Credit managers show mixed reaction to future economic and political uncertainties

Credit managers, those who keep the cash flowing in business, are untroubled by Brexit, unimpressed by new regulation, and keen to see how new technology can enhance performance in the future.

They are also valued by the companies who employ them, and actively involved in the performance and success of the businesses they represent.

These were among the key findings of a major new report from Sheffield Hallam University, commissioned exclusively for the Chartered Institute of Credit Management (CICM), that sought to determine the State of the Credit Management Nation.

In the report, 70 percent of CICM members interviewed said that Brexit would have ‘marginal’ or no impact at all on their credit risk policies over the next 12-24 months. Beyond this period, they would review their terms and familiarise themselves with the post-Brexit plans of their customers. They also believe that the credit manager’s role will continue to evolve to have an even greater ‘risk’ focus.

A similar percentage (70 percent) said that new business would be affected ‘significantly’ or ‘marginally’ in the next two years and feared an increase in tariffs and other barriers to trade. Almost half (47 percent) believe that export markets will be affected, that the cost of raw materials will rise and companies may have to lower their prices.

As well as Brexit, the research also looked at the impact of new regulation, and in particular the General Data Protection Regulation (GDPR). Only a quarter (27 percent) said that it will be of benefit, and many felt that it would simply make their jobs more difficult. Gaining access to data will be more time consuming and complex, and could actually affect
 new business. Only 62 percent believed the changes would benefit the consumer, but that companies would be working harder to protect the data they held.

The role of technology was also considered, with nearly all of those questioned agreeing that new technology had significantly impacted their business processes, people, and opportunities over the last three years. The single biggest benefit was seen to be an improvement in operational efficiency. Other findings included:

  • 49 percent of credit managers believe foreign exchange will be impacted significantly in the next 12-14 months
  • 80 percent say that political decisions in the US will have little or no impact on their UK business
  • 53 percent use shared service facilities to be more cost-effective and improve productivity and service
  • Only 17 percent use specialist credit and collections software

In terms of payments, specifically, the principal reasons for non-payment by customers was given either as the invoice being in dispute, or that they simply did not have the money to pay. Despite the emergence of new technologies to support collections, the telephone is still considered the most effective means of collecting the cash, outstripping letters, emails, and even personal visits by some margin across all customer types: consumers; sole traders; partnerships; micro businesses; SMEs; and large businesses.

Credit managers also have a positive attitude to training and development, with in-house training being deemed the most effective. Most agreed that it was essential that credit managers had regular training and kept up-to-date with industry and regulatory changes.

CICM Chief Executive Philip King, believes that the role of the credit manager has never been more important: “It is the credit manager who keeps the cash flowing through the business, managing payments, identifying and mitigating risks, and enabling new business by deploying flexible credit strategies in close co-operation with the business development teams. As the business community struggles with the uncertainty of a post-Brexit world, credit management, and the need for best-practice credit management professionals, have become more vital than ever.”

The qualitative research was undertaken by four University students studying in their final year for a BA in Accounting and Finance.