The Basel III standards for international banking are set to take effect within months. And despite numerous attempts to clarify sections of the accord, there is still so much unknown about the impact the changes will actually have, said panelists at the Finance Credit & International Business Association (FCIB) Annual International Credit & Risk Management Summit in Prague.

Elisabeth Sutter-Becska, vice president, head of global export finance at Raiffeisen Bank International in Austria, says rising importance of the trade credit role and for funding costs, among other increased costs in general, should be expected. As such, trade creditors and their businesses should be preparing in a number of ways in the near-term: Reassess working capital management, consolidate treasurer operations, optimize payment streams, improve receivables management, shorten payment tenors when possible and diversify resources. Still, it is hard to plan actions because of how difficult it is to predict what will actually occur.

“Nobody can say what is going to come from the three regulation, and there are not studies that have determined what would be the affect on the real economy,” she told FCIB delegates.

Meanwhile, panelist Neil Ross, trade credit insurance profit centre manager EMEA, AIG Euopre Limited in the United Kingdom, also voiced concerns about potential confusion about what will actually happen.

“One of the things that strikes me, you have the Basel III rules, but it's up to each country to interpret the rules; each country has slightly different interpretation,” said Ross. “It makes it much more complicated.”

Ross added that credit insurance will likely play a a bigger role as banks are “under pressure to keep head counts down...Doing analysis on thousand of buyers is frankly not where the banks want to be right now.”

-Brian Shappell, CBA, CICP, NACM staff writer

The Finance, Credit and International Business Association (FCIB) will hold its first Spring Conference at the National Association of Credit Management’s (NACM’s) 117th Credit Congress & Exposition on May 18-21, 2013 at the Rio Hotel in Las Vegas. NACM's Credit Congress has always provided a venue for both domestic and international credit professionals who extend business-to-business credit, but with the inclusion of a specialized Spring Conference comes a focus on the growing opportunities in global trade.

“The purpose of the FCIB Spring Conference is to expand the knowledge base for U.S. companies that are starting to export, and to further educate and provide tools for the advanced international credit management executive,” said Marta Chacon, CICP, FCIB Director - The Americas. “The specially-designed sessions will address the pressing issues facing international trade professionals around the world, and provide the solutions that work in various global markets.”

The FCIB sessions, integrated into the Credit Congress schedule of events, focus on expanding the efficiencies in international credit management. Topics include how to create profit, reduce risks, identify the potential pitfalls in exporting, discuss ethical compliance in order to work effectively on a global level and cover the intricacies of doing business in the United States' largest trading partners, Canada and Mexico.

The Spring Conference comes on the heels of other noteworthy FCIB endeavors. Earlier this month, FCIB entered into a strategic partnership with the U.S. Commercial Service to promote exporting under President Barack Obama's National Exporting Initiative (NEI), which aims to double U.S. exports by the end of 2014. The partnership aims to make it easier for all U.S. companies to take advantage of exporting opportunities offered around the globe, with FCIB acting as a portal through which exporters can find the tools and resources they need. Under the partnership, FCIB has already played a role in the development of the third edition of the International Trade Agency’s Trade Finance Guide, and the first Spanish-language version of the guide.

“With an estimated 95% of the world’s buying power existing outside the United States, U.S. businesses of all sizes should consider the benefits of selling their products and services abroad,” said Chacon. “By incorporating a spring conference into the yearly Credit Congress, FCIB furthers its role in helping companies expand into the international market. With FCIB's sessions open to all registrants, those looking to begin exporting, as well as already-advanced international trade professionals, receive the benefits of tailored education, in addition to numerous networking opportunities and an expo of product and service providers that a large venue offers.”

FCIB and NACM welcome walk-in registrants and the press.

- FCIB

In a meeting that followed the Finance, Credit and International Business Association’s (FCIB’s) Annual International Credit and Risk Management Summit, members of the European Commission promoted the purposes and potential for success of the European Late Payment Directive. Those many aren't convinced that setting harder limits on the amount of days government entities and debtor companies will actually cause positive change and trump local laws, especially in places where slow paying is an engrained culture, some see it as an important step.

