Professional Documents
Culture Documents
CreditManagerEurope 2014-Issue 5
CreditManagerEurope 2014-Issue 5
1/2013
Europe:
Insolvencies, country risks
and export risks
Austria raises the bar
for Credit Managers
Schmidt-Gevelsberg
fully in (credit) control
3
PRACTICE
QUALITY
IN CREDIT MANAGEMENT
A Credit Managers Perspective
4
PRACTICE
This has become a ‘Best Practice’ seek and give advice over various as- To belong to the QICM Accredited
tool which I am able to share with pects of credit is something that we, group of companies and subsequent
other QICM accredited companies. in the credit profession, have waited Credit Community, from all areas of
a long time for. industry, not only demonstrates the
For me, as Credit Man- drive, passion and determination we
ager, the develop- These days, we expect all feel in trying to make a differ-
ment of the QICM To share best more from our In- ence and assist our own businesses
accreditation, the practise tips stitute and QICM in surviving the difficult economic
Best Practice Net- with some of the best gives us that, the climate but, as a whole, in contribut-
working events credit brains support, the net- ing to the economic recovery of our
and the contacts working facility, country by displaying high stand-
in the profession,
within this group the workshops, ards, best practise and commitment
of accredited com- …is something that we the introduction of to do just that.
panies has been have waited the ‘White Papers’
invaluable. To share a long time for. and Best Practice
best practise tips with examples all assist in
some of the best credit raising the standards in
brains in the profession, to the credit departments of
be able to talk about credit and to Uk businesses.
5
COLUMN
An Oscar
for the leading part:
Credit Manager as the hero in an economic crisis!
6
Trade Related
Insurance Solutions
8
Practice
2. Accuracy The invoice should describe precise- tising clutters for better effectiven-
ly the goods and services purchased ess. It should be simple to read and
Customers will only pay undisputed together with the number of units easy to follow by the customer recei-
invoices. If customers disagree with purchased. The contact details of the ving it. Any discounts granted should
any detail that features in the in- customer and the address of the de- be shown and clearly calculated for
voice, they just don’t pay. Disputed livery of the goods supplied should ease of reference.
invoices cause not only late payment also be illustrated. The correct VAT
and cash flow difficulties but also number of the customer should be Living in an electronic era, it is sug-
operational inefficiencies to both the provided and checked for its validity. gested to include the Bankers’ details
seller and the buyer because to resol- of the supplier, the supplier’s account
ve disputes takes time and requires Clauses referring to the agreed credit number, IBAN and the BIC in case the
more internal resources. terms and to late payment interest customer prefers to pay electronically.
and charges, including any action
3. Completeness taken by the supplier in case of late Issuing an invoice to customers may
payment are always commendab- seem to be trivial by some firms but
The invoice should include the le and MACM Members should also in actual fact it is an important docu-
supplier’s details with the correct VAT include the caveat provided by the ment for both the customer and the
number. All contact details should be Association to adhere to the Data supplier alike. Invoice customers late,
prominently provided and this in- Protection provisions. be inaccurate in the figures provided,
cludes the telephone number of the be incomplete with the required infor-
supplier. It is to be remembered that 4. Understandable mation and send invoices that cannot
some customers may still prefer to be understood and you will drive up
make contact with their suppliers by The invoice should be clearly printed the cost of doing business for your cus-
phone and not electronically! on good quality paper with no adver- tomer and your firm to say the least!
9
news
James Caan, the serial entrepreneur, not only protect you from the dam- mentor. Start Up Loans is chaired by
is urging smaller businesses to take aging impact of not getting paid, James Caan.
more responsibility for their own ac- but more positively in taking on new
tions in getting paid, and to consider customers and even new markets, In addition to the Managing Cash-
alternative funding mechanisms in safe in the knowledge that you are flow Guides, the ICM also manages
order to keep the cash flowing. better informed,” he adds. the Prompt Payment Code (PPC) on
behalf of BIS.
Writing the first in a new series Caan says that professional credit
of guest blogs for the Institute of managers, and Members of the ICM “There is a clear appetite to learn
Credit Management (ICM), Caan specifically, have a critical role to play, more about the benefits of prompt
suggests that small businesses need and that they are already actively payment and effective cashflow
to act to remove the barriers to pay- supporting the UK recovery: “As pro- management,” he concludes, “and
ment: “The basics are, of course, to fessionals, it is incumbent upon the we will continue to support busi-
invoice on time, promptly and ac- ICM and its Members throughout nesses to ensure they get access to
curately,” he says. “They are also to 2013 and beyond to ensure that the the best advice wherever we can
ensure that your quote has been ac- support is there for these companies provide it.”
cepted, the product or service deliv- when they need it most.”
