Credit management as a driver for business
transformation
It can happen – it is happening
Credit management as a driver for business
transformation
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I believe this is the ultimate challenge for credit management – it is
our future
It is driven by the credit manager and enabled by technology
It represents the step away from the “back office” perception
It represents an opportunity for credit managers to grow as
individuals and to operate at the next level up professionally
There are fellow ICTF members in this audience who strongly agree
and have started or are about to start the journey
Some members may strongly disagree – let’s have a debate!
About Co-pilot
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We advise large corporates and multinationals on credit
management software
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We have been doing it for 8 years
We know what works and what doesn’t work
We advise on software, processes and best practice
There are many different possible solutions - we help clients pull it all together
We’re with the client from start to finish
Typical client
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Credit Director/Group Credit Manager
An individual who wants to drive change and for whom the timing is right
We are seeing an increasing focus on credit management driving sales growth
 This is a key step towards business transformation
Key learning for Co-pilot these past 8 years?
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“You don’t know what you don’t know”
It’s not just about functionality:
It’s about having the latest technology (must be future-proof)
But it’s also about how you USE the technology
The power of end-to-end data all in one place
The power of operating in ONE system (Data integrity)
It’s about what the software partners are like to work with
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Today’s audience
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This presentation is primarily addressed to senior credit people
operating large multiple ledgers
Some of you have ledgers which are smaller (by number) but large
by volume of risk – core principles will apply though solutions may
be different
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Some of you will think that these ideas could apply to your company
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Some of you will think they don’t apply to your company
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Some (not all) of this second group might be wrong
Credit management historically seen as “Back office”
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KPIs tended to be negative and after-the-event (the sale)
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Recent years have seen a focus on costs (eg: SSCs and BPOs)
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Reduce DSO
Reduce or avoid bad debt
Reduce unallocated cash
Deal with disputes
Often driven by the same “back office” perception
Good credit managers have always supported sales
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Through good relationships and collaboration - often event-driven
A strong belief that credit management is the “eyes and ears” of the business
Many credit managers will feel that this support has not always been seen or
valued by the board
Probably the CFO just thinks you’re doing your job – “that’s what I expect you to
do anyway”
And that’s probably because credit management support has been “day-to-day”,
rather than strategic, planned, implemented and reported
So what is credit management-driven
business transformation?
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It is a credit management-initiated strategy and plan to support
sales growth - more than a series of daily events or interventions
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The sales outputs are planned, significant and visible
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It positively enhances the customer experience
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It is “inclusive” – it impacts the sales role and the way that the
company does business with its customers – these things change
And, not to lose sight of things, all the traditional things are done
better too
Head in the clouds, feet on the ground
What has to be in place?
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A credit manager who sees the opportunity and wants to make it
happen
Credibility and trust
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Ability to manage the change process
The right team
The right technology
Internal support
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Board
Credit team
Stakeholders
The credit team
Stakeholders
Project management
External support – the right partners
Don’t let anyone tell you it is easy
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Managing a change project is a significant challenge
Issues, politics and all sorts of weird things are thrown at you from
every angle
As we learned at ICTF Barcelona, Nick King initiated and is
implementing such a project
He will tell you that it has given him a few grey hairs
But it has also been a good learning experience – he is stronger and
wiser for it. Scored under the “Hay model” he operates at a higher
professional level
And, don’t forget, the impact upon Travis Perkins’ business will be
profound:
Travis Perkins business impact - recap
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Cost savings
Significant improvements in all the traditional credit management
metrics
Strong sales growth – more new customers and more business with
existing customers
Significant improvements to the customer experience – TP will look
like a different business to its customers
A positive influence on customer payment behaviour
Change to the sales process – 1,900 Branch Directors embedded
into the process
Manual processes could not deliver these outcomes - the
environment Nick has created operates in real time
Real time credit limit decisioning is essential
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The 80/20 rule:
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Credit Policy should act like a valve that you can open or close
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You should target automated decisioning and monitoring on >80% of the portfolio
This frees up the credit team to focus on the risks where they add most value
Which is supported by automated workflows for analysis and decisioning
You need to be able to react to external changes and internal needs as business
requirements change
If Credit Policy is simply a document (PDF/Word) it will not deliver this
Credit Policy needs to be embedded into daily workflows - and you need control
over it
Decisioning based upon real-time end-to-end data is stronger
Ability to develop and adapt scorecards is essential
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Can you “Champion Challenge” your scorecards?