“It’s the best thing to happen in credit management in a decade because now we have European [Union] support. That gives us higher profile as credit managers,” said Mark Harrison, chief executive of the Czech Institute of Credit Management during a panel during the FCIB event.

In an FCIB interview onTuesday, Antti Peltomaki, deputy director-general of the European Commission’s Enterprise and Industry Directorate-General, said he understands the those being skeptical over the speed of cultural change, but sees the Directive as a critical step in the right directions for credit-granting businesses. “It is good and important to have the legal framework...It is up to you whether you want to do something," said Peltomaki.

-Brian Shappell, CBA, CICP, NACM staff writer  
The extended version of this story, including more from Peltomaki, published in this week's edition of eNews, is available by clicking here.

At this week’s Finance, Credit and International Business Association’s (FCIB’s) Annual International Credit and Risk Management Summit in Prague, two FCIB members—Angela Bradbury, ICCE and Daniel Van Damme—were presented with its distinguished Service, Development and Growth (SDG) Award.

Bradbury, group credit and payable manager with Innospec, Inc. in the United Kingdom, and Van Damme, group working capital manager with Tessenderlo Chemie SA in Belgium, joined the short list of SDG award winners. Van Damme serves as the chairperson of the Chemicals Industry Group and Bradbury serves on FCIB’s European Advisory Council and is a frequent conference speaker, taking part in the Prague summit and scheduled to present at next week’s Credit Congress in Las Vegas.

“They have tirelessly worked to educate their staff, to really contribute and give back into the international credit community,” said Noelin Hawkins, FCIB director, Europe, The Middle East & Asia. “I can’t recall anyone working harder.”

The award is designed recognize the valuable contributions volunteers are making to further grow and develop FCIB’s member services and to encourage more people to serve. The first winner of the award, Mannes Westhuis, LL.M., CICP, Bierens Debt Recovery Lawyers, also eloquently described it as something that represents a win-win situation for today’s international credit-related professional: getting in touch with customers and information on leads, while “being socially and professionally responsible.”

- Brian Shappell, CBA, CICIP, NACM staff writer

All eyes have been on Spain when it comes to nervous businesses owners, credit professionals and other market-watchers wondering when the next European sovereign insolvency is going to occur. And while it would be overly optimistic to assume that danger wasn't imminent in Spain, a top four economy, by size, on the continent, another nation may beat it to default: Slovenia. At least that was the sentiment at FCIB's Annual International Credit & Risk Management Summit in Prague.

“Slovenia is far riskier than Italy or Spain,” said FCIB panelist Silvina Aldeco-Martinez, managing director of Risk Analytic Products, Standard & Poor's. She noted that, unlike Spain, it's not overall risk throughout many sectors; it's just massive problems in its banking sector.

Freddy Van den Spiegel, of BNP Paribas Fortis, agreed that Slovenia may slide into insolvency and that Spain faces many issues. Because of the nature of the problems and size/importance of its economy to the EU, Spain's filing, should it occur, would be a significantly bigger event. He said the prospects for Spain continue to generate pessimism because its high unemployment (25% among the young) shows little signs of improving because the nation doesn't have solid products and brands to make them competitive and, thus, pull themselves out of the rut. The big problem therein is that France, once hoped to help the recovery financially as much as Germany, holds so much Spanish debt.

“If it happens, we'll see what happened in Cyprus: panic,” the Belgian-based economist said. “If Spain gets into trouble, then France comes onto the radar”

All that said, Van den Spiegel still believes the European Union and the common currency will survive, but in a setting of more centralized EU power both in lawmaking and on the part of the European Central Bank.

-Brian Shappell, CBA, CICP, NACM staff writer

Off the strength of continued growth as a hub for service centers and more generalized outsourcing, nations in eastern Europe, Soviet Bloc countries until the late 1980s, are emerging as slightly bigger players in the business and credit world. However, the corporate information emanating from there often is not entirely trustworthy, said panelists at FCIB's Annual International Credit & Risk Management Summit in Prague.

