Credit Management October 2018

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ASK THE EXPERTS IN THE BLACK Why would achieving zero bad debts not necessarily be a good thing? AUTHOR – Charles Wilson FCICM I told the Editor that this article might be late. My excuse? I just had to fulfil a lifetime ambition to go to Istanbul on a motorbike. But more on that in a moment. Zero bad debts? Sounds like a dream. Imagine being able to tell your credit or finance director that the company has no bad debts whatsoever. Absolutely none. Just think about it. Pause, and enjoy that thought – 0.00 percent of turnover. And zero legal fees too? Nirvana! Just turn away any business with a whiff of risk about it. Why blot your unblemished book of paltry write-offs? It gives a nice tidy result and helps you sleep well at night, agreed, but, what is this really achieving for the business that employs you? If a credit manager is turning away 20 percent of potential sales leads, possibly with a gross contribution of 50-70 percent on it, it might be costing your sales team, your staff bonus scheme, your profit line and even your shareholders a chunky sum of money. Suppose I’d sat at home in June and dreamt about riding a bike to the edge of Asia. I’d avoid the 55 hours in the saddle, 3,000 miles on the road, excluding trains and ships, let alone riding in 35 degrees under a padded helmet and body armour! It would have been a lot safer, cheaper and more comfortable. I’d be able to take virtual tours of the big sites online, and the whole thing would not have taken 20 days. It would have been fast, efficient and cost-effective. And zero risk. How dull that would have been. Surely the skill of credit management is to contribute as much as possible to the growth and business of an employer, yet keeping write-offs to an agreed percentage on sales or profits. This must be determined by the directors, when they’ve set a policy on risk for any new business, and also a different percentage for that incremental new business which is above your business’ norms. That way the writeoff ‘spend’ relates to the marginal business you might otherwise have turned away. Obviously, there must be commitment to this policy at the highest level, so your performance is not unfairly judged against false criteria. But if you can facilitate sales of £10 million more, contributing £6 million after direct costs, with maybe £1 million to net profit, at a cost of £500,000 in write-offs, why ever not? Think about the £9.5 million that wasn’t written off! And tell your directors, it’s no deal unless you also get proper terms and conditions of business for your collections. You may choose to test the collectability of your ‘exceptional or marginal’ debt with a commission arrangement perhaps, before going-legal for the few that may need that. And please, please make sure your terms of business do enable you to claim a collection fee, full legal costs, compensation, and interest, so that the good recoveries never hit profits, and they contribute positively to the cost of your staff overhead. That’s what Late Payment compensation is for! In summary, what can we safely enable the business to achieve, keeping sales more buoyant than they would be otherwise, but giving astute control on write-offs? Okay, some customers will let us down. So what? I faced a thunderstorm in Istanbul so that my BMW flat-twin had to chug through 25cm of water in heavy traffic. It happened in a few minutes. But we got through it. I could have just stayed home and dreamt about Turkey, and my pillion wife of 44 years would have been spared living three weeks out of one side pannier. But she loved it…I think. Charles Wilson is Chairman of Lovetts Solicitors. Suppose I’d sat at home in June and dreamt about riding a bike to the edge of Asia. I’d avoid the 55 hours in the saddle, 3,000 miles on the road, excluding trains and ships, let alone riding in 35 degrees under a padded helmet and body armour! The Recognised Standard / www.cicm.com / October 2018 / PAGE 44
EDUCATION - LEARN ONLINE First steps to qualification NEW Knowledge Hub Premium Content Looking to prove your skills? New to credit control or collections? Enjoy learning at your own pace online? Be one of the first to prepare for a CICM award by studying online The new online course on CICM Knowledge Hub supports preparation for the CICM Level 2 Award in Credit Control/Collections and Credit Controller/Collector Apprenticeship. The course includes pre-course activities, ten elearning modules covering all syllabus areas, assignment writing advice, a resources section and course completion certificate for learners who complete key activities and course evaluations. There is also an option to submit a post-course assignment for a regulated CICM award. MODULES: • You and your organisation • Credit and collections function • Credit control and collections risks • Organisational risk and compliance • Risk compliance and you • Delivering excellent service • Influence of standards and values • Demonstrating effective credit/collections work • Reflective practice • Continuing Professional Development (CPD) The course takes approximately 90 hours to complete and could form part of a taught programme or stand-alone course. CPD 90 Course fees apply (Discounted CICM member rate – £270 for 12-month licence; £295 including one and a half hours Learning Support)* plus CICM standard assessment entry fees for any assignment submission. Learners studying through a related CICM virtual class or Learning Support have free access to this course as part of their programme. Email: learningsupport@cicm.com or call 01780 722909 to purchase course *Fees are subject to VAT The Recognised Standard / www.cicm.com / October 2018 / PAGE 45
Page 1 and 2: CREDIT MANAGEMENT CM THE CICM MAGAZ
Page 3 and 4: OCTOBER 2018 www.cicm.com 12 FROM T
Page 5 and 6: The Recognised Standard / www.cicm.
Page 7 and 8: ICO urges greater transparency in m
Page 9 and 10: CICMQ serves up a treat ONE of the
Page 11 and 12: INSOLVENCY Company rescue Has the G
Page 13 and 14: 3 YEARS IN 2018 Credit Controller A
Page 15 and 16: OPINION Such an increase in commerc
Page 17 and 18: TOWN & COUNTRY Exclusive statistics
Page 19 and 20: European Business Awards Sponsored
Page 21 and 22: OPINION Rob Donaldson, Head of Corp
Page 23 and 24: OPINION AUTHOR - Chris Sanders FCIC
Page 25 and 26: Stalemate -aposition counting as ad
Page 27 and 28: Due to changing factors, landowners
Page 29 and 30: TRADE TALK DEEP IMPACT Planning for
Page 31 and 32: THERE'S a lot of talk in the market
Page 33 and 34: COUNTRY FOCUS AUTHOR - Adam Bernste
Page 35 and 36: n 2.1 q East Midlands 2.5 q London
Page 37 and 38: FROM THE ARCHIVE Credit Management
Page 39 and 40: SPEED UP YOUR AML SERVICEWITH SMART
Page 41 and 42: A Credit Manager walks into a bar
Page 43: OPINION AUTHOR - Peter Walker infor
Page 47 and 48: EDUCATION MCICM(Grad)s reflect on w
Page 49 and 50: CICM KNOWLEDGE HUB Access over 1,00
Page 51 and 52: The Recognised Standard / www.cicm.
Page 53 and 54: Membership Benefits CICM membership
Page 55 and 56: Proud supporters of CICMQ With over
Page 57 and 58: Are you a Leader or follower? CICMQ
Page 59 and 60: BRANCH NEWS FULL STEAM AHEAD South
Page 61 and 62: CREDIT CONTROL MANAGER DRIVE PROCES
Page 63 and 64: BE ONE CLICK AWAY FROM OUR WEBSITE
Page 65 and 66: FOR INFORMATION, OPTIONS AND PRICIN
Page 67 and 68: STAND OUT FROM THE CROWD With over

Credit Management October 2018

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