ered, and the terms and conditions
of payment agreed in advance. Philip King, Chief Executive of the
ICM, agrees, and highlights the re- To view James Caan’s guest blog,
“If you do nothing else but stick to cent surge in demand for the ICM’s please visit: http://www.icm.org.uk/
these simple rules, then your busi- Managing Cashflow Guides, pro- home/ceos-blog
ness will not only survive, but it duced for the Department for Busi-
will actually have every prospect ness, Innovation and Skills (BIS), that
of growing and contributing to the have now exceeded 400,000 down-
economic recovery that we so dearly loads. The most popular of the 12
seek.” Guides is the one entitled ‘Payment
Terms’:
And he says that there is more small
business can do: “The Government “Demand for the ‘Payment Terms’
is keen on encouraging the banks to Guide has almost doubled in the last
lend but alternative funding mecha- year (from c23,000 to c43,000) and
nisms such as factoring and invoice in total represents almost a quarter
discounting rarely deserve the nega- of all of the Guides downloaded*,”
tive publicity they are inclined to at- he says. “This provides graphic proof
tract, and Supply Chain Finance – a that many businesses are already
particular favourite of Government focused on keeping the cash flow-
in 2012 – also has its place for cer- ing and seeking professional advice
tain companies at certain times.” wherever it is available.”
Knowing your customer, Caan ac- As well as being CEO of the ICM,
knowledges, is a particular mantra King is also on the board of Start Up
of the ICM, and again the tools at Loans – a new Government vision
a company’s disposal – from credit to provide young and emerging tal-
reference agencies to credit insur- ent with access to start-up capital
ance – all have a role to play: “They and the expertise of an experienced
10
column
WATERLOO –
ARE WE THERE YET?
Waterloo has three great claims to fame. The first is obvious, and proba-
bly the most famous of all, with a date which lives in history, and certainly
helped change the world in which we all live – 6th April, 1974. Singing in
English, two girls and two boys from Sweden calling themselves Abba won
the Eurovision Song Contest. The second is one of London’s great railway
stations, situated near the River Thames South Bank and serving southern
England. First established in 1848, the present buildings began life in 1922.
As for the third claim to fame, suffice it to say that on Sunday 18th June
1815, a combined British/Prussian force finally ended the domination ambi-
tions of Napoleon Bonaparte at a place in present day Belgium which we
now refer to as Waterloo.
11
COLUMN
Everyone is alarmed by this current sident Obama has weighed in – the get from the UK to Mainland Euro-
UK approach, with pressure for a US definitely wants to see a strong pe indirectly? My specific advice to
referendum coming from some just UK as part of a strong Europe – and Mr Cameron is do not make Brussels
adding inflammatory pieces to the Germany certainly sees the UK as a your Waterloo – you don’t have Wel-
already growing fire. The problem necessary counter balance to France. lington and Blucher with you this
with referendums is that there can time.
be a temptation to vote with the My advice to all is to keep calm and
heart rather than the head, and ano- carry on. Until someone fills in the
ther piece of inappropriate European English Channel (or La Manche, if
legislation might just be one step you prefer), Britain will always be
too far. Of course, as one of my Itali- an island and a little relic of “Splen-
an colleagues said to me some years did Isolation” remains in the British
ago – “the trouble with you British is DNA. Just look at British trucks next
that if you do not like it, you argue time you drive on the autoroute or
and argue, but if you lose, then you autobahn – the advertising on the
sign up and implement to the letter. wagons will invariably say “Daily
We, on the other hand, sign up to Services – UK & Europe”. Some even
keep the peace, but then ignore. It say “Europe Direct” – just how far
makes for a much quieter life”. Pre- out of my way do I have to go to
community
This first Pan-European FECMA Credit Management Congress is in Budapest from May 16 to 17, 2013.
The title is: “European Best Practices – Inspiration for Credit Managers”
All the practical information about the Congress can be found on the website www.cm-congress.eu.
If you want to know more about it, do not hesitate to contact the Secretariat of Fecma
by telephone: 00 31/35 69 54 103 or by email: fecma@sbb.nl
13
background
Credit Management
in enterprises
We like to inform readers, that on basis of the „Minimum requirements for the
Credit Management in Austria MRCM“ (Mindestanforderungen an das Credit
Management in Österreich) the Austrian Standard Institute, Vienna, decided to
announce a Norm (ÖNORM D 1040) for the issuance of certificates to confirm
the good quality of the credit management of the company upon application.
Current studies confirm that inadequately performed management of debtor
risk is one of the main reasons for the bankruptcy of companies.
14
background
Who is the Austrian Standard Institute With a certified credit management We supported the standardization
audit by the Austrian Standard Insti- of the credit management and have
The Austrian Standards Institute is the tute you can expect to: been working on this issue for more
neutral Austrian platform recognis- than 2 years. We hope that we are
ed worldwide for national, European M
inimize bad debt losses and right in the assumption that a certi-
and international standardization. It improve your solvency rating ficate on the quality of the credit ma-
coordinates and manages the work of nagement will become a positive sign
5.900 experts. The experts are delega- I mprove net cash flow for banks and other providers of ser-
ted by enterprises, authorities, testing vices like credit insurers, bond insu-
centres, research institutes and special R
aise staff awareness for use of rers, factoring institutes, information
interest groups. The Austrian Standard credit management processes agencies etc. A certificate of this kind
Institute is a neutral and independent should help in negotiating favourable
service organisation, not an authority. T
ap potentials for improvement terms of credit.