FCIB panelist Elisabeth Sutter-Becska, of Raiffeisen Bank International in Austria, noted that problems with performing loans levels in Ukraine and Russia are increasing again after a few years of improvement. Fellow FCIB panelist Fabrice Morel, of Berne Union, noted there was a major spike in 2008 as well, one that showed the long-term stability of credit insurance companies in Europe in some ways, but that the four following years marked a time when issues had been mitigated in significant fashion.

The potential for another spike stems from the quality of information on the businesses in several eastern European nations. Kateryna Barabash, managing director and owner of IBcontacts, a Ukraine-based firm dealing in credit, legal and news services, said the information can be hard to analyze...if a credit manager can even get it at all.

“You have to realize there is a lot of information that is incorrect or out of date,” Barabash said, adding that a high level of nepotism plays into what is released by companies. “You have to verify this information with a buyer and your partner...don't rely just on existing database information.” Beyond that, she noted that perhaps the even bigger problem is getting data like financials since estimates of the rate of refusal for such requests tracks between “60% and 70%.”

In short, her sentiment was, if the company is not being transparent, they are very likely hiding something important in the grand scheme of creditworthiness.

-Brian Shappell, CBA, CICP, NACM staff writer

Those hoping for short-term optimism, especially on most member nations of the European Union, at the start of the content portion of FCIB's Annual International Credit & Risk Management Summit in Prague Monday got a bit of reality check from the Belgian-based economist serving as keynote speaker. However, he did note that the idea that there will be bumps, if not occasional “chaos,” doesn't mean things will always be bad between now and the increasingly far-off recovery.

Freddy Van den Spiegel, of BNP Paribas Fortis, said the global economy has largely experienced its chaos moment in the last several years since various bubbles burst in key nations like the United States and some in Europe. That said: credit professionals should not consider that moment to be something of the past.

“The chaos moment is still continuing; this is the world in which we are,” said Van den Spiegel. “But there is a natural chaotic nature of any system or human behavior. And you can't just hide until the storm is over.” As such, strong risk management practices are going to continue to grow in importance in credit departments, but they will also grow in difficulty.

Meanwhile, perhaps the biggest event that needs to happen, in Van den Spiegel's view, is the European Union finally moving towards a more united bloc on issues of banking and politics. That includes having a true “president” type figure as well as a European Central Bank that exists more like the Federal Reserve of the U.S. in scope. But politics may keep that on hold because of the the election in Germany, by far the strongest EU member, coming up in September.

Van den Spiegel noted that it was unlikely anything would happen before then because the current leadership backing plans to ease back on austerity elsewhere and essentially fund bailouts in places that have not been as fiscally responsible could raise the ire of German voters. But, he believes, the Merkel government will come around, assuming the incumbents remain in power.

“There are really no other solutions,” he said. “The hurdle is that austerity on countries that failed limits their ability to grow. If they cannot grow, they cannot recover. You need balance right now.”

-Brian Shappell, CBA, CICP, NACM staff writer

A new study by the United Kingdom-based branch of Dun & Bradstreet suggests updates the European Union Late Payments Directive already are having an impact on payment behavior, at least in Britain.

D&B’s statistics noted that British businesses borrowing on terms paid their bills on aggregate two days faster in 2012 than in the previous year. At an average of 17-days late, British businesses’ tardiness on terms reached a record level in 2011, said D&B. Directive updates in the EU, last done in summer 2011, represent an important legal development designed to ensure the payment of business-to-business invoices is conducted within 60 days, and public authority-to-business invoices within 30 days. In theory, it is a win for suppliers. But there some potentially conflicting fallout exists, as D&B noted:

"This legislation makes it easier for businesses to pursue payment, with debtors being forced to incur interest and pay an administration fee if they fail to pay for goods and services within 60 days for business and 30 days for public authorities.  Whilst it will help protect some businesses [suppliers], the updated Directive presents new risks for companies [customers] struggling to manage their finances and pay on time, due to the potential interest liability risk."

