICES FOR ATRADIUS UK AND IRELAND 22 April 2015 www.cicm.com The recognised standard in credit management


In 2013 there were 10,544 credit insurance claims totalling £171million ... – THE ASSOCIATION OF BRITISH INSURERS. demise could have been predicted. But the collapse of Phones4U came like a bolt out of the blue: “The company still had significant levels of cash on the balance sheet when it failed,” he says. “Yes it is true that contracts had not been renewed, but there was a long run-off period and therefore plenty of opportunity for the directors to either re-negotiate those contracts or devise a new strategy. They had a huge store portfolio and so many options available to them, but it was as if they simply threw in the towel and accepted defeat. We certainly could not have foreseen that style of management.” Marc is understandably disappointed that Phones4U did not appear to have a ‘B’ Plan. His disappointment is even more understandable given the losses that Atradius suffered as a result: it had to pay out the largest value of claims in the company’s history of operating in the UK. On the positive side, however, he is content that several major UK firms were protected, and that the value of credit insurance, and the importance of Retention of Title (RoT), was demonstrated. The major failures of recent times have undoubtedly resulted in a change in the claims landscape: Euler Hermes, for example, has seen the volume of claims fall, but the value of each claim rise significantly, a trend which it says started in 2013. Despite this, credit exposures are growing, and acceptance rates increasing. Coface too has seen the frequency of claims fall, reaching its nadir in the third quarter of last year. Atradius has similarly experienced a fall in volumes overall, but also a marked rise in claims in certain sectors, notably construction, and most recently, food production. Gerard still has concerns that the credit insurance industry as a whole is not growing, as premium rates are not developing as they should: “While our exposure goes up, the total £-premium available has remained flat, at best, which means that the industry is heading in the wrong direction,” he says. That’s not to say that Euler Hermes isn’t trying new things. Two years ago it opened a new ‘channel’, working through the banks (and specifically HSBC), and yet still the overall number of policyholders remains a challenge. In terms of product innovation, Euler Hermes’ Simplicity product, launched specifically to address the SME market, is finding a willing audience and introducing a new generation of businesses to the purpose and value of credit insurance. Demand for its ‘top up’ product – CAP – is also on the rise, and yet another positive sign of business growth. Frédéric tells a similar story. Premium rates, he says, are at best flat or reducing, but that consistent pricing and coverage remains paramount: “No-one wants to go back to the time five years ago when coverage was being slashed across the board,” he says, “and no-one wants to be forced into taking action that is to the detriment of our customer base. Rates have to be at a sustainable level to provide the level of cover our clients need.” Coface has similarly seen its SME book grow and expects that it will grow further: “It is probably where the opportunity for credit insurance is the greatest,” he says. In the ‘core’ market, sometimes referred to as the ‘national’ segment (i.e. firms of between £10 million to £100 million turnover), Frédéric has greater concerns. Accounts have tended to ‘churn’, and features such as noncancellable limits and extended grace periods that are more usually associated with multi-national contracts have started creeping into the national space: “These are good for the customer if the promises are fulfilled,” he says, “but what happens in a crisis we will have to see.” Topliner, Coface’s ‘top up’ product is proving popular, with steady monthly volumes: “Customers like to have choice,” he says, “and are happy to adjust levels of cover at particular times when they need it most. There is much greater flexibility in the cover available than there was two or three years ago.” Marc agrees with Gerard and Frederic that competition within the credit insurance industry is increasing: “Price pressures are on a downward spiral, which is great news for our clients and prospects, but not great news for insurers,” he says. He sees competition within the broker arena also on the increase: “Brokers are getting stronger and there is more competition,” he explains. “Many new brokerages have been launched in recent years, attracting individuals who have either worked for a larger broker, or come out of university with an entrepreneurial flair, are ex-credit insurers or bankers and are wellmotivated, well-trained, and making a real impact. We find that there are now three or four brokers hunting each piece of new business.” Despite the competition, Marc is pleased with the traction that a new Atradius Single Situation Cover product is having, and encouraged that it is attracting new entrants to the market almost on a ‘try before you buy’ approach. Atradius is also building on its heritage with a new Export policy for businesses that are new to international trade and that need a helping hand. It also has its own ‘top up’ product, but its plan for 2015 is to work with its clients more closely within an existing whole turnover policy to provide the level of cover they require. And as to the future? Nobody seems keen to rule out major failures in the future. Indeed quite the opposite: “We are in a period of ‘volatile volatility’, to coin a phrase from a leading investment bank, during which the unexpected should become the expected, and to occur more often,” Frédéric concludes. TRADE CREDIT INSURANCE PART ONE The recognised standard in credit management www.cicm.com April 2015 23


OPINION HOLDING A GRUDGE Andy Moylan, Managing Director, EFCIS Trade credit insurance brokers, winners of a CICM British Credit Award, looks at how credit insurance can move from a grudge purchase to a business builder. AS an industry we have not been proactive in assisting insured clients in drawing their attention to the many tangible and measured benefits of their policy. Understandably a good proportion of credit managers and finance directors look upon credit insurance as a grudge purchase. Yet a well-managed policy will deliver a measurable return that may justify the premium paid. But, it’s the responsibility of a specialist trade credit broker to work in partnership with their clients, helping each one realise the many business specific benefits of trade credit insurance. Yet the default position of Trade credit insurance has been to sell on fear. Whilst cover can provide comfort because it will protect your business from the effects of an insured bad debt, credit insurance offers so much more than the blindingly obvious. Not least it protects your largest company asset; your sales ledger. So, what are the compelling benefits of trade credit insurance and how can they help a credit manager in managing and supporting their many challenging everyday risk decisions to support growth? Additional resource Credit managers are faced with making difficult risk decisions. They’re regularly under pressure from sales departments to agree credit lines to support business growth. But the information they need to support these decisions is often limited or outdated, especially so for export sales. A company with credit insurance benefits from an additional debtor risk resource; these credit limits are assessed by an experienced risk underwriter who has the most up-to-date financial and trading information available. Simply relying on financial information that reflects a trading position of a company at a point in time (which typically may be 18 months old) may be insufficient to justify large credit lines and so the sale might be lost. A company will benefit from current payment performance information (as required by their policy terms and conditions) or up-to-date management information. This crucial information could make the difference in justifying the credit line required. Credit insurance should provide cover on customers with a measured degree of risk and uncertainty and not simply cover clients that are a safe bet (referred to by underwriters as ‘blue chip’). It’s astonishing but true that increasing sales (with the comfort of credit insurance cover) by £1,000,000 on net margins of 10 percent generates an additional £100,000 in profit. The ability to secure a swift and accurate credit limit decision can make the difference in winning the business or not. On a monthly basis monitor the current sales ledger balance with the endorsed approved credit limit. Ask your broker what support is on offer to ensure that the current insured ledger is covered up to an acceptable level; one that provides ledger protection and a platform for considered growth. Don’t unintentionally opt for the alternative situation where you simply hope that, in the event of a bad debt, cover is in place. Generating funding Invoice financing has become a major source of funding for many growing companies in the UK. But the level of available funding can be restricted because of the low level of endorsed credit limits. A well-managed trade credit insurance policy provides working capital to support the growth of the business. A company that increases the level of insured debt by only £250,000 could potentially draw down an additional £200,000 of working capital to support growth or even pay for supplies in advance for a discount. This additional level of working capital could provide the headroom needed to increase sales and ultimately profit. The more reassurance you can give your invoice finance provider in respect 24 April 2015 www.cicm.com The recognised standard in credit management


Andy began his career at one of the UK'S largest trade credit insurance underwriters, Euler Hermes over 29 years ago. After working at a senior level for several specialist brokers he established EFCIS in 2000. of claim payment certainity and credit limit cover, the higher the level of funding they will be prepared to offer you. Make sure your funder is aware that you have an extremely well run policy. Provide them with regular credit limit updates and compliance reports. What risk? Grading individual debtors gives you a platform to potentially align the grade to margins as well as collection stance. These debtor grades can be made available by the credit insurance underwriter within the scope of your policy. They are based on the most up-to-date financial information including management accounts when available and trading information (payment delays and reportable adverse events). Combined they provide a robust guide to the individual trading risks which can then be aligned to profit margins and collection stance. These grades should then be monitored and reviewed on an ongoing basis to ensure they reflect today’s trading position. Consider increasing the margin for highrisk graded debtors to generate additional profit or to simply increase the bad debt reserve to reflect the increased probability of future payment default. Also consider the potential DSO and working capital benefit of greater alignment to individual debtor grades with your collection stance. Consider too proactively chasing payment from below average debtors. This will have a positive impact on DSO, cashflow and ultimately profit. More coverage The UK Government is keen to support increased levels of export sales to help the UK economy recover after a prolonged period of recession. However, it is generally accepted that there is greater degree of uncertainty and risk when trading with a number of these countries due to the increased potential of non-payment due to a political event. A credit insurance policy can include political risk cover such as contract frustration, contract cancellation, currency transfer and export/import restrictions. The credit insurance policy can also cover binding orders, work in progress, extended credit cover, non-cancellable limits, dispute cover and trade specific clauses for sectors such as advertising, construction and the oil and gas industry. With the support of your specialist broker conduct a risk audit twice a year to ensure that all potential risks that can be covered are included within the scope of the policy. Why not ask you broker to arrange for a dummy claims inspection to highlight any potential policy breaches and agree what steps are required to ensure policy compliance? THE credit manager of an importer and distributor of meat, with estimated insured sales of £22 million, was becoming frustrated with its invoice finance provider; restricted credit limits were impacting negatively on available funding. The company did not have the available working capital to grow the business and its high fixed costs were negatively impacting on profit. Key credit limits were increased by £2.2 million resulting in increased working capital to support future growth and profit. This additional working capital assisted the company in securing £6 million additional sales during the course of the year at four percent net margins, generating £240,000 profit (the policy premium was £70,000). A vehicle leasing and contract hire company had an initial DSO of 193 days; understandably this was having a dire impact on working capital and profit. Its credit insurance policy provided individual debtor grades (including highlighting the riskier debtors). Not only was the company not being paid by a number of its customers, but it was also at risk of claims on its policy being refused because it was not complying with the insurer’s requirements. The company now has a higher percentage of insured sales on its ledger and the DSO has reduced from 193 days to 59 days. This level of DSO an improvement combined with the improved credit insurance policy compliance has resulted in a £5.5 million improvement in cash utilisation freed up from its receivables, combined with a decrease in inherent risk. It also has the added benefit of peace of mind from improvement in trading certainty through limit utilisation and increased policy compliance. CASE STUDIES THE credit manager of a major IT distributor wanted to supply goods on credit to a number of overseas markets, but was struggling to obtain financials to support potential sales of £7.5 million. There was also concern that in the event of a payment default it did not have a local presence in these markets to collect the debt. The company commenced trading with the full support of the underwriter from a risk, cover and collection point of view and generated additional sales of £4.7 million in 12 months and additional net profit of eight percent (£376,000) was generated. The policy premium was £110,000. However, one of its overseas customers was unwilling to pay the amount due. It used the fact that it was insured as leverage to secure payment. Its customer did not want its grade to be adversely affected, nor to be on the receiving end of collection and legal action. At all times during these discussions the company knew that in the event of a bad debt they were insured for 90 percent of the insured debt. The recognised standard in credit management www.cicm.com April 2015 25


CONSUMER CREDIT CONSUMER CREDIT ROUNDUP Amanda Hulme gives an overview of all the goings on in the world of consumer credit. IN BRIEF ... STATISTICS RELEASED THE Building Societies Association (BSA) has released mortgage lending statistics for 2014 showing that building societies provided 26 percent of all mortgage lending in the UK with gross lending of £52.6 billion during the year, out of a total of £204.4 billion lending by all mortgage lenders. This performance, the BSA says, was well above the sector’s more natural market share of 19 percent. Over the year societies approved mortgage loans to over 373,000 homebuyers. The BSA reckons that competition will be stiff in 2015, especially now that an increase in the bank base rate this year looks to be out of the question, even to the point of the Bank of England stating that a drop in the rate, whilst unlikely, is a tool that will be used if necessary. BBA PUBLISHES STAFF BRIEFING THE BBA has published the first of what will be a series of briefings on vulnerable customers. The purpose is to identify best practice for banks and allow them to develop effective policies towards this group of customers. This briefing concerns how to support customers with long-term conditions (LTC) (defined as a physical or FOLLOWING consultations last year, HM Treasury has confirmed that the Bank of England’s Financial Policy Committee (FPC) is to have new powers over the housing market with a view to protecting financial stability. Rather than just making recommendations as at present, the FPC will be able to set limits on debt to income ratios and loan to value ratios for mortgages. mental illness that lasts a year or longer and that may require ongoing care, support and treatment) and the ‘‘good outcomes” that banks and their staff should seek to achieve, such as establishing clear procedures for gaining consent to store, use and share information about a customer’s diagnosis and LTC. FPC NEW POWERS OVER MORTGAGES Proposed legislation has been published by the government which intends to consult separately early in the new Parliament on the FPC’s recommendations for it to have new powers over the buy-to-let market, with a view to building an in-depth evidence base on how the operation of the UK buy-to-let housing market may carry risks to financial stability. 26 April 2015 www.cicm.com The recognised standard in credit management


Amanda Hulme is a partner in the corporate department of Addleshaw Goddard LLP. amanda.hulme@addleshawgoddard.com. CML ON REPOSSESSIONS AND MARKET TRENDS THE Council of Mortgage Lenders (CML) has published figures showing that the number of homes repossessed in 2014 dropped by 26 percent compared to 2013, and was lower than any time since 2006. Moreover, at the end of 2014 the number of mortgages in arrears was at its lowest since 2006. Out of the 21,000 repossessions, 16,100 were on owneroccupied properties, and 4,900 were on buy-to-let properties. The figures also saw fewer mortgages in arrears at the end of 2014 than at any time since 2006. 1.05 percent of all mortgages were in arrears equivalent to 2.5 percent or more of the mortgage balance - down from 1.29 percent at the end of 2013 (and 1.12 percent at the end of the third quarter of 2014). In numerical terms, this equates to 116,800 loans - down from 124,400 at the end of the third quarter, and 144,600 at the end of 2013. The CML notes that the two main traditional drivers of mortgage difficulty are income shocks (such as unemployment) and interest rates. Both factors are relatively benign at present, assisting the welcome decline in both arrears and repossessions, supported by effective lender practices. The CML has also published data on the characteristics of the UK mortgage lending market, broken down for the periods of December, the fourth quarter and annual data for 2014. Residential lending to homebuyers rose slightly month-on-month in December totalling 55,600 loans. In contrast, remortgage activity declined month-on-month in December with the number of remortgage loans totaling 22,300. Overall for 2014, homeowner house purchases totaled 676,900 loans, up 11 percent on 2013 and the highest annual lending level since 2007. This meant £112.7 billion was advanced in total in 2014 for house purchase, up 19 percent on 2013 and again the highest annual value since 2007 IN BRIEF ... LSB MAKES PRE-ARREARS RECOMMENDATIONS THE Lending Standards Board (LSB) has carried out a review and published its findings into pre-arrears handling which makes recommendations to strengthen the Lending Code. The review assessed the adequacy of processes and controls to identify the early warning signs of financial difficulties. While all firms sampled provided general advice and guidance (say via websites/leaflets etc.) only one took pro-active steps towards customers in difficulties pre-arrears. Most activity by firms was reactive where customers were on the cusp of financial difficulties. Among the proposals are a separate pre-arrears section in the Code to give more prominence to these requirements with details of general support to be afforded to customers. Concrete proposals to revise the Code are expected in Autumn 2015. The recognised standard in credit management www.cicm.com April 2015 27


