Credit Management Jan:Feb 2018

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NEWS A YEAR OF OPPORTUNITY Credit Management spoke to a number of different members of the credit community for their hopes/expectations for their companies and the economy, in 2018. Practicing International Director of Credit: “Brexit uncertainty is undoubtedly having some impact, but businesses and consumers will start adapting. The UK economy grew by two percent in 2016 and surprised everyone being relatively unaffected by the EU referendum result. The weaker pound might squeeze household spending but makes the UK more attractive for exports and cheaper overhead. Growth will probably be softer but will continue to be positive and, I think, will continue to improve. “UK unemployment figures are also much better than in many other EU countries and further investment from outside the EU will grow in the UK. Fundamentally, the UK will have a flexible economy which is able to adjust more quickly. I see many positive seeds being planted for the future. A final point: media studies show that bad news far outweighs good news by as much as 17 negative stories for every one good news report. Why? Because humans seek out the dramatic negative, much like the EU Parliament.” Nigel Fields – Executive Director – 20th Century Fox Payment provider “After a lot of hard work developing and designing our platform, 2018 is finally the year the first real-world instant payment decisions get made. Early in the year, we plan to roll out with our first multinational clients. “We can only tackle slow payments if everyone in the payments chain comes on board; suppliers, buyers and invoice funders. They only come on board if you provide them with the practical tools and meaningful incentives to speed up the payments chain. “From a creditor’s perspective, this means opening up access to a huge market of SME suppliers who were previously too risky to be funded in a cost-efficient manner. Through machine learning we are able to shift the credit risk away from the SME and onto the invoice payment itself, creating a new low-risk funding opportunity for lenders. “I am very proud of those businesses and funders who have decided to take a lead on tackling slow payments with us next year. Where they lead, I am sure many others will follow soon.” Paul Christensen – CEO – Previse. Business information provider: “With Brexit on the horizon we believe that the economy is changing in the UK to become more focused on small businesses. The number of new start companies is increasing and with new technology developing all the time, companies can easily be set up from home. With this in mind, CoCredo is focusing solutions, not only on large companies, but also the smaller start-ups which are the life blood of the economy. “Most new start companies need credit in order to trade and grow their business. Traditionally new starts are seen as highrisk due to lack of data. With initiatives introduced such as open banking data (which we have access to) this will mean that businesses of this nature can be more accurately scored. The industry and economy are moving with the times and our products and services are moving at a fast pace to reflect this. We are committed to helping smaller businesses as well as medium and large and our products help them to be “Success in the current climate remains challenging. As we look forward into 2018, continued emphasis remains on regulation and undoubtedly this will play a part in many businesses’ key focus plans for the year ahead (GDPR and The Senior Managers Regime in particular). Whilst regulation remains forever a business’s mandatory obligation, our key focus in 2018 is about creating a fantastic experience for our customers. We improve the experience, we improve engagement and we improve the outcomes for all our stakeholders. “For our business, the ongoing leaps in technology represent exciting opportunities to develop our business and improve the customer experience. This year we will continue with our investment We believe a passionate focus on a great customer experience in all that we do unites our business in a way that no other goal can Debt Collection: The Recognised Standard / www.cicm.com / January-February 2018 / PAGE 12 recognised and assessed more accurately. “We appreciate the challenges that lay ahead with the uncertainty of Brexit and GDPR but we as a business welcome change, which will bring about higher standards to the industry. Brexit will mean that companies will have to look at other opportunities outside of the EU. This will no doubt bring with it its challenges, however with the transparency that international credit reports provide and our ever-growing network of local providers, working with countries outside of the EU has never been easier.” Dan Hancocks – Managing Director – CoCredo Brexit will mean that companies will have to look at other opportunities outside of the EU. in digital self-serve capabilities. Many customers expect firms to offer them the same simplicity and convenience as other online businesses. Our focus in the coming period is to evolve our digital experience to do exactly that. We are also planning on developing our conversation expectations for our customer facing agents; while we have never scripted our calls, we want to move away from rigid tick box guidance that many agents use (not least to make sure they don’t make a mistake which would lead to a low QA score) to a much more emphatic focus on providing a good experience for customer interactions. We believe a passionate focus on a great customer experience in all that we do unites our business in a way that no other goal can. “Dare I say it too, but we also need to focus on profitability, for while we could offer the most compliant business, providing a wonderful experience for our clients’ customers, unless we are remunerated sufficiently to be able to make a reasonable profit, DCAs will not be able to provide these services for their clients and their customers in the longer term.” David Sheridan – Director – ARC Europe.
