AICDP Newsletter – June 2024

AICDP Newsletter – June 2024

“Another great webinar!" For those of you who attended the recent AICDP webinar - “Another great webinar!, I’m certain you’ll […]

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Looking ahead, the evolving role of Finance

Looking ahead, the evolving role of Finance

Up until a few years ago, the Finance function was primarily looking backwards through the month end close & reporting process and the provision of analytical insights into a business past performance and underlying drivers.

Recently though, the idea that Finance at large should act as a business partner within the typical corporate organization, has become prevalent. A change that requires a radical shift in the way Finance looks at the business…

Looking forward instead is indeed becoming the new norm, not just through the usual planning, budgeting & forecasting activities, but by providing leadership executives with deeper & wider insights into where the business should be going!

Likewise, the significant amount of manual work usually inherent to the lack of flexibility & agility attributed to historical accounting systems is now being challenged by the compelling need for real-time insightful reporting & analytics.

As the role of Finance – starting with that of the CFO – changes from being primarily reactive & transactional to becoming a proactive, analytical & agile function, so do talent requirements with a much bigger emphasis on data-driven analytical skills, digital tools mastery, customer service mindset & business acumen. It is therefore essential for the Finance function to re-invent itself in ways that match the evolving requirements of being a successful business in today’s world!

What’s new here for O2C Finance/Credit management?

At first glance, nothing appears to be genuinely new here. O2C Finance/Credit has always been a customer-facing function whose intrinsic mission is to partner with Sales & Operations to enable/support business, while protecting trade Receivables to minimize bad debt. As such, a professional O2C Finance/Credit function should naturally guide the business towards growing sales & margins with those segments
of the customer portfolio that are financially robust and may actually be under-leveraging their purchasing capacity.

What is new to the O2C Finance/Credit world however, is that the Covid-19 crisis had created the need for businesses to develop a proper sustainable Working Capital management strategy & manage their Cash Conversion Cycle better. As a result, the criticality of the O2C cycle had been brought to the fore like never before, and still features as a priority topic on Boards’ agendas today!

In addition, with a wide range of business-led process automation & digitisation solutions available – from payment behaviour predictive analytics all the way to automated Credit scorecards & meaningful KPIs – O2C Finance/Credit teams can free up human resources and leverage often hidden talents to spot risks vs opportunities, be innovative and deepen customer relationships, to best perform that
crucial ‘maximise revenue / minimise risk’ balancing exercise.

Over the past few years, the role of O2C Finance/Credit has been given a fantastic boost & historical opportunity to shine its critical business value-add! And this should go a long way in having O2C Finance/Credit teams eventually represented at Board level!

All in all and despite the many challenges brought by uncertainty & complexity, we are living through exciting times to be an O2C Finance/Credit professional!

© Copyright Evelyne Legaux 2024 – All rights reserved

M: +353 (0)86 838 4247 / E: info@financeotcconsulting.com / W: Finance OTC Consulting Ltd
L: Evelyne Legaux | LinkedIn / IG: @financeotcconsulting

Finance OTC Consulting Limited, a Private Company Limited by Shares incorporated under registration number 667562 at the Registrar of Companies in Dublin, Ireland, with a registered office at 3 The Circle, Grange Manor, Ovens, Co. Cork

“Another great webinar!

“Another great webinar!

For those of you who attended, I’m certain you’ll agree with the above sentiment and for those who missed it, we had a very informative and interactive webinar on the 16th of May.

We’ve had a great line up of speakers starting with our Corporate Partner presentations followed by an Economic overview with the “Economist Extraordinaire” Mr Markus Kuger, who gave a great overview of the macro-economic environment and surprised the audience with a rather upbeat set of forecasts.

We then had our keynote speaker,  Dirk Findeisen who discussed Compliance & AML, a subject which is very crucial for today’s Credit Professional given the increased level of sanctions as a result of Russia’s invasion of Ukraine and the international stance on China as well as the hefty punitive fines that can be imposed against businesses for breaches.  Dirk has the pedigree as well, as he is founder and Managing Partner of the consulting and technology company MSG Rethink Compliance. He has more than 20 years of experience in the areas of governance, risk & compliance (GRC), data management, advanced analytics and corporate performance management. Findeisen is the author of numerous technical papers, business articles and books on the above mentioned topics, a sought-after speaker at specialist events and a lecturer at several German universities.

Then we finished off with a panel of operational Credit experts who tackled, along with audience participation,  today’s theme which was  “What a time to be Credit Professional” which was especially apt given everything that has happened over the past 4 years (just to name a few):

– Brexit
– Pandemic & lockdowns,
– Changes to work environment;  from 9-5 in the office to home working moving into hybrid working
– supply chain volatility
– FX volatility
– war in Ukraine
–  Liz Truss’s disastrous “mini-budget” leading to yet another PM
– Inflation & high interest rates culminating in a “cost of living crisis”
– recruitment supply constraints
– Macro-economic headwinds in all global regions
– Israel – Hamas conflict
– logistics disruptions
– and just to top it off, UK, EU & U.S. elections and potentially the return of the “orange faced blonde loony”.

Who knows what kind of havoc that will bring !

The entire world, business & the Credit profession have all changed profoundly since 2020 and we, the Credit professionals, also known, at least to those in the profession, as Super Heroes, have had to adapt quickly and effectively to ensure the survival of our businesses, our Teams and even our jobs.

