Credit professionals play a crucial role in any business, ensuring that both the risks of defaulting on contractual obligations are managed, and that payment of goods or services are received in a timely manner.
The Australian Institute of Credit Management (AICM) is a member body for commercial and consumer management professionals formed with the goal of helping their members, partners, government, other related bodies and the business community to succeed in credit-related matters.
The AICM has released their Risk Report 2023 (Report) which provides a succinct and useful insight on how recent and future economic conditions are impacting credit professional's abilities to manage risk and ensure a business is paid promptly for their services. The Report draws on survey results collected from AICM members and Certified Credit Executives.
The Report provides that most credit professionals have managed the economic pressures of the last year with only around 5% noting a deterioration in payment collection performance in 2022. However, the improvement of collection in 2022 of 36% is much lower compared to over 60% in 2021.
This is not unexpected to the industry. The Australian Taxation Office is continuing to escalate its recovery action, and with cost-pressures growing exponentially, many may expect that the Risk Report 2023 would see the pressures impact customers and the performance of collections targets. These pressures are evident in the increase in insolvency by 43% from 2021 to 2022, and an increase in the unemployment rate from 3.5% in January 2022 to 3.7% in January 2023. The Report considers credit professionals are prepared for the pressures of interest rate rises and inflation as only 34% are expecting deterioration in 2023, indicating that there is confidence in their ability to mitigate these risks. To further instil confidence in managing risk, the Report provides the following key articles to assist credit professionals:
- 5 Tips to light up your AR performance when the outlook is gloomy – Eric Maisonhaute MICM
- The PPSA's role in risk management – Xander van der Merwe
- Navigating Credit Risk: A legal perspective on dealing with liquidator unfair preference claims – Christopher Hadley MICM and Andrew Tanna MICM
- Safeguarding the security of your financial data – Eugene Ostapenko
- Data encryption – benefits and risks in business – Daniel Hains
You can find the full AICM Risk Report on their website here: http://HTTPS://www.aicm.com.au/