As a non-profit, private association it in your organization, processes,
provides since 1920 the platform for or documentation The first audit for obtaining a certi-
the development of norms, standards ficate by the Austrian Standard Cer-
and basic rules. O
ptimize your existing credit tificate will start in February/March
management system – from credit 2013.
checks to invoicing to debt recovery
15
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• Current overview of customer status (e.g. credit rating, limit calculation, collection status)
• Optimisation of credit management processes (e.g. through automation)
• Online access to more than 50 international credit agencies and payment history pools
worldwide
• Online interface to credit insurers (e.g. Euler Hermes, Coface, Atradius) to manage limit
processes and obligations
• Decrease in credit costs (e.g. reduction in bad debts or days sales outstanding/DSO)
• Standard software solution ensures stable and calculable total cost of ownership (TCO)
responding to
customers individually
thanks to a professional credit management system!
International forwarder Schmidt-Gevelsberg has to deal with a large volume of
orders every day. To ensure that it is nevertheless able to respond to each and
every customer individually, the company relies on a professional and effective
credit management system with software support.
17
PRACTICE
18
Opportunity and risk
in perfect harmony
Wherever there is trade, there is
Atradius, ensuring that customers the
world over won’t fall prey to payment
default and bad debt.
Supported by our expertise and market
intelligence, business is free to look
ahead with confidence – composed,
flexible and resilient.
It’s the perfect balance of managing
risk and enabling trade, of safety and
freedom, of insurance and assurance.
Seize the opportunity to discover more.
Call
0800 0856 973
Email cmc@atradius.co.uk
Visit www.atradius.co.uk
This one simple statement sets the Team Communication & Recognition
tone and the culture in everything
his department does, and like the For this I go back to Brian Morgan
best inventions and statements the and Veolia Environmental Services
simple ones are always the best. Team. Every morning at the start of
Chris Sanders MICM Like the ICM’s Quality in Credit Ma- the day they have session called ‘The
Head of Accreditation-QiCM nagement (QICM) accreditation, the Morning Boards’. There are around
Institute of Credit Management idea started with a simple question 6 different teams in the credit de-
chrissanders.qicm@icm.org.uk at the ICM2008 Conference from partment each with a notice board
Philip King (CEO ICM) ‘What does on wheels (2m x 1m) which has tar-
good look like?’ and 4 years later we gets, issues, meetings, absence and
have what we think are the right cri- objectives listed on it. The team lea-
teria to answer that question and ders run through their ‘board’ with
at the time of writing this we have their team including any systems
29 companies from many different problems, who is in and out of the
industries who have achieved the office, delegating work around the
QICM Accreditation. However, like department arranging holiday co-
all things one size doesn’t fit all and ver etc. Targets are reviewed and
one company’s Best Practice is diffe- discussed and actions noted. This in
rent from the next but the one thing itself is good but if an individual has
that all 29 have in common is a desi- achieved a good result, for example
re to be better tomorrow that they collecting an old debt or resolving a
are today and a willingness to share difficult dispute, the individual will
their ‘Best Practice’ with others, write this on a ‘post-it’ note and
and this fits in with the objective place this on the board. The next
of QICM to ‘Improve standards in morning the Team Leader gathers
Credit Management’. So I thought these up and in front of the team
that I would share some of the best the success is recognised and cele-
practice I have seen on my travels, as brated in front of the whole team.
you can appreciate there are a great A simple low cost idea which boosts
deal of interesting and innovative morale, recognises those who have
methods and procedures out there, done a good job and keeps the team
but I have picked 3 of the most inte- up to date on what is going on in
resting operational examples which the business.
are simple and low cost which can
be implemented anywhere and in
any organisation regardless of size,
complexity or industry.