Overall, it was a high-calibre webinar with some thought provoking input.  I’d like to thank our speakers, Corporate partners, attendees, and AICDP members who help organise this event.  There’s plenty more coming in the 2nd half of the year including an in-person event in the summer so keep an eye out on LinkedIn and https://aicdp.global/aicdp-events-2/. “

AICDP International Diploma in Credit Management

AICDP International Diploma in Credit Management

The very best way to ensure the quality of your debtor’s ledger is to have passionate, motivated, knowledgeable and educated credit professionals looking after it.

Hundreds of students have completed the AICDP International Diploma in Credit Management and have gone on to add value to their companies by having what they need to perform at a new level of excellence.

The AICDP International Diploma in Credit Management is a practical course that includes four subjects: Credit Management, Collections, Credit Risk Assessment and International Credit. It runs over two fifteen-week terms with two subjects per term. It is delivered through Blended Learning, so you can study the material at your own pace. The material can be put into practice immediately and gives a blueprint as to what the credit function can deliver to the business.

Throughout the course, students get valuable insights into everything that should be done from Credit Assessment, Risk mitigation, Administration and required controls to the correct way to collect what is owed in full and on time, while maintaining a commercial focus.

Credit management should be a positive pro-business function, that focuses on maximising the profitability of the company. The Diploma contains all the information that enables students to do this, and more.

Most of our students are experienced credit professionals who have been in the role for many years, and they still benefit from the systematic approach and deep insights that the course gives them and helps to focus on the concept of “Right first time – every time.” They also get the added value of a recognised qualification to add to their CV.

The course comprises a number of short tests, assignments undertaken throughout the term and there is an online written exam in each subject at the end.

In addition to the knowledge, students really value having a recognised qualification from AICDP, an International Association that operates in many countries around the world. Students become members of AICDP and have access to a global information source.

On successful completion of the Diploma, students can go on to do their Advanced Diploma in Credit Management, this is run over one intensive 15-week term and focuses on the Management of Credit. The three main areas are: Managing yourself, managing your people and managing the function.

The next term for the AICDP International Diploma in Credit Management begins on the 22nd of June 2024 with a Saturday morning Zoom meeting at 10am, that explains how the course works and what is involved. The session is recorded, and the link shared after the event to all.

The Advanced Diploma begins on the 27th of April and the 28th of September 2024.
If you want more details, please follow this link: https://share.hsforms.com/1H9cDdhqiTdO63su4fKxN_g1iuqt

AICDP Welcomes ICMT (Irish Credit Management Training) as National Certificate and Diploma Partner

 

 

 

Declan Flood

The Balance Between Managing Risk and Supporting Revenue

The Balance Between Managing Risk and Supporting Revenue

One of the most under-appreciated aspects of Credit Management is the balance between managing risk and supporting revenue.  I specifically say “managing” the risk instead of “minimising” the risk.  Minimising is easy;  put all of your debtors on 100% hard security or ask for cash in advance;  your risk potential will be nil.  However, you will not receive any thanks from the commercial side of the organisation if you adopt this policy as it is virtually impossible to grow revenue on this basis.

Credit Management, whilst having a definite scientific aspect;  formulas, ratios, statistics, et al, is also a delicate art form in terms of the range of issues with which we deal as well as the tact required in various scenarios;  both with customers and key stakeholders.

Credit Management “in a bubble” is relatively easy and is mostly based in common sense;  if a customer is late with a payment, over their credit limit or is considered a high risk then you can withhold new orders, reduce their credit line and/or ask for cash in advance or another form of 100% hard security or terminate them as a customer altogether.

Credit Management within the context of a commercial organisation is much more of an art form where we are required to balance the growth & revenue driven aspirations of the business vs the need to protect your company’s debtor asset.

In this recent era of increasing number of business insolvencies, squeezed cash flow, weak balance sheets and P&Ls, timing has also become a crucial factor for Credit Professionals to consider as to when to “drop the hammer”.  What I mean by this is that in instances where a customer’s risk portfolio has increased either due to a deterioration in their financial situation and/or payment performance and the inevitable failure of their business looms, the timing of when to exit that business becomes paramount.  Exit too early and the customer survives (and potentially even thrives), then you are seen by your company as too risk averse and “not commercial”.  Exit too late and you are left with a potential credit loss and the extra and pain staking debt recovery workload.

In my career, I’ve had customers which, on paper, have either been on the brink of failure or should have failed long ago but have have limped on for years and years after the statistical model suggested that failure was imminent.  If my department had exited when the risk models / scorecards suggested failure, my company would have lost out on significant revenue and profit.  However, by managing the risk, developing an exit strategy as well as execution of the timing of said strategy, meant that my company could continue to trade with the customer and realise additional revenue and profit opportunities.

This delicate form of Risk Management and timing is definitely an art form more than it is a science and is generally not recognised as a specific skill set by those outside of the Credit profession.   It is not an easy skill to acquire nor is it a linear learning;  it’s a matter of experience, business nous, the ability to “read between the lines” and sometimes good old fashioned luck !  In these difficult market conditions, this skill is becoming more and more crucial for the Credit Professional to possess and will be vital in your business’s overall success.

“There is an art to science and a science in art; the two are not enemies but different aspects of the whole”. – Isaac Asimov