OPINION THE DNA OF A CREDIT MANAGER Karen Young looks at what it takes to be a successful credit manager. IN a world where cash continues to be king, arguably there has never been a better time to work in credit management. As the opportunities available to talented and ambitious individuals in the credit profession grow, how can you put yourself in the best position to capitalise on such opportunities? For our new report, ‘DNA of a Credit Manager’, we surveyed over 500 credit managers to find out what qualities unite them, and what advice they have for the next generation of credit managers. What those who have reached the top have in common is commercial nous, good people management skills and positive, pro-active relationships with their colleagues in sales and the wider business. Here’s what their responses mean for the next generation of credit leaders. Invest in your own development There is growing recognition of the value of professional qualifications in credit, so enrolling in these studies is a wise investment. Almost half of the credit managers we surveyed were MCICM qualified, and a further 10 percent held the CICM Level 2 Certificate, 12 percent the Level 3 Diploma, five percent FCICM and three percent had an MBA. Credit managers under 40 were more likely to have taken on further formal qualifications in the past two years than over 40s. We believe that this is in part due to credit leaders advocating over the last few years that their teams focus on personal and professional development, and of course leading from the front. Most employers do not require qualifications as essential criteria for a job in credit, however they are increasingly listing them as desirable on job specifications. Credit managers also showed the appetite to build strong networks to progress their careers, with almost half attending industry networking events and a third networking with other credit managers online. Develop your relationship with sales The relationship between credit managers and sales is crucial, but complex. Nearly two fifths of respondents to our survey said that the sales team was the most important department for them to partner with. So it is important to get them on side by communicating with them clearly, fairly and regularly. Find opportunities to raise the profile of the credit team with the sales force, and help create opportunities for them by using your information to direct them towards good prospects and steer them away from risk. Develop commercial skills Hone your commercial skills by understanding business needs and your role in the big picture. Understanding and achieving company objectives is essential for credit managers, and over half (53 percent) of credit managers said this would be their biggest professional challenge over the next 12 months. Almost two thirds (62 percent) of our credit managers said that being commercially aware was their top tip for the next generation of credit managers, along with getting involved with operations teams and not focusing purely on the numbers (53 percent). Develop people management skills Over half (56 percent) of credit managers gave developing people management skills as their top tip for the next generation of credit managers. As 53 percent of credit managers managed teams of up to six people you will need to become skilled at motivating and managing others, whether celebrating success or managing under performance. Be ambitious Credit managers are ambitious and committed to the profession, 39 percent said they were aiming for a more senior role within credit management whilst many already enjoy the job they do and are very content to keep doing it, having already reached their goals. As an encouraging 69 percent of credit managers said that if they could start their career again, they would still choose to be a credit manager, today’s ambitious credit professionals have a lot to look forward to. For more information visit: hays.co.uk/dna/ credit-manager Karen Young is Director for Hays Accountancy & Finance in the UK. She has 17 years of recruitment experience and leads a team of 400 accountancy and finance recruitment professionals. CREDIT MANAGEMENT CM 28 April 2015 www.cicm.com The recognised standard in credit management


THE PERFECT VENUE FOR THIS YEARS CICM FELLOWS’ LUNCH 2015 june 12, 2015 In association with MoretonSmith The Stationer’s Hall Ave Maria Lane, London, EC4M 7DD Includes an enlightening talk and tour of the Hall Tickets for this event are £110 + VAT per person. If you would like to book a seat or table, please email fellowslunch@cicm.com or call Becki Sharpe on +44 (0)1780 722902. The recognised standard in credit management www.cicm.com April 2015 29


HR SPECIAL FEATURE SPECIAL FOLLOW MY LEADER In the second of a new series, Vicky Bailey of Delphinus tmc considers the benefits of being a proactive and reactive leader and which style is more effective. HOW can you tell whether you have an inherently proactive or reactive style, and is either of them better suited to a successful business environment? In recent years there has been a real shift in businesses looking for their staff to have a more proactive approach to working. Bosses have been taking a longer-term view on how they run their business and they now expect the same proactivity from their staff. The employees who have a naturally reactive style could then be potentially overlooked; so is this a good thing for our current business climate? As individuals we all have the ability inside us to be both proactive and reactive, so could it just be a case of allowing ourselves to use both skill sets, and knowing when one would be better than the other? First it is important to fully understand the characteristics of both styles: Reactive: being reactive means you have the ability to handle pressure that comes your way in real time. Reactive leaders are also renowned for wanting to solve problems on their own and take the responsibility for it on their own shoulders. Other characteristics include quick thought processes which are logical and planned to turn tasks around in the here and now. Often known as ‘firefighting’, there is very little long-term planning or forward thinking involved. Reactive thinkers find it easy to make snap decisions as this style does not lend itself to analysing what might be required sometime in the future. A reactive style can be very stressful to live with, as it often means having to deal with a continuous string of problems. It can be quite difficult to motivate a team if they are all reactive employees. On the positive benefit side, a reactive leader and workforce is exactly what you need to ensure the business can survive the short-term issues and look forward to its future opportunities. Proactive: This requires a different mindset and skills, because when you don’t know what is round the corner; forward thinking and confidence is a necessity to figure out what needs to be achieved and then how to achieve it. By creating the groundwork, proactive people can run when others are just starting out because they have given themselves the time and space to analyse each decision. A forward-thinking approach can have its benefits, especially where motivating people are concerned. It has been said that this style is very infectious as once one person is proactive others want to follow. The downside of this approach is that looking into the future can sometimes take your eyes off the here and now and in times of crisis, this would not be a good thing. As George Bernard Shaw once said: “People are always blaming their circumstances for what they are. I don’t believe in circumstances. The people who get on in this world are the people who get up and look for the circumstances they want, and if they can’t find them, make them.’’ So which characteristics are most beneficial to business? In essence you need both! A truly proactive person does not always have an eye on what is happening in the present. They are constantly looking to the future. This can be a very rewarding skill but the present needs to be handled correctly too. It is important to be flexible in your working approach and often it is a balancing act. If you can create a team with an equal mix of proactive and reactive members then you are sure to succeed. Your team will be able to take action in the short term, and plan for the future. So, understanding the pros and cons, it is time for you to ask yourself which style you would say you are best suited to? Can you identify a style you naturally lean towards? It is also important to consider whether you are susceptible to change. Can you honestly say you could bend to meet the needs of the business? Our word of the day is: Ownership – you are the driving force for how you behave in the workplace. Be confident in your skills set and make sure you can adapt to the changing nature of today’s business… For further information on how Delphinus tmc can help your team win please contact Vicky Bailey on 01509 215872 or email vicky@delphinustmc.co.uk 30 April 2015 www.cicm.com The recognised standard in credit management


“People are always blaming their circumstances for what they are. I don’t believe in circumstances. The people who get on in this world are the people who get up and look for the circumstances they want, and if they can’t find them, make them.’’ – GEORGE BERNARD SHAW Ownership – you are the driving force for how you behave in the workplace. Be confident in your skills set and make sure you can adapt to the changing nature of today’s business… – VICKY BAILEY The recognised standard in credit management www.cicm.com April 2015 31


THROUGH THE LENS ROYAL CELEBRATION The Queen's Representative, current and former Presidents, Fellows, Chairs and other VIPs gathered for the formal unveiling of the Royal Charter. MORE PHOTOGRAPHS CAN BE VIEWED AT CICM.COM 32 April The recognised 2015 www.cicm.com standard in credit management The www.cicm.com recognised standard in credit April management 2015 27


The recognised standard in credit management www.cicm.com April 2015 33


CONSUMER CREDIT HOUSE RULES Rosanna Bryant considers the treatment of mortgage customers who fall into arrears in the light of recent FCA findings. MORTGAGE businesses are undergoing significant regulatory change. Spring 2014 saw the introduction by the Financial Conduct Authority (FCA) of new rules deriving from the Mortgage Market Review and providers are now preparing for the implementation of the Mortgage Credit Directive. We have also seen two recent enforcement cases relevant to mortgages. RBS and NatWest were sanctioned in August 2014 – for failings in respect of the suitability of advice given to mortgage customers and, in a separate case, last October, Yorkshire Building Society (YBS) was found not to have treated customers fairly who were in arrears. The FCA selects cases for enforcement, in part, to communicate to the industry and public its priorities and expectations of firms’ conduct. So what is the FCA’s approach to the issues of suitability of advice and arrears management and what are the themes arising from these cases? Fair treatment At the heart of the FCA’s findings in respect of arrears management and suitability of advice is treating customers fairly (TCF). As an FCA paper, Journey to the FCA, explains, TCF and the six TCF consumer outcomes are core to how the FCA expects firms to treat their customers. There is a specific outcome for suitability of advice namely, ‘where consumers receive advice, the advice is suitable and takes account of their circumstances.’ In the RBS and NatWest final notice it was ‘of critical importance that firms providing mortgages do so in a way that ensures customers are treated fairly and in a manner which is compliant with all regulatory requirements.’ Customers rely on professional advice and, therefore, any mortgage recommendation must be suitable to their personal circumstances. The application of TCF and the six TCF outcomes to arrears management is less clear, but a central concept for firms is to act in their customers’ best interests. The fair treatment of customers is regarded by the FCA as particularly important. A customer’s best interests require a lender to be pro-active. In the FCA’s view, to do otherwise and let arrears, charges and interest be built up is not to treat a customer fairly. Moreover, if there is an inadequate quality assurance regime, one of the consequences is that management information can be insufficient to determine if the system is producing unfair outcomes. Mortgage customers are frequently seen as being ‘vulnerable’ in consequence of their financial difficulties. Their arrears may be linked to unemployment, divorce or illness. The FCA defines a vulnerable customer widely as ‘someone who, due to their personal circumstances, is especially susceptible to detriment.’ A proactive approach by well-trained staff with ‘high quality conversations’ in the context of a properly resourced service is essential. If arrears management is outsourced it is especially important to see that a contractor treats potentially vulnerable customers properly. The issue of vulnerable customers is in regulatory focus at present with the FCA’s recent publication of an occasional paper on the topic. Arrears management An FCA Thematic Review (TR14/3) in February 2014 acknowledged that arrears management had improved in firms since 2009. Mortgage lenders though were urged to focus on delivering consistently fair outcomes for customers based on their individual circumstances. Lenders were called upon to better support and empower customer-facing staff and to be more flexible in their fair treatment of individual customers based on their circumstances. The Mortgages and Home Finance: Conduct of Business sourcebook (MCOB) 13.3 requires firms to make reasonable efforts to reach agreement with customers over the method of repaying any shortfall and to allow a reasonable time to do so. In particular, they should establish, where feasible, a payment plan that is practical in terms of the customer’s circumstances. In applying this rule, the FCA expects lenders to inquire into the individual circumstances of each customer to identify the cause of their payment difficulties. It is also necessary to assess a customer’s income and expenditure sufficiently, including their financial prospects, such as employment opportunities. What is not acceptable is for firms to agree ad hoc payments without adequately considering the impact on a customer’s debt and the totality of payment options available. Nor should they let time pass with increasing arrears, interest and charges. Moreover, while repossession cannot be sought unless all other reasonable 34 April 2015 www.cicm.com The recognised standard in credit management


Mortgage customers are frequently seen as being ‘vulnerable’ in consequence of their financial difficulties. Their arrears may be linked to unemployment, divorce or illness. The FCA defines a vulnerable customer widely as ‘someone who, due to their personal circumstances, is especially susceptible to detriment ... – ROSANNA BRYANT should take reasonable steps to obtain from its customer all information likely to be relevant for the purpose of giving advice. The FCA found that the banks’ processes for assessing affordability were inadequate in that they had not considered the full extent and implications of a customer’s budget and additional committed or future expenditure when making a personal recommendation. In relation to the length of the mortgage term, the banks were criticised for accepting their customer’s preference without assessing (as required) its appropriateness. Crucially, firms must be able to evidence suitability as required by the rules on record keeping. According to the FCA, only a small percentage of the banks’ sample mortgage applications reviewed contained sufficient information to evidence the basis of the recommendation and to show that it was suitable. Whether the advice given was suitable is of little help, if no record is kept. attempts to find a solution have failed, the FCA considers that, especially in cases of long term unaffordability, this step may be in a customer’s best interests and that excessive forbearance will only cause additional detriment by increasing the sums outstanding. Firms must therefore proactively engage with customers, identify the problem, the prospects for payment and develop a plan suitable to their circumstances. Suitability of advice MCOB 4.7A provides that firms must ensure that any mortgage recommendation is suitable for that customer. The importance of this requirement is reflected by the fact it is also a high level rule within the FCA’s Principles for Businesses. Principle 9 states that: ‘A firm must take reasonable care to ensure the suitability of its advice …’ The RBS and NatWest final notice is a reminder that to fulfil this obligation a lender Systems and controls The need to have adequate systems and controls with properly trained and competent staff, underpinned with sufficient resources is clear from these enforcement cases. These weaknesses contributed to the primary failings in arrears management, suitability of advice and complaints handling. By way of example: • the key assurance function at RBS and NatWest responsible for reviewing, assessing and remediating advised mortgage sales did not operate effectively with a knock on effect on the value of management information; • YBS’ arrears handling policy documentation provided insufficient detail to staff, was fragmented and incomplete (there being no policy towards noncooperative customers); • RBS and NatWest failed to provide staff with adequate training to support them in changes to the sales process with the result that improvements were not embedded; CONTINUES OVERLEAF The recognised standard in credit management www.cicm.com April 2015 35