20
PRACTICE
DSO Drivers and Measurement increase awareness in credit ma- Best Practice in Credit Management
nagement within the business, the is everywhere and the characteris-
I saw this approach about 2 years credit team need to communicate tics of QICM Accredited Companies
ago at an ICM Masterclass Event in what they are doing and their plans is one of a constant desire to impro-
London, but understood it better for the future, so we added this to ve whilst sharing what they do well
when I went to meet Frank Ander- the QICM Accreditation Criteria. with others and for that I am very
son at AB Agri in the UK to comple- This has been a very successful int- grateful, as it makes my job interes-
te their QICM Renewal Assessment roduction and I have seen some ex- ting and I am always learning so-
last year. This is how Frank under- cellent ‘roadmaps’ and stakeholder mething, so many thanks to Brian,
stands the ‘content’ of his DSO and management plans on my travels, Frank and the other 27 QICM Com-
as a result where to focus time and from large companies like Siemens, panies for this.
effort on improving it. He shared Veolia and Shell to smaller organi-
this approach at the QICM Best sations and teams. The format and
Practice Conference in last year and contents of these plans may all be
got some very positive feedback. If different but the one thing they have
you understand what a DSO day is in common, like the credit manage-
worth to your business in terms of ment teams themselves, is a desire
debt then you can start doing this to share information with the
for yourself, for example if your DSO business and demonstrate
day is worth €2m and your debt in the benefits of good credit
query is €6m then simply put you management. The Cre-
have 3 DSO days tied up in dispu- dit Management teams
tes, this may then be something you who do this well, like
would want to discuss with the ma- those mentioned,
nager of the team responsible for become integrated
the resolution of disputes, sales or into the business
customer services. Frank has taken and form part of
this further, measuring in this sim- the management
ple way all aspects of his debtors team which de-
ledger, what is current, overdue, dis- termines the direction of
puted debt and type of disputes and the company and sales
the DSO for specific contracts and and marketing strate-
customers which may be outside gies. These ‘Credit Stra-
standard terms. This not only helps tegies’ are an approach
him to focus action but also ensures that some QICM Ac-
that ownership of the DSO measure credited Companies do
not only rests with the credit team extremely well and are
but also with others in the business perhaps a subject for
as well. another article!
21
background
Creditreform queries
practicability
of the European Small Claims Procedure. No significant improvement, inconsistent implementation across countries
Creditreform, founded 1879 in Ger- Creditreform, one of the largest procedures specifics. Thus, the ap-
many, is today the leading provider European collection agencies with plication of witness statements can
of comprehensive credit manage- offices in 22 European countries be made at any time by either party,
ment solutions and services in Eu- and in China, considered the Euro- which means that the process must
rope and China. 4,500 skilled em- pean Small Claims Procedure (ESCP) be conducted in a nationwide com-
ployees in 169 offices in 22 countries substantially failed four years after mon adversary proceeding.
serve more than 150,000 clients. The its introduction. By ESCP procedures
group turnover in 2011 reached EUR like the realization of cross-border Taken as a whole, the procedure is
543 m. loans to small claims were supposed very complicated, and especially
to be simplified and speeded up. It small claims are often not economi-
In cooperation with nationally lead- is available to litigants as an alter- cal. “This is aggravated by the fact
ing partners Creditreform offers native to the national procedures that even four years after its offi-
expert credit reports on all active of the individual Member States is cial launch the ESCP is still not im-
companies worldwide. Creditre- available. The Regulation applies in plemented in all EU countries, and
form’s business information prod- all Member States of the European in some courts it is still largely un-
ucts permit a detailed insight into a Union except Denmark. known”, said Keusgen.
company’s solvency situation, such
as payment behaviour and financial For all practical purposes, the ESCP Generally, this procedure is only
status, including balance sheets and proves to be largely ineffective. “In for completely documentable and
profit and loss accounts. Through its countries where the implementa- “uncomplicated” demands – ideally
comprehensive database they offer tion chances were good even with- receivables from goods with proof
their clients online access to credit out the European Small Claims Pro- of chain from ordering to delivery
reports of more than 24 million cedure, the ratings we achieve with verification. However, it is not rec-
companies in 26 European countries. the procedure remain good – how- ommended for the enforcement of
Creditreform also assist its clients ever, in countries with low rates, claims for damages or cancellation
to collect their overdue accounts the chances of implementation us- fees.
receivable. Their local experts know ing this procedure remain low”, said
the language, business mentality Wolfgang Keusgen, Head of Depart- Based on the experience in the first
and legal particularities of each re- ment of International Services at four years since the introduction of
spective country. Handling the case Creditreform. the procedure, Creditreform has de-
locally often brings the debtor to cided to not consider ESCP within
agree to an amicable solu- In addition, the ESCP process the international debt collection
tion and so avoids the has often not led to the process. Instead, the court of small
hassle and cost of a desired simplifica- claims will be enforced only on the
court procedure. Creditreform’s tions. In most cases, proven ways as part of national debt
clients commissioned the process time collection procedures.
Cre di tre form’s the agency last year still exceeds one
clients commis- year. Besides, in
sioned the agency
to collect more than some countries,
last year to collect 2 million open claims enforcement costs
more than 2 mil- with a total volume are in no reason-
lion open claims of more than able proportion to
with a total volume EUR 1.2 bn. the amount receiv-
of more than EUR 1.2 able. This fact is also
bn. favored by complicated
22
community
A winning night
for ICM 2013 Awards
MORE than 400 guests donned black tie and evening gowns to attend the all-new
ICM British Credit Awards 2013 at London’s Hilton Park Lane earlier this month, and
recognise some of the very best from the world of commercial and consumer credit.
