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Please use this version of the FECMA Newsletter for publishing purposes if you wish.
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From the FECMA President – Josef Busuttil
A famous English author, Lewis Carroll, wrote that “If you don’t know where you are going, any road will get you there!”
This is surely not the proper way to manage and lead an organisation. Every successful organisation should set its objectives and communicate them clearly with the respective and relevant stakeholders in order to achieve the scope of the organisation’s existence. Determining strategies to attain the objectives set should be the next logical step followed by identifying the right people to do the job or the tasks that will be required to implement the strategies.
I am pleased to disclose that for the past few months, the FECMA Council was busy developing and implementing a 3-year strategic plan for FECMA to set a clear direction for the Federation. Following a survey conducted amongst the European Associations, members of FECMA, a diligent and meticulous working group met in London in March 2017 to establish and compile a list of objectives and strategies which FECMA will deploy in order to add value not only directly to its National Associations but also to the members of the Associations. Hence, to support and add value to the credit profession in Europe and beyond.
Following the meeting in London, the FECMA Council approved the suggested set of objectives during the Council Meeting held in Almere in May 2017, consisting of:
- To enhance networking between European Credit Management Associations and their members in order to share best credit management practices across Europe. Thus, protecting their cash flow and profit;
- To undertake research in the field of credit management in Europe and to disseminate the study of this research with the Members of FECMA;
- To lobby for a better credit environment in Europe;
- To develop a European Qualification in Credit Management which would complement with the qualifications offered by European Credit Management Institutes, members of FECMA.
A number of strategies have also been identified and working groups to implement them have been established. Hard work to all involved but we are committed to raise the profile of the credit profession and we strive to ensure a healthy credit environment.
I cannot ignore the invaluable input of the FECMA Council Members who are responsible for the organisation of the 3rd FECMA Pan-European Credit Congress, which will be held in Malta on 16th and 17th May 2018. Both as FECMA President and also as Maltese, I cannot wait for this event to welcome the delegates from all over Europe and beyond to my beloved country Malta. Allow me please to urge you pencilling in the dates as this will be ‘The Event of the Year 2018’ that you should not miss if you are involved in the field of cash flow, credit management and collections. I take this opportunity to thank the proficient line of speakers who have already committed themselves and confirmed their contribution to this mega Pan-European Credit event.
All this work is not being done in a vacuum. We, as the people involved in credit and cash flow management, have been and are still being faced with a number of changes in the economic and political arena. And I note that recently we never had a dull moment!
We have experienced a number of general elections in Europe – The Netherlands, France, Malta and Germany to name but some few, with all the usual controversies that these elections bring with them. We have also read about the US and North Korea saga with all its consequences on business and trade that it may have. Besides, everyone is waiting anxiously for the outcome of the BREXIT talks and how will BREXIT eventually effect the European economic and financial landscape in the UK and Europe. Moreover, more legislation and directives which have direct impact on our day-to-day job will soon come into force and some others are currently being discussed and drafted in Brussels.
Isn’t it truly challenging to work in the field of credit management?
I always contend that working in this field is surely interesting, especially when you have a motivated team of people coming from all over Europe with different work experiences, skills and competences, contributing to and managing FECMA, with a clear vision and direction, and always focused on what is going on in the European business environment and the credit scenario. This is the reason why all credit practitioners should join their National Credit Management Association and this is why people working in countries where no association exists should come together and form their own National Association.
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Editorial from Glen Bullivant - FCICM
Life is full of surprises, exaggerations, misconceptions and all the rest. It should come as no surprise to most of you that I have been around in the world of credit for a long time, but it would be an exaggeration to say that me and Lord Horatio Nelson were best buddies, or that Alexander Graham Bell would have telephoned me if I had had one of his latest gadgets. It would also be a total misconception to assume that I was an expert in my field – like everyone else, I learn something new every day. One thing I am asked every day, however, is “what are the qualities required to make a good credit professional?” That question is as tough to answer today as it has always been, and a glance at social media, from Linked Out to Facetube reveals that the topic generates heated discussion, with opinions as diverse as planets in the solar system. For the purposes of this editorial, and prompted by reference to social media, I will focus on just four fundamentals – awareness, body language, communication, and networking.
Goodness me, I hear you cry, the old fool is off again on one of his disjointed, disconnected ramblings......