CONSUMER CREDIT CONTINUED • the response of RBS and NatWest to concerns raised by the FCA was said to be ‘poorly planned, under-resourced and not subject to adequate oversight and governance’; • YBS staff needed to be adequately trained, sufficiently skilled and provided with appropriate guidance to ‘proactively engage with ... customers to ascertain the cause of their payment difficulties and their future financial prospects’; • YBS moved customer facing staff to oversight and quality assurance duties without replacements, thereby increasing delays in contacting customers in arrears which the FCA viewed as unfair treatment; • senior management at RBS and NatWest were absent from the working group tasked to address the issues raised, and managers delegated to their juniors. The FCA concluded that no senior manager had taken responsibility and there had been little meaningful challenge or scrutiny of the group’s work; • weaknesses in quality assurance and the provision of management information contributed to a slowness to implement improvements at YBS and was viewed by the regulator as an aggravating factor when considering the seriousness of these failings. Complaints and redress It is essential to have in place effective and transparent procedures to handle complaints under FCA Dispute Resolution: Complaints manual (DISP) 1.3. The YBS final notice reminds all firms that a customer need not necessarily use the word ‘complaint’, but it can be any oral or written expression of dissatisfaction about a firm’s financial services. There must also be an assertion that the customer has suffered financial loss, material distress or inconvenience. This means that staff need to be trained to identify and acknowledge customer complaints, otherwise they may go unrecorded and un-investigated. The FCA found, for example, that one YBS customer had repeatedly complained that the sale process was too slow, causing her distress and depression. Apart from the failure to comply with complaints handling rules, senior management need the management information generated from complaints data to inform them in the exercise of their responsibilities. Complaints information brings failings in processes and procedures to the attention of managers allowing corrective action to be taken. Where failings occur, any remediation and redress provided, particularly if voluntary, will be relevant to the FCA’s assessment of an appropriate sanction. The RBS and NatWest final notice views as a mitigating factor that both banks agreed to contact customers to identify and address any customer detriment arising. In relation to mortgage arrears that were incorrectly applied to customer accounts, YBS voluntarily refunded all administration fees over a five-year period. While redress often exceeds the amount of the fine, and for YBS was expected to reach £8.4 million in respect of 33,000 plus customers, it received credit (albeit unquantified) for taking steps to proactively compensate and for having done so in a transparent manner by posting details on its website. Key lessons Senior management and compliance, to the extent they have not already done so, should review product life cycles from the perspective of customers and test them against the six TCF outcomes. They should also consider whether certain customers might be vulnerable and what adjustments should be made to ensure they are treated fairly. Staff need to pro-actively engage with customers in difficulties or arrears, identify the problem, the prospects for payment and tailor solutions to their circumstances which may include repossession. And where appropriate, ensure staff obtain sufficient customer information to provide advice Staff need to 0 pro-actively engage with customers in difficulties or arrears, identify the problem, the prospects for payment and tailor solutions to their circumstances which may include repossession ... – ROSANNA BRYANT tailored to their circumstances. Firms should check that processes and procedures are in place to demonstrate that regulatory requirements and standards have been met. At the same time firms should confirm that management information is being collected during the product journey, and in particular, that complaints are identified and their value as a management tool is recognised and acted upon. Where failings are identified, whether from internal processes or externally (e.g. an FCA supervisory visit), remedial action (providing redress) should be taken with sufficient resource allocated and senior management ownership. Senior Management Accountability Senior management should also be alert to the increasing risk that they may be held personally accountable. The FCA’s Statement of Principles for Approved Persons, for example Principles 6 and 7, require those exercising significant influence functions to exercise due skill, care and diligence in managing the business for which they are responsible and to take reasonable steps to ensure that it complies with the requirements and standards of the regulatory system. Enforcement action has recently been taken against former executives at Swinton Insurance who failed to consider customers’ best interests and treat them fairly. Rosanna Bryant is a Partner in Addleshaw Goddard’s Financial Services Group. rosanna.bryant@addleshawgoddard.com 36 April 2015 www.cicm.com The recognised standard in credit management


Does my bum look big in this? SAFE COMPUTING ADVERT Improve your bottom line with Safe Credit Control Comprehensive software solution that reduces debtor days, enhances customer service, cuts the cost of cash collection, improves cash flow, eliminates manual processes and speeds up the query resolution process. 0844 583 2134 Head office: Safe, 20 Freeschool Lane, Leicester, LE1 4FY info@safecomputing.co.uk www.safe-creditcontrol.co.uk The recognised standard in credit management www.cicm.com April 2015 37


PAYMENT TRENDS ON THE RIGHT TRACK Jason Braidwood MCICM(Grad), Head of Sales Ledger Consultancy at Creditsafe Business Solutions, analyses the latest monthly business-to-business payment performance statistics: WELL St Valentine appears to have helped spread the love during February with improved payments throughout the country and across most industry sectors, according to our monthly analysis of Creditsafe’s trade payment data databases. By the end of the month, average days beyond terms had taken a turn for the better with an improvement of more than one and a half days, and they are now standing at a UK average of 16 and a half days. While it’s good to see this move in the right direction, this is still nothing to be proud of and we can only hope that spring will see this positive trend continue to improve. As ever, it’s good to take a clear focus on the varying trends between industries and regions to help you prioritise your collection targeting. INDUSTRY SECTORS When we look at the sectors it’s interesting to note that business support in general appears to be slipping back with Professional and Scientific and Business Admin and Support heading our list of worsening sectors – a noticeable step back for the latter from January. However, when we look at the sectors with the poorest performance overall, we should perhaps be worried by the continuing late payment trends in Manufacturing Transportation and Agriculture – all big important economic sectors in the heart of the ‘real economy’ with a wider impact and all continuing to pay well over 20 days beyond terms. On the more positive side, Water and Waste has certainly pulled itself back with a major improvement to once again reinforce the better performance of the Utilities sector as a whole who continue to dominate the ‘prompter payers’ section of our analysis. REGIONS The good news on improving payments appears to be fairly well spread around the country in a reverse of January’s position, with only Yorkshire and Humberside and East Anglia showing a worsening position. Given that East Anglia is one of the better regions that seems almost forgivable – although the Yorkshire and Humberside performance does stand out against the rest of the country. Big improvements in the East Midlands and Scotland were encouraging, and it is very welcome to see London back up the list of prompter paying regions given its importance to the economy as a whole. The disappointing performance from Yorkshire and the North West doesn’t quite point to a North-South divide, however, with the South West also fairly static in its performance at over 18 days beyond terms. Jason Braidwood MCICM(Grad) Head of Sales Ledger Consultancy at Creditsafe Business Solutions 38 April 2015 www.cicm.com The recognised standard in credit management


Sector Getting Better Water & Waste -11.7 Wholesale/ Retail -8.4 Real Estate -8.3 Getting Worse Professional & Scientific +10.6 Business Admin & Support +5.5 Business From Home +4.2 Top Five Prompter Payers Bottom Five Poorer Payers Sector Feb 15 Change on Jan 15 Wholesale/Retail 6.7 -8.4 Mining & Quarrying 11.7 -2.8 Water & Waste 11.8 -11.7 IT & Comms 12.0 +0.5 Energy Supply 12.2 -1.7 Sector Feb 15 Change on Jan 15 Professional & Scientific 26.6 +10.6 International Bodies 23.0 +0.1 Manufacturing 22.6 -1.3 Agriculture 20.8 -0.9 Transportation 20.7 -0.8 Region 6 5 4 3 2 1 0 0 1 2 3 4 5 6 7 8 Getting Better Scotland -6.4 North West -2.8 +5.0 Yorkshire & Humberside West Midlands -4.0 Scotland 16.6 DBT East Midlands +7.3 -13.2 East Midlands +3.0 East Anglia Wales -3.5 South West -0.2 South East -3.6 Northern Ireland 17.5 DBT North West 19.6 DBT Yorkshire & Humberside 22.5 DBT London -2.9 Northern Ireland -0.4 Getting Worse Wales 17.1 DBT West Midlands 16.6 DBT East Midlands 9.2 DBT East Anglia 12.9 DBT South West 18.5 DBT London 12.9 DBT South East 16.2 DBT Top Six Prompter Payers Region Feb 15 Change on Getting Jan 15 Better East Midlands 9.2 -13.2 London 12.9 -2.9 East Anglia 12.9 +3.0 Getting Worse South East 16.2 -3.6 Scotland 16.6 -6.4 West Midlands 16.6 -4.0 Bottom Five Poorer Payers Water & Waste -11.7 Wholesale/ Retail -8.4 Region Feb 15 Change on Jan 15 Yorkshire & Humberside 22.5 +5.0 North West 19.6 -2.8 Professional Business Admin South West 18.5 -0.2 & Scientific & Support Northern Ireland 17.5 -0.4 Wales +10.617.1 -3.5 +5.5 Real Estate -8.3 B Fro The recognised standard in credit management www.cicm.com April 2015 39


MONTHLY ROUND-UP OF THE LATEST STORIES IN GLOBAL TRADE BY ANDREA KIRKBY. NEWS IN BRIEF EMERGING MARKETS – BACK TO 1998? EMERGING markets, for a long time the main motor of global growth, have recently showed signs of stalling. But Coface says although several countries – Russia, Venezuela, Argentina – are now in crisis, there's little likelihood of a rerun of the 1998 emerging markets crash. Countries learned from that experience, and now have more robust public finances, and banks with better balance sheets - plus in many cases significantly higher reserves of foreign currency. As always, you need to do your research on whatever country you’re exporting to. But the chances of an allout crash in the emerging markets seem more limited this time round – as long as China doesn't fall out of bed. NEGATIVE YIELDS NESTLE’S Euro denominated 2016 bond recently traded at a zero yield. In fact, better than that; it traded at a negative yield of 0.002 percent. If you want to lend money to Nestle, you now have to pay for the privilege. That seems crazy. And I do wonder if the financial markets are storing up some real pain if interest rates rise. (The Swiss franc has already bankrupted the US’s largest forex trader – and that’s a far smaller market than the eurobond market.) But it does mean unless you’re running very large risks, you should be getting a good deal on your bank loans. Banks love customer inertia – they make half their money out of it. So remember to run your eye over your financing options and make sure you're getting the best rate you can. OIL COMPANIES ARE THE NEW LEHMANNS AFTER the credit crunch, it took a while until we started seeing the pain coming through from property companies. With their properties revalued downwards, many of them were in breach of their banking covenants; some rescheduled successfully, others went to the wall. We’re now seeing the results of the fall in the oil price on oil exploration and production companies. Many of them have asset-backed finance based on the value of their oil in the ground – Reserve Based Lines. As the oil price sinks, the value of those reserves falls, too - and so does the company’s borrowing ability. So far, the banks are looking supportive. EXCO has seen a 20 percent fall in its resource value, but the banks have worked around it. But if you export into the oil sector – whether you're supplying machinery and survey services, or catering and security – you need to keep on top of the news, because the risk is beginning to mount. What looked like a conservative balance sheet this time last year could be dangerously stretched by now - even for profitable, producing companies. TWO DIFFERENT INDICES, TWO DIFFERENT STORIES I'VE just taken a look at two very different charts. One is the FTSE-100 index. The other is the Baltic Dry Index. The FTSE is trading at an all time high. The Baltic, on the other hand, is at a 29 year low having lost more than 60 percent in the last year. The thing that makes me worry is that the Baltic has always been a pretty good lead indicator of global trade. Maybe less CHANGING TIMES IN VIETNAM VIETNAM is changing. It’s been moving up for a while now from a low cost labour economy into higher value areas. It’s also highly export driven, with textiles, footwear, and now increasingly electronics and technology, performing strongly, and that makes it a large market for capital goods. Not bad for a country still run by a Communist government. Foreign direct investment has been fuelling the economy, with South Korea one of the biggest investors. Coface has a C assessment on the country, but that's now so these days, as higher value freight no longer goes by ship; but it still makes me feel cautious about the frothy assumption that recovery is going to continue. It's also worrying because it means shipping and port companies are seeing less and less income from their activities, and that's sure to put strain on their finances despite a bit of help from lower fuel prices. Watch out for credit quality in those sectors. on positive watch, and the credit agencies upgraded their ratings in November last year. GDP growth is five percent plus, inflation has been tamed, and the only fly in the ointment is a rather tattered looking banking sector. As well as capital goods, infrastructure, energy, and education are all potential targets for British exporters. Watch out, though: the Vietnamese dong is pegged against the dollar, but as we’ve seen with Switzerland, pegs can come unstuck. 40 April 2015 www.cicm.com The recognised standard in credit management


INTERNATIONAL TRADE ASEAN TO AEC NEWS IN BRIEF SOUTH East Asian countries are working towards open trade – a single market across the region by the end of 2015. The ASEAN Economic Community (AEC) could transform prospects: expected growth of five percent across the region this year could be dramatically increased as tariff barriers disappear. Don't hold your breath though. It's not at all clear whether all the constituent countries are ready for the change; some protectionist opposition has emerged, and there are rumours that implementation could be delayed. However, the long-term plan is still for closer economic union – which means if you're trading in any of the constituent countries, you need to think about what it will mean for you. There will be some threats – but equally, there could be the opportunity to become a major regional export player. GREXIT AVERTED? NEGOTIATIONS between the new Greek government and its Eurozone peers have ended not in a standoff, not in a real deal, but in a four-month extension of provisional arrangements. Things were getting pressing: first of all because the Greek government has no liquidity left. The tax take has shrunk – many Greeks are simply not paying their taxes, and the economic situation means there’s not much income or profit to tax – and the Government may not be able A recent US court case saw American candy giant Hershey's block the import of UK made confectionery – on trademark grounds. Hershey's said the confectionery, particularly its packaging, was too close to the candy that Hershey’s makes in the US under licence from Cadbury’s. (More cynical observers note that ‘chocolate’ in the US only needs 10 percent cocoa content, whereas UK ‘chocolate’ has to be at least NO SWEET DREAMS to continue paying pensions or wages. after Secondly, because Putin is sticking his finger in by offering his own deal, and making a purely Eurozone affair into a major international ignition point. Predictions of a Grexit were wide of the mark. But the country only has four months and it’s back to the negotiating table. If you’re exporting to Greece, you need to be very careful about what currency you get paid in, and when exactly you get paid. 20 percent.) That is a warning to exporters – do your research properly; even if you’re exporting goods with valid trademarks in the UK, there could be a clash with local businesses. (And for the record, there is only one US confectionery product that is really worth seeking out: Reese’s Peanut Butter Cups. Which as it turns out are made... by Hershey’s). FOREIGN EXCHANGE SPECIALISTS CURRENCY EXCHANGE RATES FOR PREVIOUS MONTH: HIGH LOW TREND GBP/EUR 1.4014 1.3433 Up GBP/USD 1.5550 1.5032 Up GBP/CHF 1.4987 1.4065 Up GBP/AUD 2.0012 1.9376 Down GBP/CAD 1.9536 1.8910 Up GBP/JPY 184.9631 180.4024 Up FOR THE LATEST EXCHANGE RATES VISIT CURRENCYUK.CO.UK OR CALL 020 7738 0777 Currency UK is authorised and regulated by the Financial Conduct Authority (FCA). SOCIAL MEDIA AN interesting snippet in the trade press was the decision by Tunbridge Wells county court to allow a trustee in bankruptcy to notify the bankrupt of an order made against him by posting it on the bankrupt's Facebook page. That leads me to wonder whether we're all making the best use of social media. Have you looked up your trade customers' Facebook pages? Do you follow them on Twitter? Does the CEO have an interesting life over at LinkedIn? Sometimes, that gives you a different perspective from the annual report or the financial press. Sometimes, of course, it won't be useful at all. But it might be worth taking a look. Whether using a customer's Facebook page to request an overdue payment is a good idea remains to be seen. NEW FAD DIETS? THE world is changing its diet, and that’s creating interesting opportunities for UK food exporters. For instance, India – a country full of vegetarians – is now eating more and more meat. And the Chinese, whose traditional diet contains no dairy products at all, are drinking more and more milk. But Elmgrove Foods (the Food and Drink Federation's exporter of the year in 2013) has made its business out of supplying more traditional tastes – ‘selling the unsellable,’ exporting all kinds of offal that we don’t eat and other people will. It started off supplying beef and lamb to Vietnam – and now exports to 80 different countries. Smart chaps! The recognised standard in credit management www.cicm.com April 2015 41