The winners included a broad range of there can only be one winner in each
businesses, including big names such category,” he said. “Everyone, whe
as Britvic (Best Use of Credit Techno ther a winner or runner up, should be Sean Feast
logy), Experian (Credit Information proud of what they have achieved and Managing Editor
Provider for the Year) and Schenker recognise how well they have done.” Credit Management magazine
(Collections Team of the Year). editorial@icm.org.uk
The ICM British Credit Awards 2013
It also included arguably perhaps less- were organised for the ICM by Incisive
er-known and more niche firms such Media, and presented by rugby legend
as SmartSearch (Fraud/AML Initiative Martin Bayfield. A full list of winners
of the Year), MarketInvoice (Commer- can be found in the supplement in the
cial Finance Provider of the Year) and middle of this issue.
Eaton – UK Electrical Division (Com-
mercial Credit Team of the Year).
23
community
14:50 – 15:20 Credit Management Best Practices: What we can learn from each other
Willibrord Van Leeuwen, Wolters Kluwer, Netherlands
Alberto Bottoni 16:00 – 16:30 Global Economic Forecast & Risk Outlook:
What´s driving Credit Management?
Júlia Király, Magyar Nemzeti Bank / Central Bank of the Republic of Hungary,
Hungary
Valérie Collot FICM Credit Management Strategies and Execution: a European Perspective
Moderator:
Philip King FICM, Institute of Credit Management, United Kingdom
Panelists:
Valérie Collot FICM, Sagem Defense Securite, France
Alberto Cotti, Donna Karan, Italy
Andrea Kelchen, Sapa Group, Hungary
Frederic Wittmans, Ingram Micro, Belgium
Alberto Cotti
18:00 – 19:30 Hotel Check-In
From 20:00 Dinner (with musical entertainment), opening speech and presentation
of “FECMA Lifetime Achievement Award”.
This event is also available for spouses at the price of € 49,00.
Claes Jacobsson
24
community
14:00 – 14:45 Credit Management Principles: Quality and Excellence as Driving Forces
Brian Morgan FICM, Veolia Environmental Services, United Kingdom
16:00 – 16:30 Credit Management as a Profit Centre and the Role of the Credit Manager:
how to add Value to your business
Joerg Peter Kowalewski, km credit consulting, Germany
Andreas Wenzel
25
community
FECMA lifetime
achievement award
Determination – Stableness – Farsightedness – Eagerness – Motivation. Five
positive characteristics – united in one small bronze sculpture. The artist
Dieter von Levetzow, living in the Lower Rhine town Kranenburg – by the way
a great-grandnephew of Goethe´s last love Ulrike von Levetzow – has created
this sculpture exclusively for the FECMA (Federation of European Credit
Management Associations). “The decision was made last year”, the chairman
of the Bundesverband Credit Management e.V., Jan Schneider-Maessen empha-
sizes: “With this sculpture we want to honour a personality from the Credit
Management for her lifework,” Schneider-Maessen announces.
26
community
www.fecma.eu
www.cm-congress.eu
27
Success through knowledge.
Software and sound
advice in one package!
Prof. Schumann GmbH | phone +49 551 383 15-0 Prof. Schumann GmbH
www.prof-schumann.de | info@prof-schumann.de Innovative Informationssysteme
background
29
background
Once this information has been gress reports. Partners are required tract, and again by receiving a share
provided, Auriga presents the client to update this area regularly. All of our turnover.”
with a list of available debt collec- documents needed to collect the
tion partners in the claim’s target debt, such as delivery notes or cop- What happens next? Auriga’s fig-
country, including debt collection ies of invoices, can easily be upload- ures clearly point to growth. “We
companies, credit bureaus, credit ed here by the creditor and made are getting more and more enquir-
management agencies, factoring available to the contractor. “In this ies,” says Di Cerbo. Even now, as the
businesses, lawyers or investigators way we can ensure that communi- business is starting out, they al-
offering their services through the cation takes place in a unified man- ready have more than 500 partners
portal. Symbols mark companies ner,” says Pauls, “and in the selected in over 100 countries. The portal is
that are members of associations language, of course.” When the pro- well networked internationally, and
which monitor the collection of cess is completed, the partner can a member of the European FENCA
debts. “That ensures reputability,” send the invoice to the creditor, also and of the globally present Associa-
says Di Cerbo. “Partners who reg- by upload. The parties transfer the tion of Credit and Collection Profes-
ister with Auriga automati- collected funds to each other sionals ACA.
cally agree to abide by directly.
the Code of Conduct The web portal Auriga is used by creditors from the
of the Federation of “The web portal finance, insurance, logistics and
functions as an
European National functions as an in- export industries. The portal is ul-
Collection Associa- in-house solution, house solution, timately valuable for companies in
tions, FENCA.” through which the through which all sectors. “Studies show that only
entire collection the entire collec- a third of all companies worldwide
Fast, secure and process can be tion process can use external debt collectors. There is
easy be managed from enormous potential here,” says the
managed from the
the creditor’s own IT expert Pauls.