In addition, to assume the directive will drastically improve payment habits within the debt-struggling EU may be a bit of a leap of faith. Though talking about the potential for EU-wide changes to bankruptcy/insolvency laws not the Late Payment Directive, a point made by Thomas Voller, an attorney with Germany-based Voller Rechtsanwälte and member of EuroCollectNet, could be considered. This is the case in part because, as Voller put it, there really isn’t all that much unity, from a continuity sense and legal perspective, in the euro zone.

“There is a tendency in the European Law to try to unify the rules and to find a common applicable law for all European states in some areas,” he told NACM for the international bankruptcy-focused article “Moving Targets” in the May edition of Business Credit (available next week). “Obviously, this is extremely difficult, and it works only in some special fields.”

Whether B2B payment is one of those fields perhaps waits to be seen.

-Brian Shappell, CBA, NACM staff writer

Officials from the European Commission will be attending and exhibiting at FCIB’s Annual International Credit and Risk Management Summit at the Corinthia Hotel in Prague next month and will be hosting an information seminar on Late Payment Directive at the same venue following the conclusion of the FCIB conference on May 14 at the same venue.

Credit professionals looking for unique financing solutions should see where investors want to put their money. That was just one of the many insights offered during yesterday's FCIB New York International Roundtable, held at the offices of Lowenstein Sandler, LLP. During the event-ending panel, titled "Non-Traditional and Creative Methods for Receivables Management and Working Capital Finance," professionals from the brightest corners of commercial trade financing offered attendees some new ideas on how to approach managing their receivables.

Panelist John Barone of JP Morgan noted that credit professionals often fail to see the big picture in terms of how receivables are securitized and financed, cutting themselves off to a number of financing options. In essence, he made the point that creditors and their companies should look to areas where investors want to put their money, and investors are currently looking to invest in so-called high-yield markets. "When we discuss high-yield we mean any company that is rated BBB or less," said Barone. "If you were to look at a group of European high-yield names and you also look at the default rate and how those names as a portfolio have traded, the spread was astronomical."

Ultimately, the idea is that the greater the risk, the greater the reward, a fact that means greater profits for investors and thus greater access to unique financing solutions for companies looking to finance sales to this area. "Many of the credit professionals that we talk to don't look at this," said Barone. "They analyze those individual customers and they tend to not step back and think about things on a more macro basis. The market for high-yield risk in Europe is growing. Investors are looking to put their capital somewhere and they're looking for something they can also get a yield on their capital." Europe is one place where creditors can hope to increase sales while hedging their risks because investors are more interested in taking the risk of securitizing such transactions with puts and other financing options.

See more about this year's New York Roundtable in today's edition of NACM's eNews. For more information on FCIB's other educational and networking opportunities, click here.

- Jacob Barron, CICP, NACM staff writer

 

As predicted in a 2011 Business Credit magazine article, the United States’ solar energy industry has taken its share of lumps over the last two years, but there are still those purporting the massive potential that solar holds. Whether true or not, there are real and continuing risks for everyone involved in the industry, and the government budget fight and “sequester” only adds a whole new dimension to potential problems, especially for survivors of the first wave of domestic solar-related bankruptcies.

U.S. product manufacturers are contending with what they see as unfair assistance to competing solar manufacturing sectors in Asia by their governments, especially that of China. The U.S. placed tariffs on Chinese imports, but the measures were seen as somewhat weak and coupled with evidence that some Chinese firms are simply off-shoring operations to areas like Singapore where such tariffs aren’t in play. In addition, the glut of U.S. producers left over from the cheap lending days of the financial boom of the late-2000s caused an industry saturation that became a real problem when demand fell during lower growth years. The two issues led to several high-profile bankruptcy filings headlined by that of Solyndra, which had ties to key Obama Administration fundraisers investigated for widespread fraud and reaping huge amounts in government grants.

