January and February 2016 Credit Management

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On the one hand is the desire to become more open in the data that they share, specifically around small businesses seeking money to grow. On the other, is an apparent disconnect with proposed regulation that will enable people to modify their data, and make more accurate information more difficult to come by. “It is all very complex,” he says. COMPANIES HOUSE Ray Ruffels who heads up the Business Information division at Jordans, agrees that there are contradictions. He highlights the changes that are happening with data from Companies House e.g.: “The removal of the requirement for companies to file the day relating to the date of birth of a director,” he explains, “which although it sounds like only a small change, has data matching implications. “The reason given is that it will help to reduce fraud, and there is some merit in that argument. But the unintended consequence is that it will make the data less precise and possibly even increase the risk of error, especially when you are trying to accurately identify the correct Director named ‘John Smith’!” Access to ‘free’ data from Companies House provides an opportunity for Jordans and others to differentiate their services from other information providers: “Free raw data and documents have limited long-term use and value so it is our job to take the raw material and turn it into insight and high quality decision making tools whilst ensuring it is searchable, in context, fully mapped and accessible at the point of decision,” he adds. The industry has been campaigning for some time for the HMRC and HMT to agree to the release of VAT data, and this now looks a real possibility. Understandably, Government is insisting on certain safeguards: one is to work with information providers that are ‘CRA Designated’; another is that they adhere to ISO27001 as a minimum standard for information security. Does this present any particular challenges? "Just because a company appears to pay late does not mean that it is about to fail, but its payment practice and behaviour will ultimately be considered in its overall business information summary." MARK PRESTON DUN & BRADSTREET David Knowles of CreditSafe says that ‘Designation’ is a big step in the development of the commercial credit reference industry: “In many ways, however, the more exciting issue is around the rationale for designation as this will now see a much wider range of financial ‘credit information’ on businesses being made available from the banks “While the Government’s intention is initially to give SMEs more access to finance via Alternative Finance Providers this is a move that will inevitably lead to further change in the industry but one which may well affect the ease with which newer entrants may come in.” Max Firth says that opening the VAT register is an example of how sharing data can help smaller businesses: “It allows CRAs to identify and verify SMEs more easily and improve the accuracy of credit scores. As a result, lenders can make better decisions and the trade between businesses will increase.” TWO-TIER SYSTEM He welcomes the concept of CRA Designation: “However,” he says, “clearly it will result in a two-tier CRA system between those who have been designated and those who have not. It will leave companies with a decision to make on which CRA they want to use, based on their information requirements and regulatory needs.” Mark Preston adds that it will not only rationalise the industry, but also serve to root out some of the more questionable players: “Anyone can set themselves up as an information provider, charging businesses for information that is effectively free and adding very little of any value or insight,” he says. “The information may not be good enough to base an important credit decision on its own, and would require more analysis. “A designated agency, however, will be able to demonstrate how their data is captured, stored and maintained. Designated CRAs typically publish financial accounts information combined with multiple, additional data sources to deliver an all-round view of a business including who runs it, owns it, and their track record. The more sophisticated agencies also look at payment records (globally Dun & Bradstreet captures something in the order of five billion trade experiences every year!) and interprets those records so that they are appropriate to the business and the sector in which they operate. Just because a company appears to pay late does not mean that it is about to fail, but its payment practice and behaviour will ultimately be considered in its overall business information summary.” Nic Beishon, Head of Commercial, Equifax UK & Ireland, agrees with Mark and only expects a handful of CRAs will pass through the due diligence process and be designated: “It’s too early to suggest whether it will rationalise the market, but we would expect each CRA, designated or not, to continue playing to its own strengths,” he adds. SECURITY CONCERNS In terms of security, most agree that the ISO27001 information security accreditation is almost a given requirement: “We are already seeing it appearing in RFPs and Contracts,” Mark Preston says. So too is David Knowles at CreditSafe: “We are increasingly seeing it as a base requirement for data security when negotiating data supply agreements with other suppliers.” Neil Munroe does indeed think that ISO27001 will become a given and thinks that over time, data security standards will become even more stringent: “Over time, 20 Jan/Feb 2016 www.cicm.com The recognised standard in credit management
