Biggest Trade Credit challenges identified for 2019 by NCI Brokers, ICBA Broker Partner Australia

NCI Brokers recently conducted their client survey asking CFOs and Credit Managers to relay their biggest challenges ahead.

The four main challenges were categorised into the following:

1. Time to manage and assess new customers and increasing credit limits. It would seem a trend within credit teams is managing time to assess new accounts and existing customers. A number of responses highlighted the difficulties in allocating enough time to ensure assessments are made at an in-depth level.
2. Keeping customers to payment terms and implementing stricter Policies for late payers. A considerable amount of responses in the survey focused on slow payments and collection actions.
3. Obtaining the required credit insurance cover. Many responses commented on the ability to obtain Trade Credit Insurance coverage had improved over the past year. However, obtaining the full credit limit remained a challenge in some instances.
4. Getting paid on time. The bulk of the challenges link to comments relating to customers not paying on time/late payers. NCI’s collection statistics over the past 12 months show that the level of late payers has increased in Australia and New Zealand.

Kirk Cheesman, Managing Director, commented: “For the first time, there were challenges relating to specific insolvencies such as RCR Tomlinson. Obtaining cover in ‘tricky spots’ in countries such as Argentina, Pakistan and Algeria were also noted as future challenges.

“Interestingly, Brexit was highlighted by a number of respondents surrounding the unknown outcomes. Similar to previous years, the challenges acknowledge why credit management is a key part of any business. Working hard at the front end to analyse good credit risk and setting stringent Policies in collecting monies on time are important areas to focus on. NCI’s new ‘Top Up’ offering should assist in one of the challenges over the next year to obtain the full cover required.

“Regardless of the challenges facing your business, having the right resources, information, and protection in credit risk management is worthy of a strong focus in 2019 and beyond.”