Michael Joncich, manager of the business insolvency department for NACM affiliate Credit Management Association for NACM affiliate Credit Management Association, was among those who predicted the problems in 2011. He now speculates that reduced federal subsidies, grants and other assistance aren’t likely to help current matters. “Government can make or break an industry. I don’t really know if the shakeout is done yet,” he said.

Joncich noted that a colleague in the liquidation business recently learned everything he could about green businesses, thinking it was a bubble ready to pop, especially once it became apparent that the government was retracting its “generous funding” of those industries, including solar. “The observation is that they can’t seem to fund themselves,” he said. “When the government pulls back because of federal budget cutbacks, many can’t survive it,” he said.

It doesn’t mean all solar manufacturers are doomed, but there are enough red flags that virtually all creditors dealing with customers related to the solar industry should be paying close attention to them, their accounts and their terms.

- Brian Shappell, CBA, NACM staff writer
 

New learning tracks and the evolution of professional designations are part and parcel for keeping up with the varying and progressing needs of today’s business professionals, including those in credit. After a review of existing programs, and careful consideration and development, NACM announced in March the latest in a long line of world-class program designations: The Certified Credit and Risk Analyst (CCRA).

The CCRA is unlike NACM’s other longtime designation programs in that it is a standalone program. It exists outside of NACM’s “Career Roadmap” that includes the Credit Business Associate (CBA), Credit Business Fellow (CBF) and Certified Credit Executive (CCE), the latter of which is still NACM’s top-level designation for members.

The CCRA was created after Financial Statement Analysis II was removed from the CBF designation, with the new requirements effective January 1, 2013. NACM’s Education Department updated the extracted course and renamed it Financial Statement Analysis, Interpretation and Credit Risk Assessment to better reflect its emphasis. The updated version is now considered by NACM to be the cornerstone of the CCRA.

“We realized that Financial Statement Analysis II wasn’t for everyone, and that it served as a bit of a roadblock to the CBF for some members. However, we also recognized that some credit department personnel need that in-depth, advanced financial analysis background, which is why this standalone designation was created,” said NACM President Robin Schauseil, CAE.

As with other designation courses, Financial Statement Analysis, Interpretation and Credit Risk Assessment can be taken by itself as a certificate session. However, earning the CCRA requires the completion of three courses: Basic Accounting, Financial Statement Analysis I and the new Financial Statement Analysis, Interpretation and Credit Risk Assessment. The methods available to complete each course vary and can be found under “Education” at www.nacm.org. The first opportunity to take Financial Statement Analysis, Interpretation and Credit Risk Assessment is a five-segment session and exam held at Credit Congress from May 18-23.

Though separate from the “roadmap” lineup of certifications, the CCRA will serve as key program for credit professionals tied to deeper financial analysis responsibilities, and for those who will be in the future. It is also designed to build background and add key skill sets for those already pursuing a designation. “If you’ve earned your CBA and want, or need more financial analysis skills, this is for you,” Schauseil said. “It’s a great precursor to the CCE even though it’s not a part of the NACM career roadmap. It’s also a great precursor for NACM's Graduate School of Credit and Financial Management.”

To learn more about the CCRA, visit Education at www.nacm.org, or call 410-740-5560.

The latest edition of the National Association of Credit Management's (NACM's) Credit Managers' Index (CMI) marks its 10th-year anniversary of providing financial professionals, economists and policymakers with a startlingly accurate forecasting tool.

Since its inception in January 2003, the CMI's methodology has undergone a number of revisions, but never stopped being an immensely powerful economic predictor. In 2007 it was even able to tip analysts off to the start of the "Great Recession" in December 2007, showing a noteworthy decline in October of the same year.

Throughout the recession, the CMI reflected a remarkable sensitivity to the intricacies of the economic downturn, and resisted the month-to-month swings that characterized other economic indicators. Eventually it anticipated the recession's end as well, showing signs of market stabilization and nascent growth as early as February 2009, while the actual recession came to an end four months later in June.

The CMI's strength as a forecasting tool comes from the insight of credit and risk management professionals, whose responsibility it is to know what's coming next. "I think it's the nature of credit management," said NACM Economist Chris Kuehl, PhD. "Credit managers are as concerned about the condition of their clients 15, 30, 60 and 90 days from now as they are today. The tendency is to think ahead."

