The Six Criteria for Best Practice in Credit Management. Chris Sanders, QiCM

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1 The Six Criteria for Best Practice in Credit Management Chris Sanders, QiCM

2 The 6 Criteria for Best Practice in Credit Management Chris Sanders MICM Head of Accreditation QICM Premium Partner Corporate Partners

3 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

4 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

5 QICM Criteria 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 noncompliances monitored?

6 Customer Services QICM Criteria 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?

7 Performance Measurement QICM Criteria 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 Set Tolerance Levels for KPIs Trend! Value Maintain Measure In Tolerance Band Time Early Identification

8 Stakeholder Management & QICM Criteria 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?

9 Some of the 29 QICM Accredited Companies

10 International QICM Objectives: Now Underway! 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.

11 QICM Best Practice - Process Credit Strategies Set Tolerance Levels for KPIs Trend! 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 Value Time Maintain Measure In Tolerance Band Early Identification 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

12 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

13 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

14 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

15 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

16 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

17 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 ( 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

18 The 6 Criteria for Best Practice in Credit Management Chris Sanders MICM Head of Accreditation QICM chrissanders.qicm@icm.org.uk +44(0)7747 Also on QICM_CreditExc_6criteria_ ppt Credit Excellence Workshop 23 rd April 2013 Premium Partner Corporate Partners

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