Taking Centre Stage. The recession saw credit teams thrust into the limelight. Ceinwen Wilson, UK Head of Hays Credit Management considers what now lies ahead.
As might have been expected, credit management recruitment held up reasonably well during the recession. Even in finance teams going through redundancy programmes or headcount freezes, it wasn’t unusual for credit controllers to be exempt. In many organisations, the credit function was thrust into the limelight, with greater recognition of the critical contribution that skilled credit controllers can make to cash-strapped businesses. Some might even argue that this recognition was long overdue, and that the recession provided an opportunity for talented credit management professionals to shine.
People skills to the fore
Besides specific technical skills, software or sector knowledge, employers placed a much higher emphasis than might have been the norm in a more buoyant market on the interpersonal skills of those being recruited into the credit function. At interview, many finance directors and credit managers looked for indicators that potential recruits had the persistence and tenacity to successfully chase cash from customers, but also the commercial awareness and relationship-building skills to ensure that invoices were not chased at the expense of future business or client goodwill. In this respect, account managers and others in client-facing roles in many organisations discovered how much they counted on credit controllers to help maintain strong client relationships, or to at least avoid creating situations where clients might attempt to complain about strong-arm tactics as an excuse to negotiate prices down when their own cashflow was dwindling.
Not everyone in the credit control community could count on their job being relatively safe. The heightened focus on credit teams meant that weaknesses that were given little attention when times were good became suddenly and harshly exposed. With board directors keeping an anxious eye on the bank balance (many stressing out their credit teams with daily progress-chasing calls on specific invoices or client accounts), candidates with the most robust personalities often won through.
Nevertheless, salaries for credit controllers remained largely flat, with only a few notable exceptions. Job offers were often made at lower levels than those enjoyed by previous incumbents, meaning that, while the volume of credit vacancies didn’t plummet to the same extent as other areas within finance functions, credit controllers were less inclined to change jobs.
“The credit function was thrust into the limelight, with greater recognition of the critical contribution that skilled credit controllers can make to cash-strapped businesses.”
Today, salaries and candidate confidence are both rising. Credit risk analysts in particular are enjoying a sharp rise in demand for their skills, with FDs (especially in large organisations) keen to take greater preventative steps to avoid bad debts, and sales directors anxious to protect business development teams from investing time and effort in securing potential high risk accounts.
The SME sector is also changing how it regards the role of credit controllers, who often also assume responsibility for the sales ledger, invoicing and account reconciliations. In fact, the variety and breadth associated with credit roles in SMEs (as well as greater contact with senior management and other areas of the business) form a large part of their appeal for some candidates.
The Institute of Credit Management (ICM) qualifications are becoming increasingly important, with employers respecting the technical knowledge ICM graduate members bring to the table – this includes credit policy, strategy, risk management, compliance, process involvement, legal proceedings and insolvency and they recognise the commitment it implies on the part of the individual
Brighter Horizon's - The ICM's Perspective. Philip King, chief executive of the Institute of Credit Management, says ICM members who helped businesses weather the storm of recession are well-placed to play key roles as growth returns.
Effective credit management has always been one of the most critical factors to ensure profit-making firms stay in business. So it was no surprise – throughout the recession and since the economy started rebuilding – to hear regularly about ICM members bearing a relatively greater burden in the workplace than they might have been used to in less straitened times. Cash-flow assumes a heightened importance when times are tough; senior credit professionals with a deep understanding of the credit and financial issues that arise during recessions, and the gravitas and commercial sense to command attention in the boardroom, were able to help their employers withstand a sudden downturn in fortunes.
Many finance chiefs made it a priority to secure the services of talented credit managers and collections teams at the outset of recession. Yet others continued to take risks, entrusting vital credit control duties to staff without specialist skills or knowledge, and leaving them to get on with it, even when deeper skill sets were called for. Enlightened finance directors and business owners knew they would need to rely more heavily on their credit managers; many also recognised the value of investing in developing the skills of less experienced credit controllers, realising that the cost of elementary training could often be more than recouped, sometimes in double-quick time.
“Many also recognised the value of investing in developing the skills of less experienced credit controllers, realising that the cost of elementary training could often be more than recouped.”
Sudden falls in revenue call for urgent action on the part of heads of finance; they also provide opportunities for respected and authoritative credit managers to play crucial roles, acting as trusted advisors to the business.
Indeed, many of our members were able to more proactively help their employers verify the creditworthiness of new customers – often giving sales teams a crucial reality check at a time when judgments about the risks associated with potential revenue streams had to be made quickly and confidently. Switched-on credit managers not only helped to prevent riskier transactions taking place; they also moved to act before client-facing colleagues made their initial approach, minimising time-wasting and even generating warmer local leads. Moving forward, better equipped.
Within SMEs, credit controllers often carry out quite different roles. Many have a wider remit (perhaps overseeing the sales ledger or performing certain customer service tasks) or work within a more loosely structured finance function. This can be an advantage – in lots of ways, some of them will have emerged from recession with a more diverse skill set and a better sense of the business context in which they and their employers operate. Having that end-to-end exposure can create more opportunities for them to add value to the business (while shrewd heads of finance may identify additional ways to provide incentives for top performers).
Most of us recognise the payback from investing in training. At the ICM, we’re already experiencing an uptake in our professional qualifications, while more employers – large and small – are consulting us about how to generally develop their teams, or how to gain official ICM accreditation for their existing development schemes. That’s a good sign – for the many people who thrived on the challenges of the last few years and now wish to bed down their credit management career, and for the businesses that will enjoy the resulting benefits in cash-flow stability, and in staff loyalty and motivation.
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At Hays Accountancy & Financeour consultants equip SMEs, large corporates and public sector employers nationwide with bright finance talent on a permanent and interim basis.