Moreover, the structure of the CMI survey eliminates the opportunity to speculate. Other economic indices ask respondents what their company intends to do in the coming months, but intentions don't always align with reality. "As soon as you start getting into that kind of conjecture, you kind of weaken the data," said Kuehl. "When responding to the CMI question, 'Do you have more credit applications?' there isn't a lot of room for interpretation. You're getting responses that have to do with credit applications and the status of accounts, and most of that stuff is oriented to the future."

Over the last decade these factors have combined to create an unrivaled forecasting tool that's relied upon by those in the highest levels of finance and economic policy. As participation continues to grow and people continue to recognize its value, the CMI looks poised for another winning decade.

For more on the CMI, or to participate, click here.

- NACM staff
 

The recently named keynote speaker FCIB’s International Credit and Risk Management Summit , to be held May 12-14 in Prague, intimates in a late January interview with NACM that it is unfair and/or misleading to continue looking at member of the BRICs nations (Brazil, Russia, India, China) as a group, since the nations demonstrate more and more how little they have in common.

“You cannot talk about emerging countries, like the BRICs, as a group—It doesn’t work this way anymore,” said Ludovic Subran, chief economist at Euler Hermes. “You’d never talk about the U.S. in a regional context with Canada.”

In addition, the nations also are in a pattern where they are struggling, and failing, to maintain its white hot growth rates of the past few years. At this point, the individual nations that comprise the BRICs may have to reinvent themselves somewhat, as notable by India’ s move to diversify the economy and finish of free trade agreements to bolster opportunity.

“The BRICs are so 2005…They’ve reached their limits in growth rates,” he said of over-emphasis on BRICs members by the international business community. “Now the question is how they are each going to handle it. What’s next?”

-Brian Shappell, CBA, NACM staff writer

(Note: Look for the extended version of this story in the new edition of NACM eNews, available via email and the NACM website late Thursday afternoon. For more information on FCIB’s conference, visit http://www.fcibglobal.com/icrms-2013).

As many of you know, FCIB has worked in partnership with the Department of Commerce on many initiatives designed to promote and advance international trade, including the development of the International Credit and Risk Management (ICRM) online course and the International Trade Finance Guide.

Earlier this month at the FCIB Global Conference held in Philadelphia, Carlos Montoulieu, Acting Deputy Assistant Secretary for Services Industries in the International Trade Administration of the U.S. Department of Commerce (DOC), officially released  the 3rd edition of the Trade Finance Guide and announced that FCIB will continue to promote the Guide, including producing print copies of the Guide through the Department’s partnership program.

In 2007, FCIB assisted the Commerce Department in the development of this concise guide, designed to help SMEs quickly learn how to choose the most effective and efficient credit mechanism when selling cross border. Subsequently, in recognition of its contribution to the Guide’s development and promotion, FCIB was awarded a Certificate of Appreciation from the Under Secretary for International Trade.  Since 2007, more than 300,000 copies have been distributed to small and medium size businesses, helping the Guide become a popular export assistance resource.

FCIB is proud to continue to promote this new Guide and FCIB is honored to support the U.S. Department of Commerce’s International Trade Administration.

We are confident that this initiative will generate many new business leads for FCIB and NACM, allowing both organizations to advance their missions to assist businesses strengthen their commercial credit operations.

-Robin Schauseil, CAE, NACM President
 

Several years in the making, the UCC Filing Service went fully live online this week, joining the Mechanic’s Lien and Bond Services under NACM's Secured Transaction Services umbrella.  The service provides the means to mitigate the risk of debtor nonpayment for businesses that sell or finance various types of personal property under UCC’s Article 9, as well as those that lend the labor, materials and other services under state law. The purpose, at its simplest level, is to help creditors become a secured party as an investor, thus putting them in the best possible position to get paid. Remember: secured creditors get paid out 100% (if money is available) before unsecured creditors get one cent, per bankruptcy law. This is increasingly important in areas such as construction as the domestic economic recovery, already sputtering, is threatened by ongoing and new threats, such as gridlock in the U.S. Congress.