The appropriate creditor’s own desk,” explains IT
partner can be se- desk expert Pauls. It pro- Since February, there has also been
lected from this list, and vides businesses with an interface available for transfer-
a contract can be awarded interfaces to the most com- ring large debt packages. This allows
directly. Alternatively, there is an monly used ERP systems. The portal mass debt collection contracts to be
“obtain a quote” field available. If is password-protected and secured assigned conveniently and securely.
the creditor clicks on it, all the part- with the latest encryption methods. “The whole thing works with do-
ners in the list are asked to pro- All data is saved securely in an ex- mestic claims too, of course, which
vide a quote for the claim supplied. ternal data centre. In the event of can be offered through Auriga to
“Within a few days the creditor will any problems, a telephone hotline is various debt collection companies
receive a number of offers to choose available. in a national pitch,” explains Pauls.
from,” explains Pauls. Communica- The quality and user-friendliness of
tion takes place through a mailbox Free to creditors the portal is also constantly being
system in the personal section of tested. “Auriga is continually being
the website. The system provides a As well as debt collection contracts, expanded and improved in the in-
convenient way for the creditor to there are also supporting functions terests of the users,” affirms Pauls.
distribute contracts simply by click- available such as address searches “For example, it will soon be possi-
ing the mouse. As one might imag- or debt financing products. “And the ble to use the web client to evaluate
ine, this requires very little time. All most important thing is that using partners’ quality, reply times and
the details of the offer remain in Auriga poses no financial risk to the trustworthiness. This builds trust,
the messaging system and can be creditor. Registration is absolutely which is indispensable for lasting
brought up again at any time. free of charge, as is setting con- success in an area as sensitive as
tracts.” The only costs are to debt debts management.”
The debt collection partners in the collection partners. These are 1 per
target countries can accept offers cent of the amount of the claim – a
that they receive through Auriga di- minimum of CHF 2.50 and a maxi-
rectly through the web portal. The mum of CHF 50. “A creditor also re-
debt’s collection package is filed ceives a bonus premium of 10 per
internally in the debt collection pro- cent of the partner’s acceptance fee,
cess area, through which the debt is paid by us, for each accepted collec-
now processed. Creditors can keep tion and search contract – so they
themselves informed on the collec- profit from it twice: once by award-
tion process here through live pro- ing an international collection con-
30
interview
insolvencies in Europe
Inteview with Richard Dey, Managing Director at Verband der Verein Credit
reform e.V., about Insolvencies in Europe, year 2011/12.
CM Magazine: Mr. Dey, do you think solvent services company has de-
that the economic situation of a clined. However, one in every three
country – marked by the dramatic business bankruptcies is in the ser-
crisis of the global economy – is vice sector and still has the largest
reflected in its bankruptcies? share of the insolvencies. About 10.0
percent of the bankruptcies were
Dey: There is a difference between registered in the manufacturing sec-
Central European and peripheral tor. In the other sectors, the number
countries. Most of all, the precarious of insolvencies has increased. The
situation of the economies of south- number of bankruptcies in the retail
ern Europe is reflected in insolvency: and hospitality industry is increasing
Greece, Spain, Italy, and Portugal are to almost 32.0 percent, followed by
among the countries with signifi- the share of the construction sector,
Richard Dey cant increases in the number of cor- which is increasing as well.
Managing Director Marketing, Sales porate insolvencies. Thanks to the
and International Services at relatively good performance in the CM Magazine: Mr. Dey, would you
Verband der Vereine Creditreform Central European countries like Ger- describe the insolvency situation in
r.dey@verband.creditreform.de many, France, Austria and the Neth- Eastern Europe as tense?
erlands, the insolvency situation has
adopted no more dramatic extent. Dey: The economic environment in
Eastern European states was deter-
CM Magazine: So would you say that mined in large part by the debt cri-
peripheral countries are in the sha sis and the resulting consequences
dow of the debt crisis? in the Western European countries.