Trade Credit Insurance Provides a Platform for Growth… Trade Credit Insurance is an enabler for growth. Your policy should cover both well rated and not sowell rated customers tosupport increased sales in the UK and overseas. Does your policy? Contact us to discuss. EFCIS is aspecialist Credit Insurance Broker with offices in 38 countries as the sole UK representative of the International Credit Broker Alliance (ICBA). Visit us efcis.com Contact us t: +44 (0)1279 437662 Email us enquiries@efcis.com Maximising the profit from your sales ledger 42 April 2015 www.cicm.com The recognised standard in credit management


SOAPBOX CHALLENGE MANNERS MAKETH DIGITAL Glen Bullivant FCICM has an issue with smartphones, or rather smartphone users. SOAPBOX challenge YOU may well ask why it is that you have not heard anything from me for a little while, and to be honest, I am going to tell you even if you have not asked. Hitherto, I have always waited for the signal from the Journal bunker and the steer towards the subject matter as specified by the Editorial Grand Master. The silence being deafening, I accepted my fall from grace with only marginal grumpiness – until the other week, that is. At the very splendid posh frock do in London, me and himself exited the venue at about the same time, me all poise and elegance and himself, it has to be said, looking a tad frayed around the edges. He muttered something about having just flown in from Dubai that afternoon by way of explanation, though I suspect that a glass or three of Chardonnay and a peck on the cheek from the glamorous co-host had done little to improve the jet-lag recovery. “Where’s your article?” – a command rather than a question. “What do you want?” – a meek enquiry as I know my place. Negotiating his way past two security guards (who would not have been out of place as extras in Die Hard 5), he briefly turned his head and said: “get on your soapbox”. Now it is funny he should have said that, because of late, something has been annoying me. Smartphones. Now before you start shouting Luddite, Dinosaur or some such similar derogatory condemnation of an old duffer, let me be more precise – smartphone users. I have a smartphone and I would not be without it. I love it and I use it, though I would be the first to confess that perhaps I do not utilise every function of which it is capable. Be that as it may, it goes everywhere with me and I would not be without it (though I do remember vaguely that somehow or other we coped before their introduction). We have all got used to the loud conversations on trains – a stern look usually suffices – and we mostly accept the need to stand right in front of the baked beans in Sainsburys while taking instructions digitally from ‘er indoors. The two smartphone cardinal sins from my perspective come under the general headings of awareness and manners. Awareness – knowledge or perception of a situation or fact. Credit managers know all about awareness, or they should do in so far as knowing what is going on is stock in trade. Something about the smartphone, however, appears to shroud awareness in an impenetrable fog – I see them and their owners wandering blissfully across Oxford Street without a care in the world. I know not whether it is a text received, one being sent or an ardent desire to reach the next level in Candy Crush, but both phone and owner are totally oblivious to big red buses, black cabs, courier motorcycles or anything else potentially lethal. If the earphones are implanted, they cannot hear anything either other than Ellie Goulding or Mark Ronson (whoever they are). The pavement is no safer – they walk, or rather amble, directly towards me, and it is for me to take the required avoiding action because in their now world, I just do not exist. More annoying is the sixth sense that they appear, in some cases, to have developed – a sort of radar, which means as I move slightly to the left to prevent collision, they move without reason it appears to their right. Bump – I am so sorry, I do beg your pardon. Why am I apologising? Manners – a) a way in which a thing is done or happens; b) a person’s outward bearing or way of behaving towards others. This section requires me to put another soapbox on top of the one I have already mounted, because smartphones and manners just do not compute. Consumers have high demands when it comes to customer service as indeed do B2B customers. Credit managers know that as well – in fact no one understands customer service better than credit managers. We may now be heading towards the standard of customer service we deserve due to the smartphone owner who has no regard for manners or common courtesy. The phone is glued to the ear when at the railway ticket office, post office counter, shop, bank or just about anywhere when the situation requires the smartphone owner and the member of staff to interact, i.e. talk. No call is that urgent or important that the phone cannot be put away for just a minute while the staff member receives the respect and courtesy he or she deserves. Bear with, bear with…..no, not me, matey .Glen Bullivant FCICM Do you have an issue worthy of the soapbox challenge? If you do, the editor would love to hear from you. Send your email to editorial@cicm.com or andrew.morris@cicm.com The recognised standard in credit management www.cicm.com April 2015 43


LEGAL COLUMN NORTHERN ROCK’S CONFUSING LOANS Northern Rock purported to incorporate the provisions of the Consumer Credit Act 1974 into some loans, which were not strictly regulated consumer credit agreements. Peter Walker reviews a recent case to see if the other borrowers could claim the same recompense. IN the first half of the 20th century Robert Benchley, a US humourist, would not trust a bank prepared to lend money to him, such ‘a poor risk’ he thought, but what turned out to be poor decisions by financiers, such as Northern Rock, were part of this century’s greater financial problems. A High Court judge in NRAM plc v McAdam and Hartley [2014] EWHC 4174 (Comm) considered some of Northern Rock’s problems in the light of the Consumer Credit Act 1974. The background to the litigation was that, after the nationalisation of Northern Rock, the business was split, and NRAM plc took over the pre-existing mortgages together with the pre-existing unsecured loan accounts. It has a new owner, UK Asset Resolution Limited, which has another subsidiary company owning the closed mortgage books of Bradford and Bingley. Taxpayers in the UK will be interested in the outcome, because the government has lent a lot of money to resolve the financial problems of those two financial institutions. The new companies deal with the transactions created by their predecessors, including certain unsecured credit agreements entered into by Northern Rock. Some borrowers took out secured loans of up to nine percent of the value of their homes and further unsecured loans of up to 30 percent of that value. Those unsecured loans were capped at £30,000. The two defendants in the NRAM case borrowed that full amount, but section 8(2) (since repealed by the Consumer Credit Act 2006 effective on 6 April 2008) of the Consumer Credit Act 1974 only created regulated consumer credit agreements when the credit was less than £25,000. Regulated agreements have to comply with provisions such as those relating to disclosure of information, and from 1 October 2008 creditors have to supply periodic statements (s 77A of the 1974 Act). 44 April 2015 www.cicm.com The recognised standard in credit management


more than 40,000 people who had a personal loan with Northern Rock…are in line for windfalls averaging £6,000 each.’ It stated that ‘none of them are said to have lost out financially. And the taxpayer will be picking up the £261 million bill...’ – THE GUARDIAN Northern Rock had, however, used the same paperwork for all such unsecured loans, i.e. including loans of £30,000. Burton J had to decide whether the rights and remedies under the 1974 Act applied to such agreements for amounts greater than £25,000. There are, for example, consequences if a creditor fails to provide periodic statements, and, according to section 77A(6), these include the loss of the right to pay interest ‘to the extent calculated by reference to the period of non-compliance or to any part of it’ (s77A(6) (b)). The Claimant had not complied with the provisions, but compensated borrowers, whose agreements were clearly regulated agreements, i.e. their unsecured loans were less than £25,000. It declined to do the same for those people who had borrowed more than that amount. The cost would already be around £258 million, but those not compensated wanted the same benefit. The agreements, after all, seemed to be subject to the 1974 Act. Contract This raised the question as to whether or not the parties to an unregulated agreement could contract into the 1974 legislation. Toulson J in Brandeis Brokers Ltd v Black [2001] 2 Lloyd’s Rep 359 had considered a bill of lading subject to the rules of the Securities and Futures Authority. Many of them were inapplicable to a Charter Party, but Toulson J noted that there were ‘relevant parts which do potentially have such a bearing.’ Romilly MR had a different point of view in the case In re Strand Music Hall Company (Limited) [1865] 35 Beav. 153, which concerned the powers of directors to issue bonds. He explained, ‘The proper mode of construing any written instrument is to give effect to every part of it, if this be possible, and not to strike out or nullify one clause in a deed, unless it be impossible to reconcile it with another and more express clause in the same deed.’ Lord Esher MR in Stewart & Co v Merchants Marine Insurance Co Ltd [1886] 16 QBD 619 was, however prepared to strike out ‘immaterial stipulations which cannot possibly apply to an insurance of a ship.’ Estoppel Northern Rock in the NRAM case could therefore be estopped from denying that the relevant agreements were governed by the Consumer Credit Act 1974. Estoppel was defined by Sir William Blackstone in the 18th century as happening ‘where a man hath done some act or executed some deed which estops or precludes him from averring anything to the contrary.’ It was an issue in Daejan Properties Ltd v Mahoney [1996] 28 HLR 498, where the Rent Act 1977 required the Landlord to be a party in any agreement between the statutory tenant and an incoming tenant to enable the latter to be a statutory tenant (Sch 1 para (13(2))). The Landlord was not a party to the agreement, but recognised both people as joint statutory tenants. Sir Thomas Bingham MR observed, ‘Parties cannot contract out of the Rent Act and therefore cannot be estopped that the Rent Acts will not apply.’ He added, ‘But in respect or those matters upon which the parties are at liberty to agree, there seems to me no reason why the ordinary doctrine of estoppel should not prevent a party from denying that he has so agreed.’ The judges of the Court of Appeal therefore ruled that the Landlord was estopped from denying the position, i.e. that it would treat the tenants as though they were joint statutory tenants as if there was an agreement to do so. Estoppel, however, is normally applicable to mistakes of fact, and is also a shield to defend, not a sword to attack. The 1966 edition of Snell’s ‘Equity’ states ‘By the nineteenth century, both at law and in equity the rule was that there would be an estoppel where there had been a representation, by words or conduct, of existing facts, not law, intended to be acted upon and in fact acted upon to his prejudice by the person to whom it was made.’ There have been many developments in the idea since the nineteenth century, and in The Vistafjord [1988] 2 Lloyd’s Law Rep 343 the judges of the Court of Appeal considered estoppel in the context of an agreement, by which a claimant was to pay 15 percent commission on gross ticket sales for cruises on a liner. The defendants arranged a charter to a company and a sub-charter, but the claimants objected to the latter. In addition to that objection they were unwilling to pay commission, because, for example, the sub-charter was outside the passenger sales agreement. The judges of the Court of Appeal decided that both parties knew of the sub-charter, and that the defendants would not have committed themselves without expectation of commission. The charter furthermore was dependent on the sub-charter. This case incorporated the idea of estoppel by convention, which is sometimes known as estoppel by agreement. The parties in this situation assume facts, and will be precluded from denying that assumption, if it would be unjust or unconscionable to allow them to go back on it. Bingham LJ set out a three-stage test. ‘It applies where (1) the parties have established by their construction of their agreement or their apprehension of its legal effect a conventional basis, (2) on that basis they have regulated their subsequent dealings, to which I would add (3) it would be unjust or unconscionable if one of the parties resiled from that convention.’ There is furthermore a course of conduct after the contract, which results in a common understanding. Bingham LJ made another observation about estoppel by convention. He said that it ‘need not be of facts but may be of law.’ Conclusion with a proviso That and other rulings were reviewed in Burton J’s judgment in the NRAM case. The claimant, i.e. NRAM, wanted him to declare, for example, that the rights and remedies under section 77A of the Consumer Credit Act 1974 were not incorporated into the agreement. The claimant also wanted a declaration that it was not in breach of its obligations by its failure to provide statements as required, and, where they did not comply, it did not have to repay or re-credit default sums or interest to the defendants. Burton J was unsympathetic, and was ‘satisfied that the rights and remedies in relation to section 77A were imported into the Agreement.’ The claimants were therefore in breach of it. There were resulting headlines in newspapers such as ‘The Guardian’, which on 10 December 2014 reported that ‘more than 40,000 people who had a personal loan with Northern Rock…are in line for windfalls averaging £6,000 each.’ It stated that ‘none of them are said to have lost out financially. And the taxpayer will be picking up the £261 million bill.’ The case, however, may go to appeal, so perhaps other judges will have a different point of view. The cases nonetheless emphasise the importance of complying with the provisions with the Consumer Credit Act 1974. Credit Managers will rarely deal with situations like those of Northern Rock: very fortunate for all of us! The recognised standard in credit management www.cicm.com April 2015 45


HR MATTERS INCREASING A DISCIPLINARY SANCTION AT THE APPEAL STAGE WHEN faced with a disciplinary issue, employers need to keep the terms of their disciplinary procedure in mind – acting otherwise in accordance with a policy will have an impact on the fairness of any subsequent dismissal. A carefully drafted disciplinary procedure is also very important at appeal stage. The Court of Appeal was recently required to consider the fairness of an employer's appeal procedure in circumstances where an employer sought, at appeal stage, to increase a disciplinary sanction that had been already given to that employee. Contractual disciplinary policy In the case of McMillan v Airedale NHS Foundation Trust [2014], Miss McMillan was employed at Airedale NHS Foundation Trust as a consultant. The Trust’s disciplinary procedure was incorporated into McMillan’s contract of employment, making it a contractual document. The disciplinary procedure provided that an employee could appeal against a warning or dismissal and that there was no further right of appeal following that initial appeal stage. The Trust instigated disciplinary proceedings against McMillan, and following an investigation and disciplinary proceedings, upheld allegations of misconduct. McMillan was issued with a final written warning, which she appealed against. Employee’s appeal In an exchange of correspondence before the appeal hearing, the Trust confirmed that the appeal panel would consider the evidence in relation to the allegations and would be entitled to determine its own outcome in terms of the sanction applied. The appeal hearing then took place and, having heard evidence and reached its decision, the panel set out its findings in a letter to McMillan. The letter concluded by saying that the panel should go on to decide what sanction should be imposed. Disciplinary sanction The appeal panel concluded that the original decision had been a correct one and that the allegations against her had been well founded. In addition, however, the appeal panel indicated that they felt that it would be appropriate to reconvene to reconsider the appropriate sanction. Court's decision Before the appeal panel could make its final decision on sanction, McMillan applied to the High Court for an injunction seeking to prevent the Trust from increasing the sanction to dismissal. At the initial hearing of this injunction, the High Court held that the employment contract did not allow the appeal panel to increase the sanction and issued the injunction, preventing the appeal panel from taking this measure. The Trust appealed to the Court of Appeal (CA) but the appeal was dismissed, with the CA agreeing with the High Court's original decision. The CA held that there was no express right in the contractual disciplinary procedure to increase the sanction on appeal and this did not mean that the Trust had free rein to take whatever step that it wished at appeal. Interestingly, the CA said that the possibility of appeal under the procedure ‘‘was there to benefit the employee.” The CA went on to say that the procedure expressly provided that there was no further right to appeal against the decision reached at the appeal hearing. This meant that if the Trust was able to increase the sanction on appeal this would mean that the employee would have no further right to appeal against that increased sanction, which goes against the general principles of fairness. The CA also referred to the ACAS guide 'Discipline and Grievances at work' which expressly states that an appeal should not result in an increase in penalty. Best practice This case is a reminder that where an employer has a contractual disciplinary procedure, it is bound by the terms of that procedure. Invariably, the scope of an appeal would not usually extend to increasing sanctions, and to do so would conflict with ACAS guidance and would usually constitute unfair practice. If an employer does want particular flexibility to increase sanctions on appeal they would need to provide for an express power to do so in the relevant procedure. There would also need to be a further right of appeal against that sanction. This case can be distinguished from the case of Christou and another v London Borough of Haringey [2013] that involved the two social workers involved in the Baby P case. In this case, new facts came to light that justified a fresh disciplinary process. Eventually, as a result of that new disciplinary process, the employees were dismissed, notwithstanding that the original disciplinary process had resulted in initial sanctions of written warnings. Increasing disciplinary sanction, or trying to unpick and change the result of a disciplinary process is very unlikely to be fair and will only succeed in the most extreme set of circumstances – as the Baby P case illustrates. Gareth Edwards is a partner in the employment team at Veale Wasbrough. 46 April 2015 www.cicm.com The recognised standard in credit management


