Recognition of ‘Best Practice’ in Credit Management

ICTF International Credit Professionals SymposiumAmsterdam 14th to 16th April 2013

Recognition of ‘Best Practice’ in Credit Management

Chris Sanders MICMHead of Accreditation – QICMUK Institute Credit Management

ICMCorporate Partners

Contents

• QICM - What is it?• The QICM Process & Criteria• Some of the QICM Companies• International QICM with• QICM Best Practice Examples• Stated Benefits of QICM• Plans for QICM 2013• My Contact Details

QICM Outline

• ICM’s Accreditation Process for Credit Management and related functions• Covers 6 Specific Areas:

• Credit Policy• Compliance• Customer Services• Personal & Professional Development• Performance Measurement • Stakeholder Management & Roadmap

• Companies have to demonstrate they meet a minimum standard of ‘Good/Best Practice’ in Credit Management

• If successful a company is awarded QICM Accreditation and retains the award for 2 years when it has to be renewed

• 29 companies have QICM Accreditation with a number at various stages of implementation…such as Nick King and his team at Travis Perkins

• Investment structure based on size and complexity of the client

Credit Policy • Do you have a written credit policy?• Is it signed by the senior management?• Does it cover all relevant aspects of the departments activities?• How is it updated and reviewed and how often?

Compliance• What is the legal and regulatory framework within

which you have to operate?• What is the evidence of training of staff to ensure

compliance?• How is compliance audited how are non-

compliances monitored?

QICM Criteria

Customer Services• How are customer requirements and satisfaction measured?• Are Credit Management & Billing included in customer satisfaction survey?• How are queries and disputes measured and tracked to resolution?• Do you have regular meetings with Customer Services to resolve and

progress debt in dispute and customer queries.

Personal & Professional Development• How many people in your organisation are members or studying for ICM

qualifications?• Are new staff trained and inducted and what is the process?• Does everyone have a PDP linked to Performance Reviews/Appraisals?• How often are the staff reviewed and how do you identify training needs?

QICM Criteria

QICM CriteriaPerformance Measurement

• Are there a set of objectives and targets and do they align with the Credit Policy?

• Are objectives and targets set to improve the effectiveness and efficiency of the Credit Department?

• Are appropriate KPIs gathered regularly? (A ‘Dashboard’)• Is success celebrated and recognised?• Are there regular account reviews with Sales, Customer Services

Time

Valu

e

Maintain MeasureIn Tolerance Band

Set Tolerance Levels for KPIs Trend!

Early IdentificationTime

Valu

e

Maintain MeasureIn Tolerance Band

Set Tolerance Levels for KPIs Trend!

Early Identification

QICM CriteriaStakeholder Management & …

• When was the last time you presented to the Senior Management Team or the CEO on Credit Management, results, targets and plans?

• Do you have a regular slot on the Sales, Customer Service, Marketing Leadership Team agendas?

• Do sales REALLY understand what you do what your targets are and the policy within which they operate?

… Roadmap• What part does credit play in the development of the business Strategy and

objectives?• What are your plans for the Credit Function for the next 3, 6 , 9, 12, 24 months?• How are these plans developed and communicated to the business? • What are your plans for continuous improvement?

Some of the 29 QICM Accredited Companies

[email protected]

Now Underway!

International QICM• Objectives:

o Provide International recognition of ‘Best Practice’ in Credit Managemento Improve standards and awareness of excellence in Credit Managemento Create a network of International Companies who share ‘Best Practice’

• Approach:o Assessments performed by Senior Credit Management Professionalso Mixture of document reviews, conference calls and site visitso Recommendations of accreditation ratified by senior officers of the ICTF

• Deliverables:o ICM & ICTF branded reports, awards and certificateso Accreditation renewed every 2 yearso Awards presented at ICM or ICTF events where possible.

