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The Six Criteria for
‘Best Practice’ in
Credit Management
Chris Sanders, QiCM
Corporate Partners
Premium Partner
Chris Sanders MICM Head of Accreditation – QICM
The 6 Criteria for ‘Best Practice’ in Credit Management
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
• 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 Criteria
Performance 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 Measure
In Tolerance Band
Set Tolerance Levels for KPIsTrend!
Early IdentificationTime
Valu
e
Maintain Measure
In Tolerance Band
Set Tolerance Levels for KPIsTrend!
Early Identification
QICM Criteria Stakeholder 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?
Now Underway!
International QICM
• Objectives: o Provide International recognition of ‘Best Practice’ in Credit Management
o Improve standards and awareness of excellence in Credit Management
o Create a network of International Companies who share ‘Best Practice’
• Approach: o Assessments performed by Senior Credit Management Professionals
o Mixture of document reviews, conference calls and site visits
o Recommendations of accreditation ratified by senior officers of the ICTF
• Deliverables: o ICM & ICTF branded reports, awards and certificates
o Accreditation renewed every 2 years
o 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 Measure
In Tolerance Band
Set Tolerance Levels for KPIsTrend!
Early IdentificationTime
Valu
e
Maintain Measure
In Tolerance Band
Set Tolerance Levels for KPIsTrend!
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
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
Corporate Partners
Premium Partner
Chris Sanders MICM Head of Accreditation – QICM [email protected] +44(0)7747 761641 @chrisQICM Also on QICM_CreditExc_6criteria_20130423.ppt
The 6 Criteria for ‘Best Practice’ in
Credit Management
Credit Excellence Workshop
23rd April 2013
