Economy Still Top Concern for Credit Professionals

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February 15, 2011: Columbia, MD-"The state and future of the economy" was the most popular answer in the National Association of Credit Management's (NACM) Monthly Survey for January, which asked "As a credit professional, what are your biggest concerns for 2011?"

Nearly 40% of respondents voiced their ongoing concern with the state of the economy, while the next most popular answer, "slow payment, delinquencies and general customer creditworthiness," received 22% of the votes. Another 10% of participants said their greatest concern was "larger companies dictating unfavorable terms," while 7% said they were most worried about their "job security or the future of [their] career."

Issues such as the international market, the perception of the credit department as a cost center and the process of complying with federal regulations garnered a negligible amount of votes, with each receiving less than 5%.
The top two concerns seemed to go together, as respondents noted that the economy will affect their company's business as much as their customers' ability to pay. "The economy plays a large role in my concern for 2011 with regard to customers, so those two categories should go hand-in-hand," said one participant. Indeed, many seemed to still be waiting to feel the effects of the current uptick in economic indicators. "The state of the economy affects sales, which in turn drives budgets and collections and bad debts," said another participant. "While many of the other concerns exist, it's all about the economy; a rising tide raises all boats."

Political concerns also were hot items among respondents, both in terms of the especially caustic atmosphere in Washington, DC and the recession's devastating effect on local governments and their willingness to pay. "Political bickering, things like the so-called Obama-care health plan and tied-up bank lending policies cause business owners to remain ultra-conservative rather than expanding business opportunities and investments. There is very little confidence to build upon," said one respondent. "Many jobs are either directly or indirectly linked to a government entity, which creates some concern in the payment process as aging of accounts from a state level continue to come in slower than previously experienced," said another.

Regulations were also of concern, and many noted this would've been their second choice after the overall state of the economy. "Meeting government regulations would be right at the top of the list," said one participant. "We manufacture commercial industrial mowers and for 2011 most of our mowers had to be redesigned to meet government regulations. New fuel tanks, fuel tank caps and engines were required."

Comments about the perception of a credit department in a company were usually accompanied by the standing threat of outsourcing of the credit function, which many seemed to associate with a fundamental misunderstanding of credit's role. "Having just gone through a merger, I am concerned with the overall perception of the credit department and the value of keeping the department in-house as opposed to outsourcing," said one respondent. "I see a need for us to better sell our value to the sales organization," said another. "We seem to have lost that over the last couple of years because of the lack of large bankruptcies."

Often the unsung drivers of the world's business, credit and finance professionals must have the skills to be able to gauge the difference between fact and fiction, hope and charity, and faith and foolishness. The judgment of credit executives and chief financial officers (CFOs) is integral to the corporate world. Their job is to manage financial risk.

This year, credit professionals from around the globe will again gather at NACM's Credit Congress to enhance their capabilities as credit, risk and financial managers and, on the whole, return to their companies more valuable than they were when they left. Held in Nashville, Tennessee on May 22-25, NACM's 115th Credit Congress and Exposition will offer targeted education sessions and executive-level forums in its continued effort to help credit professionals position their companies for growth in the recovering economy. Educated credit professionals lead to greater accounts receivable turnaround and, hopefully, a shift in the perception of the credit department from a cost center to the revenue generator that it can be.

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NACM, headquartered in Columbia, Maryland, supports more than 16,000 business credit and financial professionals worldwide with premier industry services, tools and information. NACM and its network of Affiliated Associations are the leading resource for credit and financial management information and education, delivering products and services, which improve the management of business credit and accounts receivable. NACM's collective voice has influenced legislative results concerning commercial business and trade credit to our nation's policy makers for more than 100 years, and continues to play an active part in legislative issues pertaining to business credit and corporate bankruptcy. Its annual Credit Congress is the largest gathering of credit professionals in the world.

NACM has a wealth of member experts in the fields of business-to-business credit and law. Consider using NACM as a resource in the development of your next business story.

Source: National Association of Credit Management

Contact: Caroline Zimmerman, 410-740-5560, carolinez@nacm.org

Website: www.nacm.org

 

 

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