We've only just got over the surprise of the Conservatives winning a majority last year when we're shocked again by the result of the EU Referendum. The 2015 general election took politicians, pollsters, and civil servants by surprise, and the momentous result last week seems to have done the same.
Almost every business person, civil servant or journalist I've spoken to since last Thursday had acknowledged an 'out' vote was a possibility but genuinely didn't believe it would happen. Nor, I suspect, did many of us foresee the ramifications for domestic politics straight after 23rd. We're in tumultuous times, and it'll be a brave person who says they know what lies ahead.
It is in times of uncertainty, as we saw in the financial crisis of 2007/2008, that the true value and meaning of credit management comes to the fore, and the positive impact that credit managers can have is seen. Keeping the cash flowing is more important than ever. I heard Ron Emerson, the Chairman of British Business Bank, recently say at an event that businesses go bust in a day, when a vital cheque doesn't arrive. He was right, and we know the truth of those words better than many.
But, and particularly in turbulent times, it isn't just about cash. Credit management adds huge value across the business. Knowing our customers, our customers' customers, and the markets in which they operate will help us price risk and make good decisions. Knowing the strategy and direction of our own business will help us look for, and find, creative ways of doing business with high risk customers that might otherwise have to be avoided. Knowing the state of the macro economy and recognising the impact of changing conditions will help us keep ahead of our competitors.
Good credit professionals take a wide and multi-faceted view of their world. They understand the impact of stock markets, interest rates, trade deficits, currency fluctuations, and so much more, on their business and the business of their customers. They monitor these things, and they adapt and flex their credit policy and approach, to meet the needs of the market. Our recent press release about BHS and the reduction in losses that, in many cases, could have been achieved through good credit management, highlights the importance of being close to customers and really knowing them. And threats come from the external environment too; they need to be watched just as closely. (The press release can be seen here).
Members of the Institute who qualify to put professional letters after their name have demonstrated their competence and professionalism, and they understand the world in which they operate. That's why they are in demand, and will increasingly be sought by astute businesses who recognise their value. That's also why we're seeing an increase in demand for our qualifications, training and expertise from all continents across the world.
There are plenty of commentators reviewing, analysing and predicting what will happen post-Brexit, and they're better qualified than me to do so. As far as I'm concerned the only economic certainty right now is that the future is uncertain. There is, however, one fundamental certainty which I can talk about with absolute confidence. Businesses with best practice credit management will fare better than those without.
Good credit management professionals are worth their weight in gold, and more besides.
Philip King FCICM
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