Credit Management magazine October 2017

OPINION
TIGHTROPE
WALKERS
Chris Sanders considers the impact technology
may have on debt recovery and litigation.
AUTHOR – Chris Sanders FCICM is Head of Accreditation – CICMQ
Chris Sanders
THE abundance and development
of new systems is not
limited to the ‘core’ activities of
credit management, and many
organisations are taking advantage
of new App-based development
opportunities which are faster, and
easier to access and deploy. It is tough for the
major ERP providers – IBM, Oracle, and SAP
– to keep up with customer and business demand,
not least as large ERP systems are managed
by in-house IT teams, and implementing
even the simplest ‘change request’ can be complex
and protracted.
These long-established players remain
the engine room of many businesses and
will do for some time, if not forever. I know
one organisation whose billing system
is fundamentally the same one that was
originally designed in 1973; the addition of
smaller specialist systems are providing the
real innovation.
I was at a conference recently and met
with one of these fast-moving innovators who
showed me a real-time demo of an HR system
on his smartphone. The task was a simple
one that many HR teams struggle with – the
maternity entitlement for staff. By gathering
multiple data sets from various HR, Payroll,
and employee information systems, it took
less than three minutes to complete a task that
used to take five days, recalculating salary, and
holiday start and end dates. This is ‘employee
self-serve’ and required no HR involvement.
This is just one of the applications they are
working on. As this is more of an aggregation
tool than a specific specialist system designed
to fix a specific process, it could technically be
applied to any functional activity.
PROCESS IMPROVEMENT
Taking the complexity and manual handoffs
out of processes and systems is what process
improvement is all about – driving efficiency,
but also cutting costs. It has traditionally been
easier to pass off the complex or difficult
tasks to third parties like debt collectors and
solicitors. When you have exhausted all your
options, outsourcing collections has been
the accepted norm. The danger is that debt
collectors and solicitors can become a safety
net – much like credit insurance can be – and
‘business as usual’. Don’t get me wrong, there
is a place for all of these activities, but surely
if there was no safety net you would ensure
you were more focused and properly trained
before you stepped onto the tightrope.
The difficulty has always been that
managing debt at the end of the ‘normal
process’ has been seen as ‘difficult’, and less
valuable to the organisation. By the time a
debt is that overdue, contact with the debtor is
reduced, there are more disputes, customers
are either not who you thought they were,
or even where they said they would be, and
frankly you have bigger fish to fry. Any margin
you may have had on the product or service
you have sold would have been lost. Adding
debt collection charges and solicitors’ fees can
be seen as throwing good money after bad, and
that isn’t the ‘mystical margin’, but real money.
When the debt progresses to ‘legal’ you
are in the hands of a complex process with
timeframes that can be protracted and
expensive if unsuccessful and, in any event,
by the time it gets to this point, and you
have decided to use the ‘nuclear option’, you
have probably given up on the customer
anyway. (One thing is for sure, the sales guy
The Recognised Standard / www.cicm.com / November 2017 / PAGE 36