THE CREDIT CONTROL RECRUITMENT SPECIALISTS www.portfoliocreditcontrol.com ...and here’s what makes us different: • We DON’T recruit Accounts Payable or Management Accountants…. JUST CREDIT CONTROLLERS and are really good at it (just ask our clients and candidates!). • We speak to Credit Controllers ALL DAY EVERY DAY, giving you access to immediately available, tried and tested Credit Controllers at short notice. • All clients receive a 1 DAY FREE TRIAL on every single Temp. • We are an AWARD WINNING RECRUITER having gained places on ‘The Sunday Times Best Companies to Work For’ and the ‘Fast Track 100.’ • We offer the MOST COMPETITIVE RATES in the market. At Portfolio Credit Control we pride ourselves on our commitment to service delivery, business ethics, honesty and integrity and ensuring our service exceeds your expectations every single time. We have achieved enormous growth over the last couple of years because we offer a uniquely specialist approach that no-one else on the market does and our goal is to be the largest specialist recruiter of Credit Control staff in the UK. We know Credit Control and we also understand what makes a good Credit Controller and the correct skills to succeed in this industry. If you are planning to recruit or looking for the next step in your career please get in touch with the Credit Control recruitment specialists on 0207 650 3199 or contact us at recruitment@portfoliocreditcontrol.com. We look forward to working with you. “ All the team at Portfolio Credit Control would like to congratulate all the nominees and winners at the CICM Credit Management Awards 2015. “ New Liverpool House, 15 Eldon Street, London EC2M 7LD tel:020 7650 3199 email: recruitment@portfoliocreditcontrol.com


Legal Matters EMMA EMERY IS A PARTNER AT FREETHS : emma.emery@freeths.co.uk FREE LEGAL ADVICE FROM FREETHS BY CALLING THE CICM LEGAL HELPLINE 0845 0779698 CICM FREE LEGAL HELPLINE Getting Your Money Back - Charging Orders In this month’s Legal Matters we give you an overview of another Judgment enforcement method, Charging Orders. YOU may have recently obtained a County Court judgment against an individual Debtor for an unpaid debt. Despite this, the Debtor may still not have paid the money back. What do you do next? What is it? If your Debtor owns property one option is to obtain a Charging Order. The purpose of a Charging Order is to try and secure the monies that are owed to you by placing an entry at the Land Registry on the Debtor’s beneficial interest in the property. Process of obtaining a Charging Order There is a two stage process to obtaining a Charging Order: 1. You need to apply for a Charging Order on a standard court form. The court will usually consider the application without a hearing and if everything is in order an Interim Charging Order is granted by the court. The Interim Charging Order can then be registered on the Debtor’s interest in the property by way of Agreed Notice (if the property is solely owned by the Debtor) or by way of Restriction (if the property is jointly owned by the Debtor and another). 2. The court lists the Charging Order application for final hearing at which point the court will either dismiss the Interim Charging Order or make it Final either with our without modifications. The Final Charging Order can also then be registered on the title of the property. An Interim Charging Order can be granted at any time after the judgment falls due. The Charging Order will be registered on the Debtor’s beneficial interest in the property but not the joint owner’s interest (should the property be jointly owned). You have a Final Charging Order, what next? The purpose of a Charging Order is to try to and secure the Judgment debt which is due to you plus accrued interest and costs. This means that, should the Debtor seek to sell his or her property (or in some cases remortgage) and there is sufficient equity in the property once prior chargeholders, such as mortgage providers, have been paid in full, the surplus sale proceeds can be used to pay your Judgment debt either in full or in part. One option then open to you, rather than just sitting and waiting for the Debtor to sell the property, is, if you are satisfied that there is sufficient equity available to pay your Judgment, to issue a claim for possession and sale of the property. The granting of an order for sale is discretionary but the Debtor will need good reason as to why such an order should not be made and he will need to convince the judge at the hearing of the claim. If you obtain an order for possession and sale then you can proceed to obtain a writ of possession and send a High Court Enforcement Officer to the property to take possession and you can then market the property for sale. The court will usually order that the prior chargeholders be paid in priority from the sale proceeds and the costs of sale will also be deducted from the sale proceeds. If the property is jointly owned then you will be entitled to the Debtor’s interest in the sale proceeds (usually 50 percent) once these expenses have been paid and these proceeds can be used to pay your judgment debt. Advantages of using a Charging Order • Your judgment debt effectively becomes secured over the Debtors beneficial interest in the property. • It can be used alongside other methods of enforcement i.e attachment of earnings or third party debt orders. • It is a relatively quick process. • It is a relatively cheap process. CASE STUDY – After obtaining an Interim Charging Order, the Debtor disputed that he had a beneficial interest in the jointly owned property because he had entered into a Deed of Trust with his wife whereby he transferred his beneficial interest to her to protect the home from creditors. We successfully applied to the court that the Trust was a sham solely to put assets beyond the reach of creditors (s423 Insolvency Act 1986) and the final charging order was granted. A claim for possession and sale was subsequently issued and an order for sale granted. If you require advice on applying for a Charging Order then please contact us on the Legal Helpline. www.freeths.co.uk Banking & Finance / Business Services / Corporate Finance / Construction / Employment / Public Sector / Real Estate Services for Individuals / Taxation Birmingham • Derby • Leeds • Leicester • London • Manchester • Milton Keynes • Nottingham • Oxford • Sheffield • Stoke on Trent 48 April 2015 www.cicm.com The recognised standard in credit management


WE WANT YOUR BRANCH NEWS! CONTINUING PROFESSIONAL DEVELOPMENT (CPD) HOW CAN YOU ACHIEVE CICM CPD HOURS? You can achieve CICM CPD hours a number of ways; by attending branch events, masterclasses, training and undertaking special projects at work. The CICM activities offering CPD hours can be identified by the CPD logo which will detail the hours achievable by participating. Below are a few examples of forthcoming events: CPD 2 1 APRIL – CICM WEST MIDLANDS BRANCH, BAILIFF REFORMS IN PRACTICE, BIRMINGHAM. 22 APRIL – CICM MASTERCLASS – CREDIT RISK AND COMPLIANCE, BLACKBURN. CM Credit Management magazine for consumer and commercial credit professionals 29 APRIL – CICM MASTERCLASS – SUCCESS WITH TECHNOLOGY SOLUTIONS, LONDON. See the forthcoming events section for many more opportunities. Have you completed 24 x CICM CPD hours? If so, it’s time to submit your plan and PROGRESS report for certification. Send your completed submission to Sue Kettle at the CICM HQ or email cpd@cicm.com TO DOWNLOAD A CPD DEVELOPMENT PLAN AND PROGRESS RECORD VISIT WWW.CICM.COM RECEIVE YOUR PERSONAL SEAL OF APPROVAL The Royal Charter affirms the quality and integrity of your Institute, your qualifications, you as a member, and the critical role that you play in your business. New Chartered Institute of Credit Management membership certificates are now available for any members who would like to receive one. You can order a new certificate for the nominal cost of £25 to cover printing, administration and postage. Visit http://www.cicm.com/certificate-request-form/ to request your certificate today or simply call 01780 722903. The recognised standard in credit management www.cicm.com April 2015 49


CICM BRANCH NEWS BRANCH members met for their regular (semi-annual), bowling match at the Milton Keynes XScape Centre recently. As ever competition was fierce and some participants obviously took it quite seriously whilst others just enjoyed the opportunity to learn a new skill and meet with other credit professionals. As last year, dark horse Matt (I don’t CHILTERNS BRANCH BOWLING EVENING MEMBERS STRIKE IT LUCKY! play regularly) was in good form whilst Pete from Milton Keynes (to quote Paul Daniels) ran him very close, having recovered from his late night at the CICM Awards in London the previous evening. Top score went to veteran Stuart, but given that the prize for best performance was provided by FUJI he handed over the trophy to Matt at the end of the games. Top scores over two games were: Stuart 258, Matt 231, Pete 230, and Cham 212. It was great to see some new faces and our Secretary, Cham spent time between his turns persuading some of them to join him on the committee. EAST OF ENGLAND BRANCH EAST OF ENGLAND BRANCH AGM THE AGM at FRP Advisory LLP in Brentwood was well attended despite foul weather. Chairman Richard Brown reported on another good year. The Data Usage in Credit Management conference in London had been well attended and received, with positive feedback from delegates and speakers. He thanked Hays Credit Management for hosting the day, Prism for donating to the Branch’s charity - Paddington Development Trust, and corporate partners Sidetrade for sponsoring the prize draw. The joint golf day with London Branch had been an enjoyable sporting and networking event and thanks went to Mike Wykes of London Branch for organising it, Smith and Williamson LLP, CRS Electronics Limited, and Buttsbury Consulting, for their sponsorship which ensured that it was self funded. Once again the Branch had supported the Turner Lecture, Branch member Atul Vadher being a panellist. Committee members were thanked for their support in raising the Branch’s profile through Brentwood and Essex Chambers of Commerce. Outgoing committee member David Seago gave the Treasurer’s report and he was then thanked by the Chairman for his service. Details of the new 2015 Committee are on the Branch page of the CICM website. Carol Baker, Vice Chair, Secretary and Events Organiser, gave a detailed update on conferences being planned for 2015 and there was much valuable input from the floor regarding content. Unfortunately, the advertised ‘CICM HQ on the Road’ session could not be held because, despite her best efforts, Sue Kettle, CICM’s Director of Membership and Support Services, was unable to get to the meeting in time due to the weather and traffic chaos. The evening concluded with an insightful and informative update on Insolvency from Branch member Paul Atkinson, Insolvency Practitioner and Partner, FRP Advisory LLP. The Chairman thanked FRP for hosting the evening and providing the hospitality. 50 April 2015 www.cicm.com The recognised standard in credit management


NAME: Rob Clarkson AICM(Cert), Dip CII From the left: Mark Wagstaffe (Vice Chair), Laurie Beagle (Chair), Matt Cox (CRS), Mark Whiteley (CRS), Carl Goodman (Committee member) SHEFFIELD BRANCH AGM WITHOUT SNOW THE Sheffield & District Branch had its second attempt at an AGM on the 4 March, since back in January the planned event was cancelled at the last minute due to snow. This time the weather held firm, and was positively beautiful in comparison. We did however keep to the same theme, ‘2015 through the looking glass’ albeit including hindsight obtained from January and February. 2014 was good year for the branch, having seven events throughout the year including legal enforcement; late payments; technology in credit; and a mock creditors meeting. On a lighter side, The Tour De France credit team event, a trip to Rotherham FC, and our annual visit to the casino rounded off the year. A big thank you must go to the 10 sponsors; their contribution was The recognised standard in credit management immense and helped us deliver a successful program of events. Another big thank you must go to the branch committee who all worked very hard, and particularly to Neil Lane who is leaving the committee having served for many years. Credit Risk Solutions sponsored this year’s AGM, with Matt Cox and Mark Whiteley taking us through trade credit insurance, explaining what it is, who provides it, and the current insurers predictions of what will happen in 2015. This proved to be highly insightful and thought provoking for all in attendance. The branch has another packed programme planned for the coming year, and we look forward to Philip King,Chief Executive of the CICM, visiting us on 7 July. For further details and updates please visit our website. To include your branch reports in the May issue of CM, submit your copy by 9 April via email to branches@cicm.com CICM CONTINUING PROFESSIONAL DEVELOPMENT (CPD) CICM recognises the importance of Continuing Professional Development (CPD) for credit professionals Start your journey to progression today by downloading the CICM CPD plan from the website www.cicm.com STEP CLOSER TO YOUR PROFESSIONAL GOAL CPD 1 JOB TITLE: Binder Credit Manager COMPANY: Canopius Managing Agency (Lloyds of London) HOW LONG WORKED AT YOUR CURRENT COMPANY: 3 Years HOW LONG YOU’VE WORKED IN CREDIT MANAGEMENT: 20 years 60SECONDS WITH HOW DID YOU GET INTO CREDIT MANAGEMENT? In the 80s I had an accounts job and discussed my career path with the Group Accountant who advised taking ICM qualifications. I soon discovered a whole credit management world beyond credit control. WHAT IS THE BEST THING ABOUT WHERE YOU WORK? The diversity of the role - working within the Lloyds Insurance environment means that you need to fully understand the logistics of insurance, regulatory issues and emerging risks. WHAT MOTIVATES YOU? My childhood was tough so I motivate myself to be the best I can and inspire my children. My mum is also a great motivation – she held three jobs while completing her BA Hons at night. WHAT IS YOUR FAVOURITE MEAL? You can’t beat a good old plate of fish and chips with plenty of salt and vinegar and ketchup on the side. WHAT IS YOUR FAVOURITE HOLIDAY DESTINATION? The Algarve, I like to rent a villa near to Albufeira for the family when I can. NAME 3 PEOPLE YOU WOULD INVITE TO A DINNER PARTY AND WHY? Richard Branson – I find his life story fascinating and inspirational. Kylie Minogue – I would like to hear more about her fight with cancer and how she copes with being in the public eye. Hugh Grant – My favourite actor and I am sure he would have some funny celeb stories to tell. WHAT IS YOUR FAVOURITE PASTIME/RELAXATION ACTIVITY? It would probably be golf but have not played in a while so will say DIY, I like it when you complete a project and can say “I did that”. IF YOU WERE TO HAVE ONE SPECIAL POWER, WHAT WOULD IT BE AND WHY? To be able to fly, I would love to sky dive which is the closest I will get! It would save getting the constantly delayed train to work each day. www.cicm.com April 2015 51


