January 18, 2024

Automation can help streamline repetitive tasks, reduce errors and ensure timely responses, improving overall credit management. A recent eNews poll brought light to the fact that 65% of credit professionals do not leverage automation for their credit and collections processes. Surprisingly, of the 35% who do, only 21% are satisfied with their automation or technology vendors, leaving room for opportunity for improvement.

NACM’s Expo is the vital nexus for credit professionals to learn about the latest industry tools and trends while also discovering new tools. Whether it’s your first or 50th time attending Credit Congress, it’s crucial to understand the value of being able to easily learn about and compare the offerings of a plethora of service providers supporting the credit profession with technology.   

In one convenient location, credit professionals can find an abundance of automation and artificial intelligence (AI) tools. “I found vendors and tools that improved automation for the credit decision-making process and the customer onboarding process with functions such as reaching out to references and setting up customers,” said Christopher Finley, CICP, global credit analyst at Club Car LLC (Evans, GA). Exploring tools that can improve credit processes or department procedures is also a benefit. “I think it’s very important as a credit professional to see what new tools that are out there can help your department and company become more efficient and improve collections and cash flow,” said Michelle Achondo, CBA, CICP, director of credit at American Fast Freight, Inc. (Fife, WA). 

The automation tool that works best for your department will depend on the size of the company and number of customers. NACM’s Expo is the perfect venue to learn about what each vendor has to offer while also listening to the conversations of each service provider with its current users—whether you are not satisfied with your current automation company or are starting from scratch.

“We've vetted several different vendors but the one we found at the Expo Hall is probably the most respected,” said Carl Davidson, director of credit and collections at Blue Water Industries LLC (Jacksonville, FL). “We use the automation vendor for our cash applications, collections and online customer portal, which is very easy to deal with and responsive to any requests we have. 

Credit managers can see live demonstrations at the Solutions Hub, a learning forum in the hall, for a more intimate learning experience. “At the Expo Hall, we saw a demo on an automation platform for credit reviews and writing dunning letters, which is increasingly helpful as our team members need time to work with customers on issues with their accounts,” an NACM member said. “I believe that more credit professionals will need to be more creative and flexible with customers and decision-making by leveraging software that takes the more menial processes out of our day-to-day so we can work on more complex tasks.”

Vendor or supplier vetting processes vary for each company, so it’s important to take the necessary steps to avoid any issues in your department or others. Harry McLaughlin, CICP, process improvement manager at Continental Tire the Americas, LLC (Fort Mill, SC) works for a large company in terms of structure, which requires an extensive onboarding process for vendors and suppliers. “We do a comparative analysis when looking at multiple vendors for what's being offered versus pricing,” he said. “We also work with global procurement, collections, AR, sales, customer service and IT whenever anything new is being integrated or replacing an existing system.”

While exploring the Expo, you are guaranteed to run into tools that you may use or never even heard of that can improve many aspects of your job. Even though you may use a vendor’s tools or services, it doesn’t mean you can’t discover a new process with them. “My company made a decision on a collection software several years ago and we used the vendor contacts I obtained to schedule demos and ultimately make a final decision,” Achondo said.

NACM’s Expo is more than an exhibition—it’s a social event. Credit professionals can reconnect with colleagues or long-time friends. But it’s also a time to network with others and make connections to advance in your career. “It’s nice to meet in person with people that you may have spoken with on the phone or emailed like representatives from NACM’s National Trade Credit Report and other reporting agencies that I’ve worked with,” Achondo said. “I was also able to speak with various vendors, see short demos, collect information and contact information and after the conference schedule more in-depth phone calls with the vendors.”

Whether you’re casually browsing or have a specific agenda in mind, you have the rare opportunity to see how systems work in real-time and in-person. “The tools and cutting-edge technology presented at the Expo Hall helps credit professionals sharpen their credit skills and be a greater professional with the added value they provide,” said John Zummo, CCE, CICP, senior manager of industrial credit at PCS Admin USA Inc. (Nutrien) (Deerfield, IL). “It is also very interactive as the suppliers try to engage everybody with games and activities.”

With a surplus of new tools and processes, credit professionals can see which will work in their credit department. “If you are already using one of the vendors, this is a great time to meet them face-to-face or to test drive a new version of the product that has not yet been released,” said Philip McCraw, CCE, senior credit risk specialist at Southwest Power Pool, Inc. (Little Rock, AR). “If nothing else it’s great to stop by the vendors to chat and find out about their products, and a lot of them have great little giveaways that have their contact information so you can follow up with them afterwards.”

The bottom line: NACM’s Expo is a critical platform for credit professionals to discover innovative tools, enhance their processes, network with peers and vendors and gain hands-on experience with emerging technologies in the industry.