Well, you hear me cry, just try to stop me! In this age of smartphones and tablets, digital downloads and “on the go” entertainment, it is easy to lose contact with the world surrounding us. The credit professional’s whole career depends upon knowing what is going on at all times, be it locally, nationally or internationally. The credit manager should have built-in radar, ready to detect early any event or sequence of events that will materially alter the status quo – read the papers, watch the news, listen and hear. Like worker ants, we depend upon each other, each contributing to the success of the whole, and each able to contribute to the full array of knowledge and information required to make those decisive choices. Being aware to changes in the atmosphere in the department, alert to breaking news whatever it may be and ready to adjust and adapt accordingly lies at the heart of credit management.
Get out from behind the desk and visit the customer – body language speaks volumes. Character judgement is just as important as all the financial criteria boxes being ticked – am I dealing with someone who is honest and sincere? I have always encouraged less attention to the laptop and more attention to people watching when sitting in the airport departure lounge. Take time to watch the world go by, and learn more about what makes people tick. I jump at any opportunity to be shown round a customer facility and get an understanding as to the culture in the company – busy, quiet, clean, orderly, happy, miserable, disorganised…….there can be no limit to the knowledge gained by human interaction. The handshake, the eye to eye contact, perspiration, nervousness, enthusiasm, confidence – the list goes on, but that in-built radar mentioned above applies equally to people contact as it does to the world around in general. Some may say that all that comes with experience which may be true, but experience begins from the moment we are born, and we make choices and decisions regarding friends and colleagues from a very early age. Think back to school, who you became friends with, and why. If the credit professional is neither aware nor able to judge people, he or she is not likely to succeed.
CU2M. I know what it means, and can easily understand why text and whatsapp speak is so popular. Between friends and family, it serves a useful purpose, but a business to business communication is an entirely different environment, and requires an entirely different approach. The credit professional spends his or her business life communicating with people at all levels and has to master that art in order to obtain success. Any parent with a teenager offspring will recognize the phase that said bundle of joy will go through between the ages of about 13 and 19 – communication is a series of muffled grunts, intermingled the a scattering of “whatever”. In the world of business, the ability to control conversation, create constructive and meaningful emails and letters, listen, hear and respond, understand and empathise when required is of paramount importance. The recipient of the communication, whatever it’s form, may be a CEO, purchase ledger manager or a member of staff – it matters not. What does matter is the ability to communicate.
All of the above is enhanced by networking. Conferences, like the one in Malta in May, 2018, seminars, workshops, industry group events and the like represent the opportunity to meet one’s peers, share knowledge and experience, learn about best practice and get to know people as people, not just the email recipient known as fred@xyz.com. Social media is part of networking, but the smartphone and the tablet are extras – face to face and the handshake is worth all the tea in China.
Talking of extras – we are all used to the low cost, no frills airlines these days. The air fare is as stated, but pay extra for seat allocation, priority boarding, luggage, terminal check in and all the rest. With one major European airline recently, it appears that the aircraft is extra!!
Glen Bullivant FCICM
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Industry 4.0” or “Digitization” – consequences for Credit Management
by Andreas Schmitt
Bundesverband Credit Management Germany / BvCM
Head of working group “International Credit Management”
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There is a lot of discussion going on about the effects of industry 4.0 and digitization for Credit Management. And many experts already predict that the Credit Manager is an “endangered species”. But then, Credit Management has been under change for decades: from trying to get hold of balance sheets directly from the customer (who was regularly reluctant to share the “best-kept secret of the company”) to electronic filing with the public registers, from paper invoice to EDI, from manual creditworthiness assessment to electronic score cards and from standardized dunning routines to customized case-specific dunning approaches etc. So, maybe the pace of change is accelerating, but still – when it comes to crucial decisions – Credit Management will always be a “people’s business”. Or, in other words: Credit Management processes will definitely become a lot more automated (Prof. Ludo Theunissen at FECMA council meeting in October 2017: “Integration of systems will become so tight that Credit Management will also be an integrated part of the process. It will not be possible for the credit manager to just step in at a given stage.”), while – on the other hand – there will always be a need for qualified and experienced experts in Credit Management (Glen Bullivant at the same meeting: “When I put a million £ at stake, I definitely won’t leave it up to a machine but will always want to look deep into the eyes of the debtor.”).