INSOLVENCY In debt? – then breathe! New measures are being considered by the Government to ease the debt burden for those struggling to repay. AUTHOR – David Kerr MCICM is the Chief Executive of the Insolvency Practitioners Association (IPA). David Kerr I wrote last summer about the possibility of legislation on proposals for a ‘breathing space’ for debtors; it seemed there was a glimmer of hope that this would see the light of Parliamentary scrutiny, because the main opposition parties pledged something similar. The Government has taken the first step down this road. A call for evidence has just closed, and we can expect a consultation this year on the measures the Treasury intends to introduce. The breathing space concept will provide some additional assistance to indebted individuals. It will though require appropriate supervision to ensure that the process is not abused and that creditors can be assured that their positions are not worsened. The breathing space has to fit well with existing debt solutions, and use of existing insolvency tests would ensure consistency. However, there are a number of people who are ‘just about managing’ to meet minimum payments due to creditors, but living with a heavy debt burden and without any real prospect of repaying the principal debt. Perhaps they too should be eligible if it is clear they have no prospect of repaying capital and genuinely wish to bring about an orderly resolution of their debts. The breathing space could build on existing routes of entry into insolvency procedures, via regulated debt advisors, or intermediaries currently acting in respect of Debt Relief Orders, or Insolvency Practitioners or the bankruptcy adjudicator, to ensure that debtors receive regulated advice. BREATHING SPACE The current proposal is for a six-week breathing space. Creditors can reasonably expect that all of a debtor’s liabilities must be disclosed, and debtors will need to be advised of the consequences of nondisclosure, and in particular that creditors not covered by the new process may be at liberty to continue to pursue their debts. There is an argument for allowing interest to continue to be applied until a formal insolvency process is in place (if that is the result at the end of the breathing space), so as not to interfere with existing rights of creditors. The Government has sought views on whether interest as well as other charges should stop at the point the breathing space commences. If a repayment plan or other formal process can be commenced before the expiry of six weeks, then there would seem little point in prolonging the breathing space, and it will be interesting to see how proposals for early termination of the breathing space look when the consultation is published. This includes bringing it to an end early if the process is abused, for example if the debtor does not take regulated advice, prefers certain creditors over others, takes further credit, or does not make full disclosure. HOW IT COULD WORK A key point for creditors is the need for a means by which those entering the breathing space can be identified. A searchable register would assist creditors and afford the debtor some protection. The Government considers that there could be benefits for creditors as well as debtors in having a period of protection. The positive impact of consumers taking advice and making reasonable and sustainable proposals for dealing with their debts should outweigh any shortterm detriment to creditors, provided the breathing space period is a maximum of six weeks. A longer period increases the risk of distortion of creditors’ rights in any subsequent insolvency process. REPAYMENT PLAN The breathing space can be an entry point into a formal solution to a debt problem. It should not be seen only as a means to enter a debt repayment plan of the type envisaged in the call for evidence. A number of outcomes are possible, including the current full range of statutory options. The manifesto commits the Government to introduce a statutory debt repayment plan where appropriate. Debt management companies already administer debt management plans and are regulated by the FCA for that purpose. Other formal solutions such as an IVA may be administered by IPs. Some careful consideration needs to be given to how a new formal debt repayment plan would sit alongside existing solutions. TO VOTE OR NOT TO VOTE In IVAs, creditors’ rights, which are affected by a process that provides for some debt forgiveness (i.e. not full repayment), are protected by a vote at the outset, albeit one through which there is provision to bind dissenting creditors. A simple majority vote could be included for a debt repayment plan, and perhaps enhance creditor confidence in the new procedure. Some might argue that if ‘repayment in full’ is envisaged then a vote is unnecessary, but in every case creditors’ rights are adversely affected if only by delayed repayment and removal of enforcement options. There is also the possibility if plans run for several years, that a debtor’s circumstances will change and that a plan intended to repay in full will not do so; in those circumstances (and where a debtor is avoiding bankruptcy and the potential for investigation of a debtor’s conduct) creditors might expect to be consulted. Engaging creditors at the beginning of a process is likely to be more fruitful than seeking to do so some way down the track. NEXT STEPS The Conservative manifesto committed the Government to introduce the scheme ‘with the right safeguards to prevent abuse’. It remains to be seen whether the final proposals will hold true to those aims. The Recognised Standard / www.cicm.com / January-February 2018 / PAGE 13
Page 1 and 2: CREDIT MANAGEMENT CM JANUARY/FEBRUA
Page 3 and 4: JANUARY FEBRUARY 2018 www.cicm.com
Page 5 and 6: CMNEWS A round-up of news stories f
Page 7 and 8: Citizens Advice warns fitness fanat
Page 9 and 10: Report claims SMEs are turning to f
Page 11: OBITUARY The right cuppa TATA Globa
Page 15 and 16: The Recognised Standard / www.cicm.
Page 17 and 18: INTERVIEW AUTHOR - SEAN FEAST been
Page 19 and 20: OPINION AUTHOR - Mike Hutchinson, B
Page 21 and 22: THE RECOGNISED STANDARD CICM Britis
Page 23 and 24: OPINION AUTHOR - Katy Walker THE re
Page 25 and 26: Skills Builder Special business and
Page 27 and 28: The next evolution in credit manage
Page 29 and 30: CURRENCY UK PLANES, TRAINS AND PERA
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Page 35 and 36: For more information call 01206 322
Page 37 and 38: THE CREDIT CONTROL RECRUITMENT SPEC
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Page 45 and 46: LET’S DO CREDIT WEEK! Here’s ho
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