And overall, the situation in the face
Dey: Well, the number of corporate of the looming difficult credit situ-
insolvencies in the EU-15 countries ation for companies is tense. Thus,
plus Norway and Switzerland has ris- the increase in the number of busi-
en in the past year to about 180,000. ness failures in Eastern Europe has
Thus, a slight increase compared increased. The largest increases
to the previous year was recorded were reported in Bulgaria, Slovenia
amongst the number of companies and Czech Republic. But on the other
affected by a bankruptcy. By histori- hand, a significant decline is regis-
cal standards, since the beginning tered in Latvia and Estonia.
of the financial crisis in 2008/09, Most bankruptcy cases in Eastern Eu-
the number of bankruptcy cases re- rope – more than on in every three –
mains at a high level. were attributable to the retail trade
and hospitality industry, followed by
CM Magazine: And do you think the share of the service sector. Al-
there is an increase in job losses of most one in five bankruptcies were
companies at risk of becoming insol- among the manufacturing sector.
vent? In Central and Eastern Europe, more
than 200,000 jobs are likely to be en-
Dey: Unfortunately, the aggravation dangered by insolvencies.
of the situation among European
insolvencies has impacted on the CM Magazine: And is a geographic
insolvency-related unemployment. difference in payment experiences
Thus, the number of impending job or, in other words, do companies
losses rose by about 7.0 percent. In in certain regions overdraw longer
Western Europe, the number of in- than in other regions?
31
interview
Dey: Well, the tendency of last year’s CM Magazine: And, Mr. Dey, as a last
figures shows that companies in point, what trend do U.S. bankrupt-
the Mediterranean region overdraw cy figures show?
the longest. The poor payment his-
tories made by export-oriented Dey: In the U.S., the year 2011 was
German companies do not seem marked by debt reduction. The num-
to be promising for liquidity of the ber of personal bankruptcies de-
Southern Companies. So one in four clined. The insolvency situation in
German companies experienced a the corporate sector was equally en-
default in payment of more than a couraging. Since 2011, the number
month when it exported goods to of companies which had to declare
Italy. Equally, Spanish and Portu- insolvency is decreasing.
guese companies were considered
poor debtors. Almost a fourth of CM Magazine: Thank you very much
German exporting companies com- for the interview!
plained about customers from Spain
and Portugal, which were above the
agreed terms by 30 days. Business
relationships to Eastern Europe were
affected by similar problems. Only
one in ten German exporters had no
objection to payment default if de-
livering goods in countries such as
Romania, Croatia, the Czech Repub-
lic or Hungary.
32
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“The economic upswing has led to a Currently, German exporters see po- for example, highlight default risks
further rise in the export ratio of Ger- tential for increasing their foreign and lengthy accounts outstanding.
man companies”, said Richard Dey, trade turnover above all in Russia/ The problem of very long payment
managing director at Verband der Ukraine, the Benelux countries and periods is also encountered by firms
Vereine Creditreform. This is shown Scandinavia, and then also in Roma- dealing with business partners in
in last year’s figures, where almost nia, Bulgaria and the Balkan states. Russia/Ukraine. Exporters experi-
half of the firms surveyed increased The specific focus depends on how ence bureaucratic obstacles above all
the export-generated share of their long a company has been in the ex- in the Baltic region, and in Romania,
sales revenues, while only few reg- port business. “For instance, German Bulgaria, Poland, Russia/Ukraine, but
istered lower year-on-year figures. firms with more than 25 years of ex- also in Italy and the Iberian Peninsula.
In particular, firms whose foreign port experience see growth oppor- A frequent additional factor in some
partners are in the wholesale/re- tunities above all in Eastern Europe of these countries is corruption.
tail sector have benefited from the and Russia. Firms with more limited
export boom, while above-average experience in the field of exports “The length of typical payment peri-
improvements in export business will next year tend to target Germa- ods varies substantially within the
are also reported by companies sup- ny’s immediate neighbours and the continent as a whole. The best per-
plying goods or services to Turkey, eurozone in general”, so Dey. formers in this respect are the Scan-
Spain/Portugal and the United King- dinavian countries, Austria, Switzer-
dom/Ireland. The biggest risks seen by German land and the Benelux states”, so Dey.
exporters are bad debts or customer Figures show that invoices sent to
Plans for further expansion in the insolvencies, and, more generally, these firms in these countries are
export field remain ambitious. In the the poor payment conduct of their generally paid within 30 days.
coming year, more than half of the European business partners. Round-
firms surveyed will seek to ing out the list of major risks On the other hand, when German
increase the export-gen- are possible exchange firms export goods or services to any
erated share of their rate fluctuations in of the countries suffering particu-
turnover. However, Expansion transactions with larly from the euro crisis, they have
this means that the of this kind will partners outside to reckon on waiting considerably
proportion of opti- the eurozone, the longer before their invoices are set-
also create more jobs:
mists has declined lack of reliable tled. The same applies to parts of
slightly. Further one firm in every business contacts, Eastern Europe. Only 20-25 percent
expansion in the four is now planning and the specific of those surveyed reported receipt
field of exports is to recruit more legal and tax con- of payment within 30 days. In the
planned especially personnel. ditions in the coun- case of Russia, Poland and the Baltic
by industrial compa- tries dealt with. In states, though, the spectrum of pay-
nies and construction this respect, there are ment conduct is very broad: whereas
firms. Expansion of this differences depending on some German exporters experience
kind will also create more jobs: the particular region being ad- comparatively short DSO (days sales
one firm in every four is now plan- dressed. An above-average number outstanding), others have to accept
ning to recruit more personnel. of companies exporting to the Bal- very long payment terms of more
tic states, Turkey or Eastern Europe, than 60 days.