For more information about Credit Congress and the companies on the Expo Floor, visit our website. If you would like to discuss technology and automation with other credit managers, consider joining NACM’s Technology Thought Leader Discussion Group.

Total bankruptcy filings increased 18% year-over-year in 2023—likely due to high interest rates, maturing business loans and inflation. Chapter 11 bankruptcies increased 72% year-over-year and Subchapter V filings rose 45%, according to a report from Epiq. “While representing a substantial year-over-year increase, total bankruptcy filings remain lower than the pre-pandemic total of 757,816 recorded in CY2019,” the report reads.

Financial conditions eased in Q4 of 2023, with the Federal Reserve pausing rate hikes, but what does this mean for the bankruptcy landscape in 2024? Many expect insolvencies to continue rising despite possible rate cuts.

What they're saying: Experts agree that the increase in bankruptcies will most likely have a back-end impact on the credit industry. “I think in 2023 we already saw an uptick in bankruptcies and will continue to see that uptick in 2024 due to a number of factors,” said Jason Torf, Esq., partner at Tucker Ellis LLP (Chicago, IL). “We’ll see most of the impact on real estate and commercial lending, Subchapter V filings and lasting impact of high interest rates. Businesses might be unable to refinance that debt, so insolvency events are more likely with respect to all businesses—whether small, midsize or large—further triggering an uptick in bankruptcy-like events.”

Real Estate and Commercial Lending

With 16% of companies being fully remote, and 83% of the global workforce in a hybrid work model, there has been a large rise in vacant office buildings. Delinquency rates for office loans were at their highest rate in mid-2023 (2.8%) since the pandemic began, according to finance analytics from Trepp.

“Tenants have the buying power and are taking up less space, so we’re going to see the glut of empty space in commercial office buildings all over the place,” said Torf. “In some cases, landlords may not be able to service their debts leading to more commercial office building owner bankruptcies or distressed events to a lot of commercial office properties.”

Why it matters: The increase in bankruptcies will most likely have a back-end impact on the credit industry. Credit managers will need to remain vigilant in their financial analyses. Some credit professionals recommend taking a close look at profit margins as 2023 year-end financials roll in. “You must look specifically at that interest expense line item and compare that number to the prior year,” one credit manager explained during NACM’s Thought Leadership Discussion Group. “Most companies will have profit margins that virtually stay the same, but in some cases, they could have a multimillion dollar drop in higher interest costs. They can have the same amount of debt, but the interest cost will be much higher.”

Credit professionals should always consider the financials of potential, new and existing customers. Interest rate increases are the common denominator in most risk-inducing impacts, so staying proactive with your customers is key. “The early bird gets the worm,” Torf said. “Being proactive is going to be incredibly important for 2024. If your customer is paying late at all, you want to get to the bottom of it, and quickly, before you keep shipping new goods or providing new services. You don’t want to be the largest creditor in a customer bankruptcy.”

Despite the rising bankruptcy rates, proactive measures such as revising credit policies and establishing credit limits could help mitigate financial risks for businesses in 2024. “You want to make sure to follow the policy and stay on top of those things early and often,” said Torf. “Demand to review the policies in the first quarter of this year given the potential uptick in distress as 2024 progresses.”

In today’s workplace culture, staff needs to know they matter and that they make a difference. Every member of a company wants their voice to be heard and more importantly, want their work and their presence to be valued. It can be a challenge to make everyone on the team feel appreciated, especially in larger teams, as everyone has their own way of feeling appreciated.

Why it Matters: By learning about the different ways you can show appreciation for others, you not only improve your employee’s confidence, but make for a more efficient credit team.

By the numbers: According to a 2023 Snappy Workforce study, 80.5% of American workers report they feel their contributions at work are recognized. 20.4% shared that they very rarely or never feel appreciated at work. “The people whom workers are most eager to seek appreciation and recognition from include their direct manager or supervisor (47.7%), their company CEO (17%), their peers (16.5%) and team members they directly manage (14%),” the report reads.

What credit managers are saying: Employees who feel like they’re valued are more engaged, more productive and more likely to stay long-term, said Rita Milano, CBA, district credit manager at Hajoca Corporation (Baton Rouge, LA). “The ultimate benefit to employees feeling valued is their ability and eagerness to not only get the job done, but to go above and beyond,” she said. “Valued employees bring new ideas to the table, driving innovation in the credit department. They also have trust in their employer leading to less stress, less anxiety and more confidence in their job.”

