04th July 2014 Posted by Warren Paull
As many companies continue to expand their products and services, credit managers struggle with increased scrutiny and expanded responsibilities; the demand for these key executives to contribute to the success of the organisation is higher than ever. They are depended upon for business intelligence, data analysis, effective forecasting and management of working capital, but in a world of constant financial change and evolution this is not without its challenges. Some of the largest current responsibilities in credit management are: moving from tactical to strategic management of working capital, accurately recording and taking advantage of big data, and uncertainty about the economic environment and how fluctuations may affect future business.
Efficient and Effective Working Capital Management
Executives of large UK companies are now thinking outside the box in response to the current period of budget austerity. It is often said that you can lose money for a certain amount of time but you can only run out of cash once. For the majority of companies, credit managers are burdened with the responsibility of managing the firm’s single largest asset. However, the potential to add value through continuous improvement to the receivables management process can become a key factor in the development of the firm’s economic value. At the same time, businesses need to move beyond the day-to-day activities to achieve a more positive outcome. Being able to efficiently and effectively manage working capital along with the shift from tactical to strategic management increases performance and accountability by allowing managers to monitor and adjust as required.
Harnessing Big Data
There is no doubt that finance functions are also intensifying; responsibilities are being expanded and companies can no longer rely on doing things the way that they have always been done. This is why many organizations are moving in the direction of using vast amounts of data to provide a sharp competitive edge.
The role of IT has been leading across the global economy and it is a subject that dominates short, medium and long term strategic planning. Big data is seen as a way to improve productivity and efficiency at every level of the organization. The main priorities for the next decade are to apply techniques that offer effective harnessing of business intelligence and analytics. Also needed are new skills for change and project management. Any credit manager can increase their value if each challenge is viewed as a learning opportunity that has the potential to result in innovative thinking, new technologies and integration.
Uncertainty about the economic environment is a factor still overshadowing many organizations across Europe and the rest of the world. Many credit managers are still walking on thin ice- it is the biggest challenge we face today.
With the economy, regulation and the constant changes to the tax system, there is no doubt that there is plenty to be uncertain about. Fluctuations in business confidence continue while the fiscal crisis of some euro area members lingers; a strong euro due to a few thriving economies is creating an unpredictable business environment where good news can quickly turn to bad news.
Overall, uncertainty remains high, but some see opportunities to improve internal procedures to help organisations mitigate their own uncertainty. Finance executives who learn to more accurately forecast future events can easily identify challenges and take advantage of the situation. This is where MoretonSmith comes in, allowing companies to continually measure, analyse and model every action that the client takes.
Success is achievable even in uncertain times. As we know, the coming year will bring many challenges for both organisations and finance executives, with slow growth and consumers becoming ever more demanding. But, if success is achieved in the form of intelligent mitigation of risk, increased operation efficiencies, innovative thinking and integration, together, we can face the changes that present themselves and use them to our advantage.