If you have got all this you can safely make portfolio-wide
decisions in real-time
Your business
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Your businesses/EDP systems
Bus.
Bus.
Bus.
Bus.
Credit
management
team
Four types of software
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Your businesses/EDP systems
Bus.
Bus.
Credit
management
team
Bus.
Collections
software
Credit risk
software
Bus.
Cash Allocation software
Data cleanse software
Four types of software

Your businesses/EDP systems
Bus.
Bus.
Credit
management
team
Bus.
Collections
software
Credit risk
software
Bus.
Cash Allocation software
Data cleanse software
Real time credit management

Your businesses/EDP systems
Bus.
Bus.
Credit
management
team
Bus.
Collections
software
Credit risk
software
Bus.
Cash Allocation software
Data cleanse software
Global
credit
bureaux
Real time credit management
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Your businesses/EDP systems
Bus.
Bus.
Credit
management
team
Bus.
Collections
software
Credit risk
software
Bus.
Cash Allocation software
Data cleanse software
Identity &
fraud
checks
Global
credit
bureaux
Real time credit management
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Your businesses/EDP systems
Bus.
Bus.
Credit
management
team
Analytical
tools
Bus.
Collections
software
Credit risk
software
Bus.
Cash Allocation software
Data cleanse software
Identity &
fraud
checks
Global
credit
bureaux
Real time credit management
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Your businesses/EDP systems
Bus.
Sanctions
& PEPs
Checks
Bus.
Credit
management
team
Analytical
tools
Bus.
Collections
software
Credit risk
software
Bus.
Cash Allocation software
Data cleanse software
Identity &
fraud
checks
Global
credit
bureaux
Real time credit management
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Credit
insurance
or finance
Your businesses/EDP systems
Bus.
Sanctions
& PEPs
Checks
Bus.
Credit
management
team
Analytical
tools
Bus.
Collections
software
Credit risk
software
Bus.
Cash Allocation software
Data cleanse software
Identity &
fraud
checks
Global
credit
bureaux
How you can support sales with real-time credit limit
decisioning and monitoring
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New customers
Better identification of good/bad new risks permits:
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higher credit limits
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better prospecting
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point-of-sale decisioning
Existing customers
Ability systematically to pre-authorise increased credit limits for
good/improving existing customers:
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Automated or manual
Insured or house
Essential for seasonal trade
A better customer experience
Competitive edge
Ability to adapt risk strategies quickly
Credibility and professionalism
Credibility and professionalism
Two examples:
The CFO phone call
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“Our Global Key Account, “Acme Distribution” has just issued a
profits warning - sales are down 10%. What is the impact upon us?”
Four possible answers:
I’ll get back to you
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I’m sending you a pdf now – it shows you our global position at close of play last
night
 All outstanding global balances, payment history, payment behaviour, risk
profile and history, credit limit history, decisioning audit trail, etc
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I’m sending you the pdf and, as we speak, I am running the new numbers
through my risk analysis tool – it shows me that the impact upon Acme’s
financial health is xxx
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You have already sent the pdf, the analysis and your recommended action
because your credit risk management software picked up the profits warning as
it happened and actioned appropriate work flows. And this is what the CFO is
phoning to consult you on
How many credit managers were monitoring Tesco?
1.
PDF – example page
xxxxxxxxxxxxxx
The Sales Director phone call
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“Why won’t you give me a bigger credit limit on International
Widgets?”
Answer: I’m sending you a Delinquency Report now.
It shows that they regularly pay 45 days beyond terms and it shows
you how much this is costing us.
Our margin on this business is x%
If you want a bigger limit you need to negotiate a higher price, or get
them to pay sooner
The opportunity for risk/reward based limit capacity allocation?
Develop functionality within your ERP system?
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Don’t go there!
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Credit people explaining what they want to IT people
Things get missed or misunderstood
Time-consuming internal project with other demands
Huge costs
Changes require another project – future-proofing is critical
There will always be things you didn’t think of – because you didn’t know what
you didn’t know
Specialist credit management software is:
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Able to work with multiple ERP systems
Better
Quicker to implement
Cheaper
Future-proof
In conclusion
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Some credit managers will see and seize the opportunity
In doing so they will grow as individuals and enhance their
professional standing and their career prospects
And, something I have not yet mentioned:
 They will enhance their team’s job satisfaction and better
protect the team’s job security
It’s a question of manage or be managed