All employees want to feel valued, but each generation in the workplace needs to be shown appreciation differently. According to the Snappy Workforce report, when it comes to daily motivation for American employees, 1 in 3 (30.4%) surveyed report money and compensation as their top motivating factors. The generations who were all over-indexed on money as their primary motivator were:

• 33.2% of GenZ, often called Zoomers, ranging in age from 18-24
• 35.6% of GenX, ranging in age from 45-54
• 33.3% of Baby Boomers, aged 55+

Although these statistics are helpful, not every member of each generation will appreciate a single form of appreciation. You must still understand how your employees like to feel appreciation—whether that’s public recognition, private recognition or constant feedback. “Once you understand what matters to them, you can make more of an impact,” said Erica White, CCE, regional credit manager at Ferguson Enterprises LLC (Addison, IL). “If an employee is primarily motivated by increased compensation or title, make sure they understand where they are on that path, what is available to them and what they need to work today. I’m also big on birthday recognition and taking the time to say thank you for a job well done. It's amazing how a simple thank you can go miles.”

Sometimes helping employees see the impact of their work makes them feel like they matter. Harvard-trained psychiatrist Gabriella Kellerman suggests that managers use a “Mattering Map,” a map of concentric circles, where managers can show the ripple effects that each employee’s work has in the organization and beyond. “The manager should reach out to people in each of these circles to get stories about their work outcomes and how they use the work done by that specific employee or team,” Kellerman told CNBC.

Showing appreciation to remote employees needs to be consistent with in-person team members. “There already tends to be friction between employees that come into the office on a daily basis versus those who get to work from home,” said George Demakis, credit manager at Scafco Corporation (Spokane, WA). “I communicate regularly with the one remote employee that I do have and give her the freedom to work from wherever she happens to be at the time. She appreciates this freedom and flexibility and I believe that keeps her engaged.”

An employee who feels unappreciated, unseen or unheard will not produce the same results as an employee who feels valued, said Kyle Kern, AR specialist at Outdoor Research (Seattle, WA). “The more support an individual feels, the more output they’re willing to produce. It’s in the best interest of the employer to listen to the needs of their employees.”

“I believe the pandemic has taught us that acquiring and maintaining talent has gotten increasingly harder as people re-evaluate their wants and needs,” Kern added. “Potential employees have gotten bolder in expressing their requirements in a job and as an employer it’s our time to listen and adjust where possible. Being willing to meet, or at least move closer to where the employees are at this time is the best chance of a win-win outcome and the employee will be happier.”

Conflict is unavoidable. It can arise at any moment in your personal life and professional settings, whether between peers or even within yourself. But what do you do when conflict crosses over the line of leadership?

Being able to settle differences respectfully and effectively with upper management is key to getting the credit team recognized by the C-suite, said Kevin Chandler, CCE, director of financial services at Zachry Industrial, Inc. (San Antonio, TX). “You need to understand their motivation,” he explained. “What is the business driver that will lead them down the path to see your point of view? Credit is not black and white; it is full of gray areas. If you want a seat at the table with the CEO on how to get things done, you must be perceived as adding value to the business process—and that means you cannot make credit decisions in a vacuum.”

There may come a time when you and your boss disagree about a credit decision. Maybe you will feel like a customer’s credit profile makes them too risky while upper management sees the sale as necessary. Take this as an opportunity to think outside the box and use different risk mitigation tools. “Credit is not the end-all, be-all final decision maker,” Chandler said. “You must be comfortable playing your role in your company. That means people will sometimes go against your decision, and if you give the right information, that’s the business decision and that’s okay. You cannot let your ego be hurt because someone makes a different choice.”

Disagreements can pave the way for a stronger relationship between credit and upper management when handled appropriately because it creates an opportunity for more conversations, said Craig Pluff, credit manager at Graco, Inc. (Rogers, MN). “I’ve learned that the more time you spend with business leaders and conversations you have with them, the more equity you’ve built with them,” he said. “Difficult conversations can foster trust and respect so that when I have a different opinion, I am heard.”

The job of a credit professional is not to eliminate risk entirely, but to mitigate and accept the risk where it happens. “If there’s a riskier credit decision that wouldn’t be touched traditionally, we can still make a business decision to say we are going to take a risk and if it comes back to bite us, it won’t come back on to the credit team as far as not collecting,” Pluff said. “Just make sure you have done everything possible in terms of additional security to try and make the transaction safer.”

Be sure to keep a paper trail if the credit department and upper management have ideas that do not align, said Brett Hanft, CBA, credit manager at American International Forest Products LLC (Beaverton, OR). “You have to document everything as much as possible,” he explained. “If I can provide due diligence and share my findings with upper management, I may not agree with a decision to move forward accepting a sale on open account terms. If the credit team does not feel like it is a good risk to accept, I want clear and concise documentation in our credit file confirming the decision to sell was not approved by credit but by upper management.”

When running a company or managing a team, the ability to speak openly about disagreements and settle differences is essential. “In some of my past roles, it’s been much more rigid in which there was a clear ladder approach that you had to go through,” Pluff added. “If I had an issue, I had to go through my boss to get to the next boss and so forth.”