CICM Credit Risk & Compliance Masterclass Free event to members 22 APRIL AT GRAHAM & BROWN OFFICES IN BLACKBURN For more info visit www.cicm.com/events To book your place email events@cicm.com or call 01780 722902 CICM EVENTS CPD 2 1 APRIL CICM West Midlands Branch – Presentation by Gary Bovan on Bailiff reforms in practice BIRMINGHAM 18:30 Gary Bovan, Director of Client Care, of the High Court Enforcement Group (HCEG) will talk about the bailiff reforms in practice, as they approach their first anniversary. Contact: peter.brewer@weightmans.com Venue: Weightmans LLP, First Floor, St Philips Point, Temple Row, Birmingham, B2 5AF 2 APRIL South West Branch AGM DEVON 18:30 AGM 19:00 MEAL The branch will hold is AGM at 18:30 followed by networking and dinner. The branch is subsidising the event and therefore CICM members may attend free of charge. There will be a cost of £15 per head for non members. This evening is not limited to Branch Members. Non members and potential new members are welcome to join us. Contact: Gerry Thomas, Branch Chair E: gerrythomas1610@hotmail.co.uk Venue: Dartmoor Lodge, Peartree Cross, Ashburton, Devon TQ13 7JW 16 APRIL CICM Best Practice Conference for CICMQ NOTTINGHAM CICMQ accreditation is formal recognition of your organisation’s commitment to quality, continuous improvement and best practice in all things credit. Contact: Chris Sanders – E: cicmq@cicm.com. Venue: Experian HQ, Embankment House, Electric Avenue, Nottingham, NG80 1EH FORTHCOMING EVENTS 2015 22 APRIL CICM Masterclass – Credit Risk & Compliance BLACKBURN Presentations will highlight the changing business landscape, a Credit Insurer’s view on life, the key things on the compliance agenda and potential impact of non-compliance and much, much more! Contact: events@cicm.com or call CICM marketing on +44 (0)1780 722902. Venue: Graham & Brown Wallcoverings Head Office, Design & Marketing Centre, Stanley Street, Blackburn, BB1 3DW CPD 2 22 APRIL Yorkshire Ridings Branch – Credit Careers & Professional Development LEEDS 17:30 – 20:30 We are delighted to invite you to an all-inclusive credit event in conjunction with Hays, giving an insight into the credit profession including education, careers, quality standards and the make up of the DNA of a Credit Manager. Contact: Catherine Hill, Committee Member E: Catherine.hill@hays.com Venue: The Royal Armouries, Armouries Drive, Leeds LS10 1LT 22 APRIL CICM South Wales Branch – Insolvency & Liquidation A Creditors Rights SOUTH WALES 18:00 This free event aimed at educating businesses about their rights when a company owes them money, either through liquidation or administration. Non members and potential new members are welcome to join us. A buffet will be available at the end of the event. Contact: Please reply to Steve White, Branch Chair E: steve@thornburycollections.co.uk Venue: McAlister & Co. Suite 4, Tredomen Gateway, Tredomen Park, Hengoed CF82 7EH CPD 6 29 APRIL CICM Masterclass – Success with Technology Solutions LONDON This masterclass will explore current and future technology solutions for the credit industry, offering insight into some of the challenges of implementation and how to secure a positive outcome. Contact: events@cicm.com or call CICM marketing on +44 (0)1780 722902. Venue: Hays Recruitment, 107 Cheapside, London, EC2V 6DN 30 APRIL CICM Sussex & Surrey Branch – The Dogs BRIGHTON Cost will be £10 members, £15 for non-members. The evening will include Dinner (starter, main and coffee/tea) in the skyline restaurant with a view of the finishing line, a pick 6 jackpot voucher, admission and race card. Contact: Nicola.reuter@ uk.thalesgroup.com or Brendan.Clarkson@ moorestephens.com Venue: Coral Brighton & Hove Greyhound Stadium Nevill Road, Hove, East Sussex BN3 7BZ OTHER EVENTS 19 – 21 APRIL FCIB – International Credit & Risk Management Summit MADRID This event provides an opportunity to discuss the latest challenges of extending credit, review current market intelligence, share practical solutions and get specific questions answered by other practitioners and industry experts. Contact: https://fcibglobal.com/events/eventcalendar/details/244-international-credit-riskmanagement-summit-madrid.html Venue: Hotel Hesperia, Paseo de la Castellana, 57, Madrid 28046, Spain. CPD 6 52 April 2015 www.cicm.com The recognised standard in credit management


EDUCATION Is it time to educate your boss? Can your company afford for you not to be a fully qualified credit professional? Best debtor day results ever, breaking previous records by six days etc Improvement in our cash receipts by over 15 percent average (over 8 months) Calls increased by 40 percent after training Disputes reduced by over £1m Take the opportunity of ‘Shaping the future’ by raising awareness of CICM qualifications during Learning at Work Week (18 – 24 May 2015). Get in touch to find out how the Chartered Institute of Credit Management can help (alison.wisden@cicm.com) or phone 01780 722909. See also www.cicm.com and www.campaign-for-learning.org.uk


EDUCATION From the left: Philip King and Ian O'Doherty. CICM CORPORATE MEMBERSHIP – A TRUMP CARD FOR MBNA FOLLOWING a period of uncertainty, MBNA turned to focus on growth and sought to invest in boosting the capability of its employees and retaining the best talent. The company had developed a programme called ‘Xplore’ based on the concept that explorers thrive on adapting and being accountable for their actions in uncertain territory. They focused on development rather than promotion and used strong imagery and language to engage staff in shaping and influencing the business. They created a portal using SharePoint with zones for engagementrelated activities, leadership development, performance appraisals and development plans. However, MBNA also needed highly specialised credit risk training to motivate and engage their risk team and encourage a broader perspective. They had already established a tailored Masters degree programme at a local university with a limited number of places. The solution Corporate Membership with the Chartered Institute of Credit Management (CICM) enabled MBNA to offer a compelling learning and development proposition to its whole credit risk team. Many are now Corporate Affiliate members of CICM, giving access to a range of training, qualifications and a jointly branded monthly e-newsletter. As a Corporate Member, MBNA has regular support from a CICM education specialist to help find the most appropriate learning and development activities, tailor training programmes, set up qualification courses, promote initiatives and co-ordinate relevant content for the popular ‘eBuzz’ newsletters. As a further commitment to best practice, MBNA combined its Corporate Membership programme with the Chartered Institute of Credit Management Quality (CICMQ) accreditation, with the aim of gaining recognition as a CICM Centre of Excellence. Commenting on the value of the arrangement, Debbie Tuckwood, CICM Director of Learning and Development explains: “Any significant initiative requires regular support and drive to ensure success. CICM understands the challenges of setting up and maintaining high quality, tailored learning programmes and our Corporate Membership arrangements build in regular catch-up meetings with CICM account managers and education specialists. The package also includes a range of discounts and flexible payment and administration arrangements to make development options for large teams more practicable and cost effective.’ The outcome During a period of uncertainty, MBNA has achieved remarkable success in building employee engagement. The response from staff has been overwhelming – all CICM programmes have been oversubscribed with employees opting for both Masterclasses and qualification programmes. To harness 54 April 2015 www.cicm.com The recognised standard in credit management


IN BRIEF : From the left: Gill Taylor, Debbie Tuckwood, Ian O'Doherty, Philip King, Karen Gresy and Alan North. The feedback that we have had from our teams has been excellent in terms of both content and quality of the CICM trainers ... this exceptional interest, MBNA ensured that all who expressed an interest received at least one of their development choices. Alan North who heads up the Credit Risk Strategies and Enterprise Analytics (CRS&EA) division and has championed the CICM program since 2013 said, “The Business Schools, Masterclasses and CICM Corporate Membership have provided an ideal opportunity for our organisation and employees to invest in their future. The feedback that we have had from our teams has been excellent in terms of both content and quality of the CICM trainers. We are delighted to be able to build on our original two year program with ongoing education in 2015.” In the first year over 180 benefited from either a Business School course or a oneday Masterclass covering fundamentals of credit risk. Sixty passed exams in Consumer Credit Management or Business Environment and a further 45 are studying in the second year. – ALAN NORTH (CRS & EA) DIVISION Feedback from participants, particularly about the teachers has been very positive. Courses have met their needs and expectations and are recommended to colleagues. The programme continues to grow with new Masterclasses being added to address specific skills gaps, such as US and UK regulation, macro and micro economics, presenting the case, and advanced credit risk. MBNA has also rolled the programme out to other lines of the business. The programme has delivered great results with the team citing the investment made in the development of staff, including the range of education and training available, as one of the top reasons that MBNA is a great place to work. The success is borne out by the participation in the CICM programme that increased by 20 percent to 67 percent in the second year. Underpinned by CICM learning and development programmes, the team also achieved CICMQ accreditation in record time. THE CUSTOMER MBNA is one of the UK’s leading credit card issuers and part of Bank of America Corporation (NYSE: BAC). It provides a range of own-brand and affinity credit cards, including some of the best-known names in the UK, such as Virgin Atlantic, Manchester United Football Club, WWF and the AA. It was voted Credit Card Provider of the Year for the second year running in the Consumer Moneyfacts Awards 2015. MBNA is headquartered in Chester with large teams in consumer credit risk and collections. THE CHALLENGE To maintain a positive, engaged workforce and retain employees with essential skills during a period of business uncertainty. THE SOLUTION CICM’s Corporate Membership delivered a flexible and tailored package of qualifications, Masterclasses, monthly newsletters and quarterly support from CICM educational specialists which complemented other MBNA initiatives. CICMQ helped benchmark MBNA’s credit operation against best practice. THE OUTCOME The enhanced range of education and training has been recognised as very positive by staff and reflected in high scores for employee engagement. For the business the enhanced skills and qualification of the team and achievement of CICMQ in record time have contributed to the high standard of work and business improvement. The recognised standard in credit management www.cicm.com April 2015 55


DON’T MISS YOUR NEXT BIG MOVE IN CREDIT At Hays Credit Management, our consultants are all affiliate members of the CICM and understand both the demands you face and the skills you need to thrive within your industry. We can therefore offer you the personalised careers advice and support that you need. LEGAL COLLECTIONS OFFICER EXPERTLY DRIVE COLLECTIONS City of London, £38,000 This leading international legal firm is looking for a senior credit controller to be responsible for a team of fee earners and its client bases. You will focus on client management and debt reporting whilst maximising collections and retaining strong client relationships. You will ideally have a legal background, knowledge of SARs and exposure to Elite. This is an exciting role for a tactical and forward thinking professional to join a market leading company. Ref: 2392724 Contact Matthew Ardron on 020 3465 0018 or email matthew.ardron@hays.com CREDIT CONTROLLER OWN THE PROCESS West Kensington, up to £30,000 A leading advertising agency is looking for an experienced and self-motivated credit controller. You will have autonomous control of a high value ledger and deal with international clients across the EMEA. You will ideally have experience working within the media industry, as well as experience using DDS software and a positive and personable nature. In exchange you will be presented with the opportunity to achieve impressive results for a company that offers great rewards. Ref: 2379860 Contact Despina Solomou on 020 3465 0020 or email despina.solomou@hays.com CREDIT ACCOUNTS RECEIVABLE MANAGER ENHANCE BUSINESS RESULTS Essex, up to £35,000 This rapidly expanding business in Epping is looking for an experienced manager. You will report into the Finance Manager and have responsibility for all credit control and accounts receivable. Managing cash collections, you will lead system development ensuring the minimisation of company credit exposure and maintaining customer service levels. Experience of using Sage and Excel would be advantageous, but is not essential. Ref: 2351070 Contact Kerry Ferguson on 0113 243 8384 or email kerry.ferguson@hays.com CREDIT CONTROLLER JOIN AN INDUSTRY LEADER City of London, £28,000 An exciting opportunity has arisen within a leading insurance company for an experienced credit controller to be responsible for an important international account. You will ideally have experience within the insurance market and will take responsibility for day-to-day operation and collection targets. This is an amazing opportunity to join an international and market leading insurance company and progress your career. Ref: 2399953 Contact James McNicholas on 020 3465 0020 or email james.mcnicholas@hays.com hays.co.uk/creditcontrol


SENIOR CREDIT CONTROLLER DRIVE CONTINUOUS IMPROVEMENT Leeds, £22,000-£24,000 A rare opening has arisen for an experienced credit controller with a prestigious professional services organisation. You will operate in a stand-alone capacity and take responsibility for the management of a portfolio of clients. Managing credit control procedures and reviews, you will analyse debt trends. You will ideally have exposure from working within a professional services environment, as well as have control experience and excellent communication skills. Ref: 2399410 Contact Kerry Ferguson on 0113 243 8384 or email kerry.ferguson@hays.com CREDIT CONTROLLER MAKE AN IMPACT Ipswich, up to £22,000 This industry leading logistics company is seeking an experienced accounts professional with diverse experience to join its credit management team. You will control and monitor a range of accounts within the FSL ledgers, as well as manage the weekly collection of aged debt and cash, reconcile accounts and produce monthly updates. You will be enthusiastic, personable and possess strong attention to detail. This is your chance to gain industry knowledge with an international company. Ref: 2397411 Contact Michael Blyth on 0147 326 1902 or email michael.blyth@hays.com JUNIOR CREDIT CONTROLLER TAKE YOUR NEXT STEP Reading, up to £20,000 A well respected construction company is looking for a driven professional to join its successful team. You will have had previous exposure to various collection, billing and invoicing processes. Directly responsible for credit control processes, you will also have business partnering and cash collection responsibilities. This is an excellent opportunity for a skilled professional to join a highly profitable local business, with excellent scope for career progression and CICM study support. Ref: 2389162 Contact James Adey on 0118 907 0321 or email james.adey@hays.com CREDIT TEAM LEADER LEAD YOUR EXPERT TEAM Edinburgh, £19,500 + benefits + CICM training This market leading company is looking for an exceptional team leader to take responsibility for managing a large credit control function. You will train and coach the team, manage your own ledger and build excellent internal and external relationships. As well as fantastic career prospects, this role offers the chance to work and gain valuable experience within a well-respected, market leading company. Ref: 2374833 Contact Hazel Wynn on 0141 212 3665 or email hazel.wynn@hays.com APRIL & MAY DNA OF A CREDIT MANAGER LAUNCH EVENT Hays in conjunction with CICM is delighted to invite you to an all-inclusive event designed to provide insight into careers, education and the dna of a credit manager. This event has been designed to cover all aspects of credit careers and provide information for managers and aspiring professionals alike. The events which feature the findings of our latest DNA of a Credit Manager Report are taking place across the country, in Birmingham, Glasgow, Leeds, London, Manchester, Newcastle and Reading. If you are looking to further your career, want to strengthen your team or would like an overview of the market, it pays to speak to the market leaders. Contact us at creditcontrol@hays.com For more information and to book your place, please visit hays.co.uk/dna/credit-manager