However, the developments summarized under the buzzwords “Industry 4.0” and “Digitization” lead to other consequences that really should catch our attention:
An example:
You buy a new car from the car dealer of your trust or a printer from your IT distributor or a coffee machine in the electronics store. However, the purchase is not yet completed: At home, you register at the car manufacturer’s service homepage and close a contract for software updates of the navigation system, you link your printer with the manufacturer in order to automatically trigger toner orders or you register your coffee machine and order your coffee in the exclusive online shop of the manufacturer. We see very similar developments in machinery and plant engineering: Plant engineering companies offer highly sophisticated networking solutions, which link, optimize and control not only the machines they supply, but also complete production lines and thus also the complementary machines of other manufacturers of capital goods. And of course, these solutions are sold as a separate ‘service package’ with fixed license periods or ‘pay-per-use’-contracts.
In this way, more and more manufacturers of durable consumer goods or capital goods are taking advantage of these approaches, since this allows them to generate relatively secure sales in the future – or more specifically: recurring revenue! In many cases limited to moderate size, but with a huge additional benefit: they gain direct contact with the end customer, gain insight into the patterns of use, get to know when and where exactly which replacements are pending, etc. (Admittedly, the coffee example does not quite fit in here. Bu then it is common to almost everyone and it would probably work just as well if the supplier was itself the producer of the machines.)
And these other effects are so attractive that it is worth taking this route, even if – in contrast to the coffee example – the supplementary business is very humble in nominal terms.
However, it is regularly a completely “new world” being entered. As a rule, you will first of all think of the technical, marketing and sales issues.
But Credit Management also faces enormous challenges: Completely different customer structures (B2C instead of B2B or end users instead of dealers) in completely different quantities (from three- or four digit customer numbers to real volume markets). Different contracts and contract models (licensing agreements with fixed contract periods instead of the classical sale-of-goods contracts). Different payment terms and different payment methods. Maybe even the need to deploy a payment services provider. A completely different receivables management, i.e. other dunning procedures. And – last but not least – completely different requirements for the assessment of creditworthiness. And the challenge rises exponentially in the case of international business. Just think of questions such as ‘cross-border money transactions’ (outside the SEPA area), ‘foreign currency conversion’, etc.!
Has your company already gone this route? If so, what has been the biggest challenge for Credit Management and how did you solve this? And: Have all parties concerned been aware of the consequences of such a strategy for Credit Management? And – last, not least – was Credit Management involved at an early stage?
Share your thoughts and experiences on LinkedIn group “FECMA”!
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3rd FECMA CONGRESS - May 2018 in Malta
People working on the field of credit management are truly working against all odds!
Today’s business environment is characterised by homogenous products and services with little scope for differentiation, very often supply is exceeding demand, customers are becoming more knowledgeable, markets are becoming more global and competitive, the cost of doing business is increasing and the profit margins are shrinking. Customer loyalty is something of the past and it has become a hard nut to crack to maintain market share, let alone increase it! To add insult to injury, changes in commercial legislation is changing the business landscape.
Nevertheless, this aggressive and hostile environment poses new challenges for the successful credit professionals and businesses. Innovation, change management and customer-focus have in fact become today’s business mantra.
People in business should be innovative, whilst stay positive at all times, even when they experience some signs of failure. Moreover, they should strive to satisfy, if not exceed, the ever changing customers’ needs and expectations in order to gain and sustain competitive advantage in their respective markets.
The role of the people involved in credit in today’s reality is far from crunching numbers and pestering customers for payment, as may have been in the past! The credit function has become a people’s function.
An efficient credit practitioner should know the customer well and should endeavour to build good customer relationship to ensure prompt payment and sound cash flow.
The FECMA Pan-European Congress is the event which every business owner, CFO, banker and credit practitioner should not miss.
A proficient line of speakers will address a number of pertinent areas relative to managing the credit function, credit risk and cash flow management.
This event is being held in Malta- Malta has been attracting conference and incentive groups for years. It has an abundance to offer, whether you are looking for a perfect place to hold a flawless business meeting or conference, or an ideal destination to host your staff's well deserved incentive reward!
An English-speaking environment facilitating good communications, endowed with hospitable people, makes Malta a safe and perfect destination for your conference, sales meeting and incentive trip.
To register for our Congress please fill in and send the form you find here. For additional information please call Ms. Pascale Jongejans on + 31 35 69 54 103.
With receipt of the registration form, the contract is established. Attendees will receive immediate confirmation together with the invoice.
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