OPINION LIFTING THE VEIL ON INTERNATIONAL REPORTS Nick Green MCICM of PurplePatch explores the issue of the pricing and supply of International Credit Information. IT wasn’t so long ago when there weren’t that many options available to credit risk managers when it came to the supply of international business information reports. No surprise then that with little or no competition, international reports came at a premium price. Things have certainly changed over recent years. Today there is a huge difference in pricing when comparing the exact same information purchased incountry as opposed to being purchased Internationally and charged at cross border prices. Some of the bureaus source their International information from the same International suppliers, whereas others partner with competitive suppliers in each region and not necessarily with the market leader. All, perhaps understandably, claim to have the best information and coverage in that particular geography. In research conducted by PurplePatch, we found many examples where the same level and volume of reports purchased direct from the provider in-country was in some cases ten to 15 times less expensive than if purchasing from the UK. This was also true of both owned subsidiaries incountry as well as partner suppliers. NEW ENTRANTS We are now seeing new entrants to this highly competitive market, offering good quality international reports at a realistic and – perhaps more importantly – a fairer market price. It is unfair to label a provider of poor quality if they have decided on what could be seen as being a fairer, lower marketdriven International price, especially when they are market leader in that country by virtue of their quality and content. Some of the main international players are arguably now in a conundrum. The market will demand a fair price for reports going forward. In a country where a main player needs to purchase from a partner or re-supplier, room for margin will be slim or worse. New product development will be difficult to control and slow to market. ‘Challenger’ brands source and create products in a different way from the ‘traditional’ bureaus allowing them to discount heavily whilst offering similar or better data utilising improved technology ‘wraps’. Some, our research shows, can offer better International ledger monitoring at a fraction of the price. Others can offer deeper and more accurate Ultimate Beneficial Ownership data required for compliance. One of the main competitors gives the customer the ability to merge their own customer data with behavioural and bureau data and then create a bespoke score and reports on the fly at little extra cost. So, there are quality options available and the days of little or no alternative have well and truly gone. If competition is driving price commoditisation, then suppliers should be passing that discount on to their International customers. ISO27001 may end up being the minimum to which companies must adhere,” he says, “especially as the data being handled becomes more sensitive.” Nic Beishon says that stringent security is at the heart of his company’s DNA: “We believe ISO27001 is a helpful benchmark for our security procedures and processes to be assessed.” Ray Ruffels agrees: “It will become a tick in the box,” he says. But he goes on to say that it will be beyond the reach of some, especially those smaller players: “Even when you are well-versed in International Standards, it still takes up considerable resource, time and effort to comply, and smaller businesses may struggle.” Not all are convinced as to the importance of the standardisation it implies: “I am sure stringent security is in place both with ourselves and our competitors,” Colin Sanders says. “This will also be further emphasised within the new authorisation now being implemented by the FCA. Whilst it is a ‘consumer’ regulation, this does impact upon any CRA that provides credit reports on small businesses such as sole traders and small partnerships. We will have to conform to new regulations, and one important factor in this is data security. Without the required standards, new licenses will not be granted.” So how have the needs of the credit manager changed over recent years? What are looking for today from their business information providers? FAST AND FURIOUS Some, like David Knowles, believe that credit managers’ needs are still much the same as they have always been: “They want good quality, reliable, up-to-date salient data presented in an accessible format,” he says. “Companies are increasingly aware of the need to see cross-border information presented in an easy-tocompare way while larger customers with substantial customer portfolios expect to have information delivered in an integrated format within their existing accounting and CRM solutions. We are also having more and more discussions with larger customers who are interested in developing bespoke scoring solutions integrating their own business information with our data.” The recognised standard in credit management www.cicm.com Jan/Feb 2016 21
Page 1 and 2: CREDIT MANAGEMENT CM JAN/FEB 2016
Page 3 and 4: CONTENTS JAN/FEB 2016 www.cicm.com
Page 5 and 6: ONEPROVIDER MULTIPLE SOLUTIONS AML,
Page 7 and 8: NEWS IN BRIEF CAI LANDMARK THE Col
Page 9 and 10: CICM NEWS COST OF HACKING LIKELY TO
Page 11 and 12: INSOLVENCY NEWS IN DEBT - WHERE TO
Page 13 and 14: There are debt purchasers. And then
Page 15 and 16: THE CUSTOMER PERSPECTIVE When I fir
Page 17 and 18: Filter out the time wasters Finding
Page 19: FRONT COVER FEATURE As an industry,
Page 23 and 24: Stand out from the crowd,beyour own
Page 25 and 26: INTERVIEW • LOCAL WORLD • ON A
Page 27 and 28: INTERVIEW Mark was not out of actio
Page 29 and 30: CONGRATULATIONS TO ALL OF OUR 2016
Page 31 and 32: www.portfoliocreditcontrol.com Port
Page 33 and 34: FEATURE SPECIAL The conference has
Page 35 and 36: INTERNATIONAL TRADE NEWS HELPING HA
Page 37 and 38: INTERNATIONAL TRADE NEWS NEWS IN IN
Page 39 and 40: 7 6 5 4 3 2 1 0 2 1 0 Region Region
Page 41 and 42: ELECTIONS2016 WE NEED YOU! The Advi
Page 43 and 44: Does my bum look big in this? Impro
Page 45 and 46: FEATURE SPECIAL New to CICM qualifi
Page 47 and 48: Time is money. We recover both. No
Page 49 and 50: THE CICM British Credit FULL PROGRA
Page 51 and 52: The recognised standard in Credit M
Page 53 and 54: THE B2B DEBT RECOVERY SPECIALISTS T
Page 55 and 56: The winning team from Northumbria U
Page 57 and 58: STAND ALONE CREDIT CONTROLLER WORK
Page 59 and 60: Cr£ditWho? CICM Directory of Servi
Page 61 and 62: Cr£ditWho? CICM Directory of Servi
Page 63 and 64: CREDIT MANAGEMENT CM MONTHLY PRIZE

January and February 2016 Credit Management

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