Powelson noted that getting involved with UCC filings is not difficult when using a service providing the know-how. He recalled a colleague in Texas who, after years of “me badgering him to protect himself,” made a UCC filing about six month before a major customer filed a massive, $40 million bankruptcy. The colleague’s business was paid nearly 100% of what it was owed, unlike unsecured creditors who received pennies on the dollar.

“That filing cost him $82 and took about one hour to complete,” Powelson said. “With getting paid what he was owed, he joked that the program already paid for itself ‘for about the next 2,200 years.’ I think there are a ton of credit managers who just aren’t sure about the process and perceive it as very cumbersome. The process can be somewhat easy, actually. But sometimes you’ve got to get crushed or really kicked in the teeth and have your boss say, ‘we can’t do this anymore. What could we have done to protect ourselves?’ before you make the move.”

- Brian Shappell, CBA, NACM staff writer

Small business lending is expected to increase according to the most recent survey of bank risk professionals published by the Fair Isaac Corporation (FICO).

Bankers expressed widespread optimism about the small business lending sector, voting by more than a two-to-one margin that the approval rate for small business loans and the total amount of credit extended to small businesses would increase rather than decrease. More than half of all respondents predicted that the overall supply of small business credit would meet demand, although this could simply be a symptom of weak demand rather than a boost in available credit.

Notably, survey respondents were less positive about small businesses' requests for credit. In the first-quarter survey, a large majority of 61.9% of respondents predicted an increase in the amount of credit requested by small business. This figure increased to 69.1% in the second-quarter survey, but fell hard to 56.5% in this quarter's survey. This is still a positive trend, with a majority of participants expecting increased requests for credit, increased approval rates and increased credit in general, but it's not as positive as many had hoped.

Still, the third-quarter survey, conducted for FICO by the Professional Risk Managers' International Association (PRMIA), didn't leave the banking industry wanting for reasons to be anxious. Concerns in the student loan market were rampant in the survey, with a 61% majority of respondents expecting delinquencies on student loans to increase over the next six months. This marks the fourth consecutive quarter that respondents have predicted a worsening of student loan delinquencies.

Commercial credit risk managers might not have to worry about the threat of student loan defaults, unless they're their own, but the adverse effects on the economy at large from these delinquencies could be potent.

- Jacob Barron, CICP, NACM staff writer
 

Angela Bradbury, ICCE, group credit manager at UK-based Innospec, Inc., and moderator of the first of five upcoming FCIB roundtable events focused on “The Credit Department as a Profit Centre” noted that there are two kinds of credit managers out there right now: “There are those with flair who are getting involved in the business [and big decisions] and the others who are operating in a very restrictive space.

Getting more involved in the company, getting your voice heard and advancing the role of today's credit professional are becoming not just wish-list type items for today's credit manager but, rather necessities.

"It’s not about going in the CFO’s office shouting and screaming, it’s about showing you’re an indispensible service," Bradbury said. "It’s not about making life difficult or easier, it’s about being a bigger part of the business’ bottom line.” Bradbury, like 2012 NACM Mentor of the Year Larry O’Brien, CCE, ICCE and a growing group of others, added that too many credit managers don’t push the agenda and confirm that his/her outlook and goals are still in line with those of upper management, the finance people or even sales.

The FCIB roundtable events, to begin on Sept. 13 at the Clerkenwell London with Bradbury, are designed to get credit people talking about how to sell the credit department’s value to others in a company, the “P.R.” it takes for this to work and how to assess the credit and risk assessment expectations that exist at your company (and how to react to them), among other topics. Subsequent events this fall in the FCIB series will be held in Amsterdam, Brussels, Zurich and Dusseldorf.

-Brian Shappell, CBA, NACM staff writer

For more information or to register for the first roundtable event in London, visit http://www.fcibglobal.com/events/event-calendar/details/125-the-credit-department-as-a-profit-centre-your-value-in-the-supply-chain-uk-london.html.


