Credit management trends in 2012: Internationalization perceived as the greatest challenge

Munich, 23 January 2012 – At a variety of levels, from overcoming the crisis in the euro to expanding individual businesses overseas, the increasing internationalization of the business environment will be the most significant theme for credit management in 2012, according to experts in the sector. This was revealed by a survey carried out last year by GUARDEAN, the international supplier of software products for customer risk and credit management. In order to be able to correspond to the needs of an international credit management function, many companies are aiming to develop and professionalize their processes on a constant basis in 2012.

The world is becoming a smaller place and this is posing new challenges to credit management in particular. As companies develop worldwide business relationships and expand overseas, the political, legal and cultural framework of each country will have an impact on the way those companies practice their credit management. Factors including culturally-driven payment habits, the legal framework, and domestic data protection regulations must each be incorporated into their processes. According to the survey carried out by GUARDEAN at the annual federal congress of the German Credit Management Association (Bundeskongress des Bundesverbands für Credit Management e.V. BvCM) and the credit risk and receivables management summits (Kreditrisiko- und Forderungsmanagement Tage) organized by Deutsche Kongress last year, industry experts are convinced that the issue of internationalization will be of great significance to credit management in 2012.

“Due to globalization, events or crises in one country can have repercussions for companies in other countries. A clear example of this is the way in which increasing levels of government debt are being reflected in the payment behavior of customers in the relevant countries. Small and medium-sized organizations may swiftly find themselves having liquidity problems as a result. A professional credit management system is therefore vital for ensuring that safe credit decisions can be made on an international level. This would include, for example, the implementation of an early warning system to help companies react swiftly to local changes at customer-level”, commented Dr Michael Sauter, CEO of GUARDEAN GmbH.

Companies have recognized the need for a professional credit management system and have placed the optimization of individual processes within this system squarely at the top of their agendas for 2012. Other challenges mentioned by participants in the survey included improving the collaboration between Credit Management and Sales, making effective use of credit agencies, evaluating suppliers reliably and further developing the assessment of existing customers.

“We can see in practice that companies are placing increasing value on having professional credit management systems – not only in Germany, but throughout Europe. This is also being driven forward by numerous subsidiaries of major companies across Europe, who increasingly want to implement a consistent set of credit guidelines within their group. At the same time, however, country-specific requirements must also be fulfilled. Credit management software provides an important foundation for this, as it enables the core day-to-day business processes to be implemented, reduces manual routine tasks and guarantees a given level of quality and professionalism within the credit management function group-wide – whilst simultaneously factoring in country-specific requirements”, added Sauter.

Support also comes from the EU, which has recognized the difficulties in practicing international credit management and published a directive entitled “On combating late payment in commercial transactions”, which must be transposed by its member countries into national law by March 2013. With a shortening of the payment period to 30 days in principle and the introduction of a lump-sum contribution towards recovery costs for late payments, the aim is to standardize and simplify cross-border receivables management. This should make companies’ payment flows more predictable in the future and improve payment behavior throughout Europe.