201504 CM April

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