34
Background
In addition to
actual payment
periods, delayed pay-
ments represent another indicator
of a country’s payment conduct.
German exporters report that in The pro-
transactions with Austria, Switzer- portion of export-
land and the Scandinavian countries, ers suffering sizeable losses
payment deadlines are exceeded in the field of receivables – losses
only to a limited extent, with more of more than one percent of their
than one third of the relevant firms aggregate export-related sales rev-
receiving payment within the agreed enues – is only about 7.5 percent of
period and delays of more than 30 all the companies surveyed. At the
days representing rare exceptions. same time, only one firm in every
In Southern Europe (Italy, Spain and five suffered no uncollectable re-
Portugal), on the other hand, the ceivables at all. One factor leading
agreed term of payment is usually to the reduction in the scale of bad
exceeded. Around one German ex- debts has been the increasing pro-
porter in every four has to be pre- fessionalization of risk management
pared for payment to be delayed by and receivables management in
at least 30 days. Tardy payments are German companies.
also a frequent occurrence in trade
with Eastern Europe, but here the “To avoid having to write off losses,
length of the delay is less severe. German firms depend extensively
In fact, German firms report that on credit checks and commercial
compared with the prior year, the reports”, so Dey. Other frequently
payment conduct of their Eastern employed protective measures are
European partners has tended to demanding cash in advance, setting
improve, whereas there has been a credit limits and responding rapidly
year-on-year increase in payment to payment delays with the help of
delays in transactions with France, an efficient dunning system.
Spain/Portugal, and also the Benelux
countries.
35
news
36
Calender
CALENDER UK www.icm.org.uk
19th March 2013 Change Management Masterclass, Birmingham
21st March 2013 Credit Risk & Compliance Masterclass, Leeds
17th April 2013 Regional Roadshow, Newcastle
14th May 2013 Credit Risk & Compliance Masterclass, Manchester
22nd May 2013 Technology Masterclass, Birmingham
6th June 2013 Regional Roadshow, Southampton
11th June 2013 Technology Masterclass, Leeds
14th June 2013 Fellow’s Lunch, London
20th June 2013 ICM Education Conference, Birmingham
37
last words
Bank regulations –
it’s now or never!
Earlier this month The Netherlands was shocked by another bank nationalisa-
tion. Four years ago the disastrous attempted takeover of ABN AMRO led to the
nationalisation of not only ABN AMRO itself, but also of the remains of Fortis
Bank (the projected buyer of ABN AMRO).
At the same time ING Bank had to be How did we get into this mess, and,
bailed out by the Dutch government even more important, how do we get
after being affected badly by the glo- out? To answer this, we can look at
bal financial crisis. Now it’s the turn the conclusions of “Inside Job”, the
of SNS Reaal, a banking and insu- brilliant documentary about the glo-
rance conglomerate, which always bal financial crisis. This teaches us
had the profile of a friendly, “small the following lessons. First of all, the
Pieter Postmus town”, midsize financial institution, banking sector has to be regulated
Manager Global Unit, but went totally off the rails after ta- again, and regulated strictly. Second,
The Netherlands at Atradius king over the real estate arm of ABN the banks should be split into smal-
pieter.postmus@atradius.com AMRO (called “Bouwfonds”) in 2006. ler, manageable entities. Investment
In the mean time we have seen one banks and savings banks should be
of the biggest fraud cases in the his- separated. Third, the “old boys net-
tory of The Netherlands, where the work” of government officials, ban-
directors of Bouwfonds turned out kers, lawyers and scientists, who
to have cheated amongst others the simply had the freedom to do what
pension fund of Philips for tens of they wanted at the expense of the
millions of Euro’s. At the same time customers of the banks, should
Bouwfonds real estate investments, be cleaned away, and new people
like the building of a whole new city should be appointed to make sure
10 kilometres outside of Luxem- we make a fresh start. So far, not
bourg city, have gone astray, leaving a lot has changed, and it will take
SNS Reaal in a position where its cus- strong international leadership to re-
tomers took away their savings at a ally make progress. Hopefully Minis-
rate of half a billion euro’s a day (yes, ter Dijsselbloem, who has recently
another good old fashioned bank been appointed as chairman of the
run), and the Dutch Minister of Fi- Eurogroup, the forum of the Finance
nance Dijsselbloem saw no other op- Ministers of the European Union,
tion but to take over the bank. This can make the necessary changes on
decision costs the Dutch tax payer European level, and by doing so, lead
another 3.7 billion euro’s, at a time the way to a new and improved glo-
when the Dutch government has bal financial system.
just announced that it will imple-
ment cut backs for a total amount
of euro 18 billion in the coming 12 Pieter Postmus
months.
38
imprint
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