NEW CICM MEMBERS THE INSTITUTE WELCOMES NEW MEMBERS WHO JOINED DURING FEBRUARY FELLOW NAME Anthony Jeremiah COMPANY Sungard Avantgard MEMBER NAME Ronald Hiller Paul Holt Yvonne Mclean Cheryl O'Brien Denise Padachi Divyansu Shah Benjamin Sutton Chris Thornton-Dees Simon Wintle ASSOCIATE NAME Shelley Depledge Michelle Harle Karen Young COMPANY Nicholls Law Advanced Diesel Engineering Ltd Ageas Retail Ltd Fletcher Building Ltd UTi Worldwide (UK) Ltd Westmill Foods Bristol Wessex Billing Services Ltd Debt Managers Services Ltd Sony Europe Ltd COMPANY Current Consult Ltd SIG Trading Ltd Lee Baron Group Ltd AFFILIATE NAME COMPANY NAME COMPANY Felek Akcay Berkmann Wine Cellars Ltd Neil Jones Hays Specialist Recruitment Khalil AlDahouk hamdan Bin Mohammed Smart University Kirstie Jones Motiva Group Ltd Suzanne Amour Scotts Sports Wafa Khalid Sloane International Development Matthew Ardron Hays Credit Management Paul Kibbler Bradford Metropolitan District Council Jessica Ashford EFM Management FZ LLC Matthew Lawrence Bristow & Sutor Simon Beaumont Bristow & Sutor Richard Lenton xoserve Ltd Rehana Begun xoserve Ltd Vicki Lingard Espa International Gemma Bennett Axa Insurance plc Steven Little Debt Collect UK Limited Sandip Bhurgee Amicus Horizon Lucky Locord Lambert Smith Hampton Sam Blake Hills Numberplates Ltd Angie Loveless Battens Solicitors Ltd Sarah Blewer xoserve Ltd Clemence Mangwana Transguard Group Michael Blyth Hays plc Ernest Marc International SOS Assistance UK Ltd Catherine Brear Zurich Insurance Joshua Mathurin Linde Material Handling UK Ltd Kelly Broadbent Deloitte LLP Paul McGinty Andrew Wilson & Co Angela Brown High Court Enforcement Group Ltd James McNicholas Hays Credit Management Roger Brown Penham Excel Ltd Faye Melrose Allianz Insurance plc Loydel Bryan Bristow & Sutor Maria Mifsud Elektra Limited Anthony Burke SIG Trading Ltd Ashley Miller Chandlers Limited Kylie Burley SIG Trading Ltd Joanne Mills University of Glasgow Stuart Byrne Hays Credit Management Louise Moir Severn Trent Water Adam Cartwright High Court Enforcement Group Ltd Pauline Muddyman Bristow & Sutor Gary Charles Bradford Metropolitan District Council Alison Murphy Axa Insurance plc Georgina Churchward Deloitte LLP Bradley Murphy Chandlers Limited Danielle Clark SmartestEnergy Ltd Kay Needham SIG Trading Ltd Damian Collett Penham Excel Ltd David Nuttall Penham Excel Ltd Kate Connall Contract Natural Gas Ltd Janice O'Connor FMG Support Ltd Lee Cunningham Acme Facilities Group Ltd Manuela Olivari Hilton Malta (Spinola Development Co Ltd) David Da Silva Pereira Motability Operations Ltd Olakunle Orebe Vintage Press Ltd (The Nation Newspaper) Sharon Da Silva Teixeira Axa Insurance plc Zeus O'Sullivan Chandlers Limited Kimberley Daniel-Ellison Andrew Wilson & Co Danielle Parsons Unite Students Kaj Darby Chandlers Limited Natasha Pawsey Andrew Wilson & Co Rebecca Day Kingsdale Group Limited Natalie Peach AA Projects Lorraine Debenham iSupplyEnergy Helen Pelham Vent-Axia Ltd Moustapha Diagne Richburns Zoe Pellow Symphony Group Plc Nicola Dickinson Veka plc Amy Pickersgill Contract Natural Gas Ltd Michelle Dilkes BaxterStorey Limited Maria Pitham 365 ITMS Ltd Matthew Donnelly Viridor Waste Management Gary Quilligan Andrew Wilson & Co Lee Dootson Andrew Wilson & Co John Randles Bradford Metropolitan District Council Andrew Dunn Andrew Wilson & Co Alison Richards Andrew Wilson & Co Hannah East Hays Credit Management Peter Roberts UK Fuels Limited Megan Evans 5G Communications Adrian Royal Financial Ombudsman Service Emma Fall Penham Excel Ltd Sherelle Senior Right Fuelcard Company Anton Fenech Actavis International Ltd Julie Sharpe AOL (UK) Ltd Julia Foster Hays Credit Management Lee Shaw M2 Todd Geisel Car Cash Point Diane Simpson SIG Trading Ltd A. Michelle Gelder My Management Accountant Satbinder Singh Bristow & Sutor Matthew Gould Penham Excel Ltd Gurmukh Singh ServiceMaster Kathryn Graham Axa Insurance plc Ross Smallwood SIG Trading Ltd Lawrence Grix Sheriffs High Court Enforcement Limited Daniel Stewart Andrew Wilson & Co Dimitrios Gyltidis Bristow & Sutor Jennifer Street Rachael Hall Francesca Taberner Academy Leasing Ltd Laural Hampson Axa Insurance plc Mark Tanti Charles Grech & Co.Ltd Nicole Harris Viridor Waste Management Louise Tate HSB Engineering Ciaran Hayes Network Rail (Infrastructure Ltd) Rodney Testa TechnoWorld Candice Heim-Sarac Axa Insurance plc Jonathan Thoburn Andrew Wilson & Co Sharron Higgins Peninsula Finance plc Dennis Thorne Bristow & Sutor Li-Ying Huang Yahoo Taiwan Alan Tuck Celesio Group UK Michael Hucklesby Penham Excel Ltd Russell Turner Marketing VF Ltd Llyr Hughes Ceredigion County Council Anita Vella FimBank Plc Sonja Hurt SIG Trading Ltd Deborah Warren Bristow & Sutor Tracy Hutchinson SIG Trading Ltd Ania Wasilewska Camira Fabrics Ltd Shane James Chandlers Limited Philip Weston Bradford Metropolitan District Council Laural Jefferies Fashion Edge Ltd Natasha White Rema Tip Top UK Ltd Jack Jepson Stanley Black & Decker Ltd Hollie Wildman Hays Credit Management Scott Johnson Bristow & Sutor Karen Young Hays Credit Management David Jones Mdn Systems Ltd David Zalans Bradford Metropolitan District Council 58 April 2015 www.cicm.com The recognised standard in credit management


Why not have both? At Controlaccount, we believe you can. Combining our customer-centred approach with fresh innovation, we work directly with your credit control department like we're part of the team - without sacrificing the perks of technology. Utilising our ClientWeb portal allows your team to upload, view and instruct cases whenever and wherever they need to. Or if you prefer the old fashioned way, you can speak to our outstanding staff. We're happy to do both. T: 0845 680 8783 E: clientservices@controlaccount.com


Cr£ditWho? CICM Directory of Services FOR INFORMATION, OPTIONS AND PRICING PLEASE EMAIL anthony.cave@cabbell.co.uk ANTI MONEY LAUNDERING COURT ENFORCEMENT SERVICES SmartSearch Station Court, Station Road, Guiseley, Leeds, LS20 8EY T: 0113 238 7660 F: 0113 238 7669 E: info@smartsearchuk.com W: www.smartsearchuk.com SmartSearch is the first system to bring together Business and Individual AML Verification on a single platform. Our data providers Experian and Dow Jones provide SmartSearch access to over one billion data items enabling AML verification in all Markets. AML verification data subjects are automatically screened against the latest Sanction, PEP and SIP Lists. Ongoing monitoring for the duration of your contract is provided at no extra cost. Efficient processes; less than 3 minutes to execute a business AML check and a sub 60 second individual check. Why not let your Compliance Team test drive SmartSearch for 14 days free of charge? (Ref:CM101) COLLECTIONS Lovetts Solicitors Lovetts, Bramley House, The Guildway, Old Portsmouth Road, Guildford, Surrey GU3 1LR T: +44(0)1483 457500 E: marketing@lovetts.co.uk W: www.lovetts.co.uk Lovetts has been recovering debts for 30 years! When you want the right expertise to recover overdue debts why not use a specialist? Lovetts’ only line of business is the recovery of business debts and any resulting commercial litigation. We provide: • Letters Before Action, prompting positive outcomes in more than 80% of cases • Overseas Pre-litigation collections with multi-lingual capabilities • 24/7 access to our online debt management system ‘CaseManager’ Don’t just take our word for it, here’s recent customer feedback: “...All our service expectations have been exceeded...” “...The online system is particularly useful and is extremely easy to use... “...Lovetts has a recognisable brand that generates successful results...” Court Enforcement Services Wayne Whitford Director – Business Development M:07834 748 183 T: 0843 504 1606 E: info@courtenforcementservices.co.uk W: www.courtenforcementservices.co.uk Court Enforcement Services provides fast resolution of High Court Enforcement, County Court Judgments (CCJs) over £600 and Commercial Rent Arrears Recovery (CRAR). We help businesses and individuals to enforce judgment awards made in their favour in the Civil Court process. Our team is very experienced within the Civil and High Court Enforcement industry and as owners of the company, we will take the lead and manage all aspects of the services that are provided on your behalf. We have launched Court Enforcement Services in order to bring a fresh, modern and above all personal customer-focussed approach to High Court Enforcement and Commercial Rent Arrears Recovery (CRAR). CREDIT INFORMATION Premium Collections Limited Office 3, Caidan House Business Centre, Canal Road, Timperley, Altrincham, Cheshire, WA14 1TD T: 0161 962 4695. F: 0333 121 3843 E: enquiries@premiumcollections.co.uk W: www.premiumcollections.co.uk Premium Collections Limited has the credit management solution to suit you. Operating on a national and international basis we can tailor a package of products and services to meet your requirements. Staffed by dedicated professionals with over 60 years combined experience of handling virtually every type of debt issue, the company was formed in December 2002 and is owned by our Managing Director, Paul Daine FCICM. Paul’s particular areas of expertise are the motor finance, insurance and international debt collection sectors. Services include B2B collections, B2C collections, international collections, absconder tracing, asset repossessions, status reporting and litigation COLLECTIONS (LEGAL) Blaser Mills Solicitors Head Office: Park House, 31 London Road, High Wycombe, Buckinghamshire, HP11 1BZ T: 01494 478660/478661 E: Jackie Ray jar@blasermills.co.uk or Gary Braathen gpb@blasermills.co.uk W: www.blasermills.co.uk Established in 1888, leading multi-disciplinary law firm Blaser Mills specialises in services for businesses and individuals. The Firm has particular expertise in Dispute Resolution and Debt Recovery working with experienced credit managers and finance directors providing solutions to both contested and uncontested claims. Blaser Mills provides an experienced team including CICM qualified legal representatives and the Firm is cited in the Legal 500 law directory based on quality of work and strong client feedback. Offices in Aylesbury, London (Central), London (Harrow), Old Amersham, Rickmansworth, Staines-on-Thames CONSULTANCY Company Watch 312 Coppergate House, 16 Brune Street, London, E1 7NJ T: +44 (0)20 7043 3300 E: info@companywatch.net W: www.companywatch.net What would happen if one of your key customers failed? Do you rely on company information that is up to 18 months’ old? Company Watch provides a credit management system that’s predicted around 90% of company failures. Not only that, our interactive system allows you to input more up-to-date accounts, and to stress-test company financials to generate an instantly updated analysis of a company’s financial health. With a portfolio and email alert system, and a user interface showing 5-year trends along with everything you need to know at a glance, Company Watch is an invaluable resource in the credit management process. Freeths Solicitors Third Floor St James’ Building, 61-95 Oxford Street, M1 6FQ T: +44(0)845 634 2540 F: +44(0)845 634 2541 E: emma.emery@freeths.co.uk W: www.freeths.co.uk Freeths is one of the UK’s leading regional law firms with 10 offices across the UK. We have a specialist team that advises on book debt collection and asset recovery in insolvency situations and everything in between. We believe our role is not just to collect your debts but also to increase your recoveries by working smarter. We have a range of flexible funding options to suit businesses of any size and advise on all matters from debt recovery and retention of title to disputes about the quality of goods and services. For undisputed claims we can offer low fixed rates or ‘no win no fee’ and we work fast taking the first steps in recovering your debt the same day. We are very proud to be the CICM’s Corporate Legal Partner and to be hosting the CICM Helpline providing free and quick initial legal advice to CICM members. Business Change Partners Ltd The Birches, 5 Moat Farm Close, Greenfield, Bedfordshire, MK45 5DP T: +44(0)152 572 0226. E: enquiries@businesschangepartners.com W: www.businesschangepartners.com Business Change Partners is a small independent consulting firm of experienced operational and consulting professionals. We assist clients in the areas of leadership, change, operational management, organisation design and business process improvement with functional expertise in Billing, Credit Management, Revenue Assurance and IT systems implementations. Our international experience includes telecommunications, utilities, oil and gas, manufacturing, publishing and financial services, in the business-tobusiness and business-to-consumer markets. We deliver pragmatic solutions and significant improvements to business processes, including cash collections, delivering millions of pounds of benefit for our clients. We are also proud to manage CICMQ on behalf of and under the supervision of the CICM. CoCredo Limited Missenden Abbey, Great Missenden, Bucks, HP16 0BD T: 01494 790 600 E: helpdesk@cocredo.com W: www.cocredo.co.uk CoCredo were proud winners at the CICM British Credit Awards for ‘Credit Information Provider of the Year 2014.’ We provide live online company credit reports and related business information within the UK and overseas. We have direct feeds from Dun & Bradstreet, Companies House and other premium providers. We provide business information on over 228 million companies across 240 countries. Our information is updated over 500,000 times per day and we have some excellent tracking mechanisms which provide proactive daily monitoring of changes in the global information on record. We can offer a wealth of additional services including D.N.A portfolio management, CoData marketing information, Consumer and Director Searches. We pride ourselves in delivering outstanding customer service offering you unrivalled support and analysis to protect your business. 60 April 2015 www.cicm.com The recognised standard in credit management