 

Germany long was held up as the model for business efficiency in Europe. Even as problems among southern European Union members first began to bubble over, the business community looked to the Germans as the likely salve to the problem, not just in bailout money but in production, efficient management and consumption by its natives. But, on top of stumbles by others in the retail sector there of late, this week came the headline-grabbing insolvency filing of mail-order retailer Neckermann.

Neckermann reportedly was working on garnering concessions from creditors, but they fell through. Some 2,000 jobs could be lost as part of the retailer’s collapse, and it led many to jump to the conclusion that the EU debt crisis is the primary culprit for the ills of this company and others who have found it tough to stay afloat.

Ben Deboeck, country and sector risk coordinator for Belgian-based Ducroire Delcredere, told us this week that it’s worth noting Neckermann was in trouble for a long while, and that it was potentially unfair to pin its failings entirely on the larger debt crisis. That said, such instances of insolvency could be part of an increasing trend pending on how the EU responds to troubles with members such as Greece, Spain and Italy.

“Given the current sluggish economic environment, it should of course be of little surprise that weaker companies, even in stronger countries such as Germany and the like, are heavily exposed to the current downturn,” said Deboeck, who keynoted FCIB’s Annual International Credit and Risk Management Summit in Hamburg. “I guess the Peugeot/Citroën problems are probably a better example of the direct fallout of the crisis, though, and may be more worrying in regards to things to come for European industries if the downturn becomes really protracted.”

-Brian Shappell, CBA, NACM Staff Writer

Mark Woolnough, CPA, O'Neal Steel Co., Inc. will be sitting for the CCE exam tomorrow morning with most of his other second-year grad school classmates. Here he talks about how GSCFM prepared him for the exam, and how his role in credit has changed.

How long have you been in credit?

I'm a director of credit and I haven't really added up the years but let's just say somewhere or another I've had 25 years of involvement in credit, and the last 7 years that's all I've been doing. I'm very much involved in setting policy and working with sales on the big picture, looking at our portfolio and making sure we're hitting the right milestones, and sort of setting the pace.

How is what you're doing now different from what you were doing, say, 10 years ago?

I think there's a heightened realization that what we do really can impact the business, whether it's from impacting cash flow, whether it's to minimize risk, to even how we can make sales and find the right customer. Also helping sales know what baggage customers bring with them so that they can price accordingly. We're not so much viewed as a hindrance anymore. We're moving more and more into that partnership relationship.

What do you enjoy most about what you do?

It's a lot of diversity, and the business situations are what makes up that diversity. You don't know what you're going to get hit with next, and you have to maintain a level of creativity because what worked yesterday might not work today.

Are there aspects of the grad school program that allow you to exercise that creativity?

I think the most creativity comes about when you're dealing with your peers in this setting. Not only are you asking the people who are instructing us, but you're asking your peers what they would do in this situation, and that's helpful.

Stay tuned to NACM's blog for more updates from NACM's ongoing Graduate School of Credit and Financial Management (GSCFM).

International business and credit emerged as a key area of focus at the 2012 Credit Congress more than perhaps any year before. Among the growing popular track was a discussion lead by FCIB International Credit & Risk Management Online Course instructor Pam Thomas.

Thomas likened the credit policy to the foundation of a house, where the base needs to be strong. Developing a checklist of what the policy needs to address and identifying those key features – like the who, what and how much – are critical in creating that base strength. Being thorough and spending time defining what you are really looking to accomplish from the start are essential.

Thomas advocated a “customer first” mentality where sales and not rules should be the first priority. As the cornerstone of this philosophy, she promoted working more closely with the other departments around upcoming strategies and, thereby, be more informed about future business plans. She contended this helps to streamline the policy writing process.  That said, flexibility to account for various factors, like political changes and corporate shifts, certainly need to be taken into account.

“It’s not like a t-shirt – one size doesn’t fit all,” maintained Thomas.

-Darren Rudham, FCIB/NACM staff contributor