SYDNEY – 15 October 2021 – National credit managers are optimistic about the future as effectively adapting existing credit management processes has enabled them to minimise the potential COVID-19 impacts in at-risk sectors, according to a survey conducted by global data, analytics and technology company Equifax.
Released today to coincide with the 2021 Australian Institute of Credit Management (AICM) Conference, the tenth annual Equifax National Credit Managers Survey 2021 assesses the evolving role of credit management in Australian businesses, against the backdrop of a decade of year-on-year insights.
“The overall temperament of credit managers is upbeat, with many weathering the COVID storm with minimal impact to their business activity and customers. Balancing commercial drivers with early lessons about customer experience from the pandemic has helped credit managers to take on the future with refreshed optimism,” said Scott Mason, General Manager Commercial, Equifax.
“It’s great news that credit managers across Australia are taking a more holistic view of their customers and their own processes. We’re seeing this shift in perspective and capabilities amongst our own members, which we’re confident will help them to future-proof their business,” said Nick Pilavidis, Chief Executive Officer, Australian Institute of Credit Management.
Minimising the uneven, adverse impacts of COVID-19
While the impact of the global pandemic across different industries has varied, credit managers overall reported a measured response that balanced their business’ risk appetite with supporting customers and staff when reviewing credit management processes over the past year.
Over three quarters (76%) of respondents said they did not increase discretionary limits during COVID-19, while one in five (20%) respondents said increasing review limits had been the single biggest impact of the pandemic on their company, closely followed by hiring staff (18%) and delayed payments (16%).
Survey respondents also shared insights on their customers’ perspective, advising that their customers’ main concerns when discussing future collections were making partial payments (27%) or defaulting payments (20%). To help allay these concerns, almost a quarter (23%) of respondents implemented new technology to communicate with customers, such as SMS notifications to cope with the closure of a call centre.
During this period, credit managers reported that the pandemic’s impact was not as volatile as expected. Over half (51%) of credit managers said their company was able to operate at the same capacity during the pandemic, while over three in ten (31%) were able to operate at an increased capacity.
“Our conversations with credit managers and these survey results show that the pandemic has tested the rigour of and inspired confidence in current credit management processes. While many credit managers were more stringent on limit increases at the outset of the pandemic, this has eased as credit managers have learned quickly how to navigate pandemic-related risks and taken a more human-centred approach to help customers return to standard terms,” said Scott Mason.
A positive outlook for the future of credit management
When looking ahead, most credit managers trust that their business’ current credit management processes and customer confidence will result in timely collections. Two thirds (67%) of respondents say they are very confident that existing processes will support their business over the next six months, either through prolonged domestic COVID-19 lockdowns and the economy reopening. When considering their customers, almost nine in ten (88%) of credit managers are confident that customers will be able to navigate the next six months effectively.
Digitisation and automation will be key focus areas for credit managers in future, as many look to enhance customer engagement. The survey revealed credit managers will prioritise reviewing their credit management processes particularly relating to automation (36%), collections processes (31%) and communicating with customers (24%) in the coming months.
“While there has been some disparity in credit management behaviours over the past year, depending on the level businesses operate in regions impacted by COVID, the decade-long trend of leveraging technology, digitisation and automation for future processes remains as a key driver. Core activities such as collections activity will continue, but the appetite to progress digital transformation roadmaps and shift focus to other aspects of credit management, including improving the cash to conversion cycle, digitisation and automation, and tackling sophisticated default enquiries, has certainly grown,” said Scott Mason.
The survey further reveals that credit managers are working to build a more holistic perspective of the people behind commercial entities alongside a more robust understanding of risk management.
A strong portion of credit managers (39%) said they now monitor high risk customers more closely as a result of the COVID-19 pandemic, and just over one in five (21%) have increased account reviews in the past twelve months. However, one in ten (10%) have reduced credit terms in the past twelve months, suggesting that more proactive monitoring stems from wanting to support customers with addressing credit risk head on, rather than collecting outstanding debt.
While DSOs have remained at a similar level as last year (49%), survey respondents over the previous ten years have shown a gradual improvement in DSO performance.
Tempering positive outlook by moving from credit management to risk management
Credit managers also revealed they are tempering their overarching outlook with broader risk management considerations to protect their business and customers.
Staying on top of regulatory and compliance changes was the leading concern amongst credit managers, with cybersecurity management (33%), risk management requirements for systems reviews (31%) and managing digital transformation (20%) identified as key regulatory areas that credit managers expressed a need for further clarity on to maintain compliance. Regulatory concerns were closely followed by concerns relating to changes to PPSR registrations, lower quality of credit applications, and adapting to automated solutions for collections activity.
“We’ve invested in risk management over the last twelve to eighteen months, which was certainly useful to have. It helped us work quickly, make better decisions, and manage considerations around larger credit limits where there was a risk amongst customers without sales of their own to meet,” said Tony Pilimon, National Credit Manager, Rexel Holdings Australia.
When reflecting on the short-term, respondents said their primary areas of concern over the next six months were getting employees safely back to the workplace (35%), increasing focus on digital/automation (15%) and managing collections activity (16%).
Encouragingly, only a small portion (14%) of survey respondents said they did not feel current government support schemes would be adequate to support the business through another round of COVID-related lockdowns.
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