Cr£ditWho? CICM Directory of Services FOR INFORMATION, OPTIONS AND PRICING PLEASE EMAIL anthony.cave@cabbell.co.uk Creditsafe Business Solutions Bryn House, Caerphilly Business Park, Van Rd, Caerphilly, CF83 3GG T: 0292 088 6500. E: ukinfo@creditsafeuk.com W: www.creditsafeuk.com Creditsafe is Europe’s most used supplier of credit & business intelligence. Creditsafe have helped over 60,000 customers across Europe and the USA with a range of products which includes our UK, European and International Company Credit Reports, which reach over 129 countries and 90m companies; customer and supplier Risk Tracker and our 3D Ledger product which has captured over 35 million Trade Payment Data Experiences since its launch in 2012. All of which will help companies manage their exposure to risk, make informed decisions in relation to credit limits whilst looking at how you can identify gaps within your sales ledger to prioritise collections and leverage sales. Arthur J. Gallagher (GB) Newater House, Eleven Newhall Street Birmingham. B3 3NY T: 0121 606 0660 W: www.ajginternational.com With the risk of default by customers still a major threat to UK companies there has never been a better time to consider trade credit insurance. Arthur J. Gallagher ABI award winning specialist trade credit team recognises the unique nature of the credit insurance market. Our team of experienced professionals deal with a wide range of businesses, from SME to large corporate and global risks. Please contact us to discuss how a specifically tailored trade credit solution can benefit your business. CREDIT MANAGEMENT SOFTWARE Prof. Schumann GmbH innovative information systems Weender Landstr. 23, 37130 Göttingen, Germany T: +49 551 38315 0 F: +49 551 38315 20 E: info@prof-schumann.de W: www.prof-schumann.de Our Credit Application Manager (CAM) is a leading credit risk management solution for major corporations, as well as insurance, factoring and leasing companies. In their daily work, CAM allows credit and sales managers to call up all the available information about a customer or risk in a few seconds for decision support: real-time data from wherever they are. CAM keeps an eye on customers whose payment behaviour stands out or who have overdue invoices! CAM provides an up-to-date forecast of customers’ payments. Additionally, CAM has automated interfaces for connecting to leading suppliers of company credit data, payment record pools and commercial credit insurers. The system is characterised by its great flexibility. We have years of experience in consulting and software support for accounts receivable management. Top Service Ltd 2&3 Regents Court, Farmoor Lane, Redditch, Worcestershire, B98 0SD T: 0152 750 3990. E: enquiries@top-service.co.uk W: www.top-service.co.uk Top Service is the only credit reference and debt recovery agency to specialise in the UK construction sector. Top Service customers benefit from sector specific information, detailed payment history intelligence and realtime trade references in addition to standard credit information. There are currently 3,000 construction sector companies subscribing to the service, ranging from multi-national organisations to small family firms. The company prides itself on high levels of customer service and does not tie its customers into restrictive contracts. Top Service offers a 25% discount to all CICM Members as well as four free credit checks of your choice. CREDIT INSURANCE Credica Ltd Building 168, Maxell Avenue, Harwell Oxford, Oxon. OX11 0QT T: 01235 856400 E: info@credica.co.uk W: www.credica.co.uk Our highly configurable and extremely cost effective Collections and Query Management System has been designed with 3 goals in mind: • To improve your cashflow • To reduce your cost to collect • To provide meaningful analysis of your business Evolving over 15 years and driven by the input of 1000s of Credit Professionals across the UK and Europe, our system is successfully providing significant and measurable benefits for our diverse portfolio of clients. We would love to hear from you if you feel you would benefit from our ‘no nonsense’ and human approach to computer software. STA International 3rd Floor, Colman House, King Street, Maidstone, ME14 1DN T: +44(0)844 324 0660. E: enquiries@staonline.com W: http://www.stainternational.com Getting Business Paid STA is an award winning B2B and B2C debt collection, receivables management and tracing supplier. ISO9001 quality accredited, and with the CSAs Collector Accreditation Initiative, duty-of-care is as important to us as it is to you. In the past 12 months we’ve collected from 138 countries worldwide; with Your Debts Online giving you transparent access to our collection success and the cost of each and account placed with us for collection. Collected funds are remitted via BACS. We look forward to getting your business paid. EFCIS Limited t/as ICBA UK Specialist Trade Credit Insurance Broker The Office, Mill House Farm, Mill Street, Hastingwood, Essex, CM17 9JF T: 01279 437662 E: amoylan@efcis.com W: www.efcis.com EFCIS Limited - Trade Credit Insurance, Debt Collection, Dispute Resolution and Legal action for small/medium & multinational businesses. EFCIS secures limits for clients where the financials alone do not support the full limit. We are tenacious when negotiating settlement of claims, securing full payment for claims and proactively working with our clients in claims avoidance. We are the industry’s only Broker to develop policy compliance software to ensure client’s maximum benefit and protection from the policy. We believe that a well-managed ledger supports business growth within increased profit and an improved return on investment. Co-pilot Limited 73 Flask Walk, London, NW3 1ET T: +44(0) 20 7813 2182 E: info@co-pilot.co.uk W: www.co-pilot.co.uk Credit Managers who manage large or multiple ledgers have come to realise that they need to use specialist software to achieve or maintain performance improvement – be that risk, collections or both. For many Credit Managers a key question is where to start. How do you examine and evaluate the options? How and when do you start the budgeting process? What are the steps? Co-pilot has advised on credit management software for a number of years. We have good knowledge of the available solutions, what’s good, how they work and what type of solution best fits given situations. We combine this with considerable experience of credit management Best Practice so that you can pull everything together into one place and achieve a flexible and sustainable position going forward. We work with you through a structured evaluation process which is designed to enable you to have a clear view of what you can achieve going forward, what is practicable, the business case implications, the preferred supplier(s) and what the implementation process would sensibly look like (in our opinion, there is no such thing as “Plug and play”). The recognised standard in credit management www.cicm.com April 2015 61


Cr£ditWho? CICM Directory of Services CREDIT MANAGEMENT SOFTWARE FOR INFORMATION, OPTIONS AND PRICING PLEASE EMAIL anthony.cave@cabbell.co.uk RECRUITMENT OnGuard 40 Gracechurch Street, London, EC3V 0BT T: 0203 4403 825 E: info@onguard.com W: www.onguard.co.uk OnGuard is a leading supplier of sophisticated software in which Credit, Collections, Complaints and Cash Allocation can be integrated in a single solution. With customers around the world we offer a truly global, proven, low-risk high-value proposition which focusses on maintaining positive customer relationships helping to contribute to improving your competitive edge. Our integrated accounts receivables solution enables you to achieve faster payment of your invoices plus the benefits of improved insights into customer behaviour and valuable time savings. This not only results in process optimisation, cost savings, a lower DSO and reduced write-offs but contributes to a stronger, positive relationship with your valued customers. See more at www.onguard.co.uk. SIDETRADE Sidetrade UK: Amadeus House, Floral Street, Covent Garden, London WC2E 9DP T: +44 203 608 9850 E: Samantha@sidetrade.com W: wwwsidetrade.co.uk Sidetrade offers companies the opportunity to digitise the management of their financial relationships with customers. Sidetrade's market-leading solutions, complementary to ERPs, meet the challenges of securing what is often a company's largest asset, its accounts receivable, by reducing late payments and controlling customer risk. With sales in 65 countries and 34 million invoices managed annually, the Group enables 69,000 users from companies of all sizes and all sectors to collaborate via its cloud solution and accelerate cash-flow generation. FINANCIAL PR Hays Credit Management 107 Cheapside, London, EC2V 6DN T: 07834 260029 E: karen.young@hays.com W: www.hays.co.uk/creditcontrol Hays Credit Management is working in partnership with the CICM and specialise in placing experts into credit control jobs and credit management jobs. Hays understands the demands of this challenging environment and the skills required to thrive within it. Whatever your needs, we have temporary, permanent and contract based opportunities to find your ideal role. Our candidate registration process is unrivalled, including face-to-face screening interviews and a credit control skills test developed exclusively for Hays by the CICM. We offer CICM members a priority service and can provide advice across a wide spectrum of job search and recruitment issues. PORTFOLIO CREDIT CONTROL Safe Computing Limited 20, Freeschool Lane, Leicester, LE1 4FY T: 0844 583 2134 E: info@safecomputing.co.uk W: www.safe-creditcontrol.co.uk Designed to manage your customer credit accounts effectively, Safe credit control enables your credit management team to: • improve cash flow • reduce debtor days • increase customer service • cut the cost of cash collection • eliminate manual processes • speed up the query resolution process Our unique approach is centred on changing the perception of the credit control function, from a series of reactive processes to proactive ones. Credit controllers are traditionally regarded as an essential element in business, to chase late payments and respond to customer queries. Safe credit control has taken the concepts of customer relationship management (CRM) and applied it to the credit control function, enabling a softer, service orientated team of customer service representatives. Tinubu Square UK Holland House, 4 Bury Street, London EC3A 5AW T: +44 (0)207 469 2577 E: uksales@tinubu.com W: www.tinubu.com Tinubu Square’s mission is to control and minimise trade credit risk. Founded in 2001, Tinubu Square has become a trusted source of trade credit intelligence for credit insurance leaders and now offers the service to corporate customers enabling them to assess their credit risk. Tinubu Square’s B2B Credit Risk Intelligence solutions – including Tinubu Risk Management Center (RMC) cloud-based SaaS platform, Tinubu Credit Intelligence service with real-time credit risk intelligence reporting and Tinubu Risk Analyst advisory service provide companies with an accurate picture of their customers’ financial health from sales and marketing through the entire order-to-cash cycle. Based in Paris, Tinubu Square has offices in London, Brussels, Singapore and Mumbai. Gravity London Floor 6/7, Gravity London, 69 Wilson St, London, EC21 2BB T: +44(0)207 330 8888. E: sfeast@gravitylondon.com W: www.gravitylondon.com Gravity is an award winning full service PR and advertising business that is regularly benchmarked as being one of the best in its field. It has a particular expertise in the credit sector, building long-term relationships with some of the industry’s best-known brands working on often challenging briefs. As the partner agency for the Credit Services Association (CSA) for the past 13 years, and the Chartered Institute of Credit Management since 2006, it understands the key issues affecting the credit industry and what works and what doesn’t in supporting its clients in the media and beyond. PROFESSIONAL BODIES CICMos (CICM Online Services) www.CICM.com T: 01780 722 907. E: training@cicm.com W: www.cicmos.com CICMOS has been designed to help busy credit managers by providing them with a suite of online tools to support and quickly develop their teams. The virtual learning centre is an open platform system, accessed via the website, which is easy to use, modular and each module is completely optional, which means the system can be tailored to suit specific requirements and time constraints. This wide ranging system is more than just a training tool it is easy to set up and use and can be accessed securely via the CICMOS website for a low annual subscription. Chartered Institute of Credit Management (CICM) The Water Mill, Station Road, South Luffenham, OAKHAM, LE15 8NB T: 01780 722910 E: info@cicm.com W: wwwcicm.com The Chartered Institute of Credit Management (CICM) is Europe’s largest credit management organisation. The trusted leader in expertise for all credit matters, it represents the profession across trade, consumer, and export credit, and all credit-related services. Formed over 70 years ago, it is the only such organisation accredited by Ofqual and it offers a comprehensive range of services and bespoke solutions for the credit professional (www.cicm.com) as well as services and advice for the wider business community (www.creditmanagement.org.uk). Portfolio Credit Control Portfolio Credit Control, New Liverpool House, 15 Eldon Street, London, EC2M 7LD T: 0207 650 3199 E: recruitment@portfoliocreditcontrol.com W: www.portfoliocreditcontrol.com Portfolio Credit Control, solely specialises in the recruitment of permanent, temporary and contract Credit Control, Accounts Receivable and Collections staff. Part of an award winning recruiter we speak to and meet credit controllers all day everyday understanding their skills and backgrounds to provide you with tried and tested credit control professionals. We have achieved enormous growth because we offer a uniquely specialist approach to our clients, with a commitment to service delivery that exceeds your expectations every single time. Jobs in Credit Foxhall Business Centre, Foxhall Road, Nottingham, NG7 6LH T: 0207 316 9533 E: info@jobsincredit.com W: www.jobsincredit.com Established in 2004, jobsincredit.com is the only UK job board dedicated to the credit and collections industry. The site attracts over 30,000 monthly visits, and advertises over 1,000 roles from a broad mix of employers and recruiters. For candidates our service is free of charge, and offers an easy way of searching for and securing your next role. For employers jobsincredit.com offers the most cost effective recruitment method, no matter the seniority. Many leading employers are clients, including Barclays, RBS, Deloitte, Centrica Barclaycard. For more information about advertising your vacancy, please visit www.jobsincredit.com ATTENTION PRODUCT AND SERVICE PROVIDERS You can connect with them all now by having a listing in CreditWho. For just £1,247 + VAT per annum: - your business will be listed in Credit Management magazine, which goes out to all our members and subscribers and has an estimated readership of over 25,000 To book your listing in CreditWho contact Anthony Cave on 020 3603 7934 62 April 2015 www.cicm.com The recognised standard in credit management


CREDIT MANAGEMENT CM in association with CREDITCONUNDRUM MONTHLY PRIZE CROSSWORD DRAW FOR ALL EMAIL ENTRIES FOR THE CROSSWORD PLEASE EMAIL : Puzzle by © 2012 Mirroreyes Internet Services Corporation. All Rights Reserved - CROSSWORD NBR 28 NAME .................................................................................................................................... ADDRESS .............................................................................................................................. ............................................................................................................................................... POST CODE .................................. TELEPHONE NUMBER ..................................................... The CICM is registered with the UK's Information Commissioner under the Data Protection Act 1998 (the "Act"). All the data contained on this form, is held and processed electronically in accordance with the Act. The Institute holds and processes your personal data in order to give you the full benefits of being a member and for administrative purposes. We may from time to time notify you by post or email of details of CICM events or other similar CICM services or products which we think may be of interest to you. If you do not wish to receive such notification please tick here q If you subsequently decide that you do not wish to receive such notifications please email the Institute at unsubscribe@cicm.com or write to the Data Controller at the address given below. The Data Protection Act gives you the right at any time to see a copy of all the data that we hold about you. If you would like a copy, please send a letter requesting this information together with a cheque for £10 payable to : The Chartered Institute of Credit Management to: Data Controller, CICM, The Water Mill, Station Road, South Luffenham, OAKHAM, LE15 8NB. CREDITMAN by MIKE FLANNAGAN ACROSS : 1. Animal foot 5. Feints 10. Aquatic plant 14. Ammunition 15. Watchful 16. Coil 17. Inheritor 18. Discourteous 20. Aerial 22. Weird 23. Best seller 24. S S S S 25. They keep dozing off 32. Paperlike cloths 33. German iris 34. A type of large sandwich 37. Breezed through 38. Orderly grouping DOWN : 1. Laugh 2. Portent 3. Leave out 4. Brow 5. Chipper 6. Forearm bone 7. Beer barrel 8. Makes a mistake 9. Immediately 10. Assumed name 11. Diving birds 12. Edge tool 13. Church recesses 19. Pepperwort 21. Bites 25. Sun 26. Delicate 27. Type of sword 28. Mob 29. Made a mistake 39. Dad 40. Type of whiskey 41. Law and _____ 42. Moses' brother 43. Running away 45. Sight-related 49. Big fuss 50. Pee-pee 53. Terminate 57. Permissiveness 59. Doing nothing 60. Always 61. A French dance 62. Tidy 63. A musical pause 64. Hinder 65. Horse feed 30. A kind of macaw 31. Do it yourself 34. Indian dress 35. Atop 36. Pow! 38. Biblical boat 39. Light tan horse 41. Academy award 42. Contributes 44. Prissy 45. Not inner 46. Demonstrate 47. Anagram of "Islet" 48. Unreactive 51. Labels 52. French for "State" 53. Bad end 54. Notion 55. Thin strip 56. Collections 58. Old World vine THERE WILL BE THREE PRIZES OF £20 EACH FOR THE FIRST THREE NAMES DRAWN ON 9TH APRIL CROSSWORD SOLUTION 27 andrew.morris @cicm.com MARCH CROSSWORD WINNERS ARE : Tony John FCICM Philip H Bennett Chris Gait For the chance of winning £20, forward your completed solution to: Andrew Morris, Chartered Institute of Credit Management, The Water Mill, Station Road, South Luffenham, OAKHAM, LE15 8NB or email: andrew.morris@cicm.com Don’t allow long-standing debts to adversely affect your business For all your credit management requirements Premium Collections Limited have the solution. Operating on a national and international basis we can tailor a package of services to meet your requirements. Staffed by dedicated professionals with over 50 years combined experience of handling virtually every type of debt issue. DEBT COLLECTION STATUS REPORTING ABSCONDER TRACING VEHICLE REPOSSESSIONS For a detailed discussion on how we can help your business or for a quotation for any of our services please do not hesitate to contact: Paul Daine FCICM, MIoD, Managing Director Office 3, Caidan House Business Centre, Canal Road, Timperley, Altrincham, Cheshire, WA14 1TD Fax: 0333 121 3843 Email: enquries@premiumcollections.co.uk Website: www.premiumcollections.co.uk Telephone: 0161 962 4695 The recognised standard in credit management www.cicm.com April 2015 63


CreditForce Richly featured end-to-end revenue, collections, customer service and query management software for the world’s leading businesses. Our state-of-the-art software systems are proven to improve Cash Flow whatever your business. With clients in 26 countries, and integration with over 40 of the world’s leading ERP systems, you can have confidence in making CreditForce the centre of your revenue and collections management processes. Visit www.innovationsoftware.uk.com or call +44 (0)1 634 812300 for more information. Innovation Software

More magazines by this user
Similar magazines