QICM Best Practice - Process

Credit Strategies

Actions• Based on measure, understand

what levers need to be pulled to ensure that the measure stays within the tolerances

• Management of debtors reduction of overdues

• Managing the quality of customers

• Managing margin• Start to forecast trends to identify

potential issues and take action early

Outcome by Segment• Acceptable DSO levels• Acceptable levels of Overdue• Acceptable risk ratios and profiles• Acceptable levels of receivables and

ERR• Acceptable write-offs (I.e. loss ratios

% revenue)• Potential sales growth as a result of

the strategies

Time

Valu

e

Maintain MeasureIn Tolerance Band

Set Tolerance Levels for KPIs Trend!

Early IdentificationTime

Valu

e

Maintain MeasureIn Tolerance Band

Set Tolerance Levels for KPIs Trend!

Early Identification

QICM Best Practice - Process

DSO Drivers • Identify current bottlenecks and potential

solutions in each area from DSO analysis

• Agree with functional managers work stream treatment and required step change

• Formulate an action plan in each case providing a phased DSO reduction to Year End

• Coach the functional heads to manage the work streams and resources to timetable

QICM Best Practice - People

Measurement of Capability• 360° Feedback…manager, staff & role requirements

• Identifies training needs and suitability for transfer

Training Tool for Credit Management• Designed and developed by 2 credit managers

• Training tool for Credit Controllers and Team Leaders

QICM Best Practice - People

Teamworking & Targets • ‘Morning Boards’ help communicate plans

• Reward & recognition every day

• Targets vs. Actuals daily

Teamworking for Achievement • Set an unachievable target & fail spectacularly!

• …or set a bigger one a year later!

• Short Term or Long Term

• Cross Functional Working

QICM Best Practice – Stakeholder Management & Roadmap

Roadmap• Continuous Development & Improvement

• Clear direction for the function & business

Stakeholder Management• Communication to the business

• Building awareness and communication

QICM Best Practice – Systems

Cash Allocation ‘Best in Class’• Significant Automation of process

• Improvements in speed and accuracy

Diallers in ‘The Cloud’• Reduction in costs of implementation

• Wider availability to smaller teams

QICM Accredited CompaniesStated Benefits

• Reduced Internal Audit Activity• Reduced External Audit Activity• Reduced Premiums for Credit Insurance• Able to bid for government tenders since accreditation• Obtained new business since trade press articles• Improved debt and cash performance since accreditation• Improved Internal Recruitment from finance• Keeps the department focussed on quality and

performance improving results & customer service• Improved credit controllers confidence when dealing

with sales and other stakeholders• Significantly improved the awareness of good credit

management across the business

“I must say that I have really appreciated the whole QiCM experience. It is not just an

accreditation it is the opportunity to discuss future direction,

options and share ideas with a fellow professional.”

Paul Brooker, MICM (Grad) - Ecclesiastical Insurance

Plans for QICM in 2013• ICM White Papers on key business issues launched at the QICM Best Practice

Conference 3 already available on ICM Website (www.icm.org.uk):• SEPA (Single European Payment Area) – ICM’s Implementation Toolkit• Paperless DD & AUDDIS (Automatic DD Instruction System) • SEPA (Single European Payment Area) – Newsletter Update

• ICM White Papers on each of the 6 QICM Criteria• QICM Guide to Credit Policy White Paper now available

• International QICM now available endorsed by ICTF• QICM Continuous Improvement Scorecard with Mid Term Reviews introduced

through client pilot 2013• QICM Best Practice Conference #2• Best Practice Library & Best Practice Network for QICM Companies and those

companies in the process of QICM Accreditation • QICM Conference Event Presentations and Sharing Best Practice examples

QICM Best Practice Conference

18 September 2013 Central London

• Planning Underway• 125 places available• Invitations from July 2013

Chris Sanders MICMHead of Accreditation – [email protected]+44(0)7747 761641 @chrisQICM

Also on

QICM_ICTF_NL_20130414_15_16.ppt

ICMCorporate Partners

ICTF International Credit Professionals SymposiumAmsterdam 14th to 16th April 2013

Recognition of ‘Best Practice’ in Credit Management