At a recent seminar I thoroughly enjoyed a presentation by two young and recently appointed Credit Managers talking about the job of a Credit Manager and the place and purpose of the Credit function within the enterprise. They split the presentation into three sections.

1. Collection Management.
2. Risk Management.
3. Peripheral External Issues affecting the company.

Their strong conclusion and recommendation were that their order of their priority of focus should be exactly this and there should be no deviation from the order. I totally agree with this approach, and it should be regarded as a cornerstone of any successful organisation. Over the years when conducting High Performance Credit Workshops, early in the methodology we undertake an exercise to articulate the purpose of Credit and Collection and do so in as few words as possible. From its’ first iteration to its last it has remained.

Maximise Collection and Manage Risk
This is why Credit and Collection Managers are hired and Credit and Collection Departments are created.

The Distractions
As time passes, events occur, laws are passed and technologies emerge, that in the main are external but are often touted as the number one priority, challenge or next big thing for the Credit Professional. We are encouraged to divert resources, hire consultants, make plans and horror of horrors make this “flavour of the month” our number one priority. Whilst not wishing to diminish the importance of any, or suggesting they should not be managed they have to be firmly placed in category 3 of the focus hierarchy.

Although not exhaustive these are some examples of my experience in this regard.

1999 The Millenium Bug
Perhaps the biggest damp squib of all as during the year vast resources were allocated, contingency plans were drawn and we became extremely worried. In the event at midnight on 31 st December precisely nothing happened! We  journeyed into the new millennium with our systems intact and working. Also, to my certain knowledge no aeroplanes fell out of the sky.

2002 Sarbox
This was a much-needed piece of legislation but there was minimal effect post sale within Credit and Collection. American Corporations became compliant to the point of paranoia and were more difficult to deal with pre-sales. It has since retreated into our everyday business life and remain part of our consciousness.

2008 The Credit Crunch
For me, this has been the most significant event in our recent professional history and the most relevant. When we cut through the chaff, the key to our successful navigation of these waters is that we have doubled down on Category 1 and 2 of our focus parameters.

2009 Crypto Currency/Blockchain
In my view, the biggest and most inappropriate distraction, it remains on the edges of our core work but the impact did not come close to the hype.

2012 Grexit from the Euro
This was closer to the core of our activity than other distractions as we had to establish planned. These included retrospective security measures like use of consignment stock, ROT planning and the use of agents. We had the additional worry of contagion to Portugal/Spain and possibly Italy but in the end, exit did not occur and we were relieved. The situation was managed and managed well but remained firmly within Category 3 of our focus.

2016 Brexit from the E.U.
This was a seismic event with far reaching effects but from an International Credit and Collection operational point of view it pretty much resulted in business as usual. The side effect for the UK itself was, I believe that it accelerated a trend started in the 1990’s that large SSC’s moved to more favoured destinations like Eastern Europe, Ireland, Asia and the Far East.

2018 GDRP
I personally, have reservations about GDRP but understand why it’s there. It’s now embedded in what we do and it has to be respected and complied with. We also need to manage it strictly as a Category 3 focus.

2019 Covid19
I do not regard Covid19 as a distraction as this would be disrespectful of the magnitude of this human catastrophe and the millions of lives lost or shattered. I was not affected directly and suffered no losses to my immediate family for which I am grateful.

On the question of it’s effect on operational Credit Management, we were still required to maintain Cat 1 and Cat 2 focus but had to it from different places, namely home or office. As a profession we dealt with this change with great skill and inventiveness but the ebb and flow between home and office continues to be debated. Another area that we have had to keep to the forefront of our minds
is incremental risk accruing to economic sectors more effected than others, notably Hospitality.

1950’s to Present ESG
At the start of this article, I said that I was writing it after being inspired by a presentation made by two Credit Mangers but when discussing ESG, I am responding to another presentation that I witnessed on ESG alone, which did not inspire me at all. At the outset the presenter, who was not a Credit Manager promoted the notion that “the absolute first priority of every Credit Manager was to manage and promote ESG” In view of all of the aforesaid I find this statement is ludicrous. ECG is noble and worthwhile and should be regarded as a set of aspirational goals for the Enterprise to be achieved over time and is evidenced by the lengthy timeframe of its’ evolution. ESG should be led by the enterprise and inspired by the enterprise within which Credit and Collection will play its’ part as Cat 3 focus.

Our future
As a credit professional it has been of continuing comfort to me over my career that our PURPOSE is clear and unambiguous and our hierarchy of FOCUS is such that it equips us to deliver our obligations to the enterprise. Our history tells us that we will remain able to address future challenges.

Bill Dunlop President AICDP