March 22, 2004: Columbia, MD—Every day of the week, credit managers make tough decisions about the creditworthiness of potential customers. Because businesses risk billions of dollars annually by extending credit, it’s imperative that these decisions are made wisely. For over one hundred years, the National Association of Credit Management (NACM) has prided itself on giving credit managers the information they need to make these tough decisions in a timely manner.
According to NACM, “credit managers must be able to gauge the difference between fact and fraud, between hope and charity, and between faith and foolishness.” One of the important resources in the Association’s arsenal of information, designed to help credit managers distinguish payment history fact from a financially risky fairy tale, is the industry credit group. These groups, which are made up of members from the same field, meet regularly for roundtable discussions to exchange information—and dispel misinformation—about the credit history of their customers.
Fact: Membership Has Its Privileges
Industry credit groups meet monthly, bi-monthly, or quarterly—and are effective because ”they minimize fraud and greatly enhance the ability to respond to viable customers,” says Don Mosher, President, NACM Business Credit Resources, Minneapolis. Mosher, former credit manager of a Fortune 500 food manufacturer, also notes that the connections members of an industry can make during roundtable discussions is an invaluable benefit. “These groups frequently have a big spectrum of expertise that everyone will call upon as they face unknown or uncertain issues.”
Chuck Monson, CCE, President, NACM Inland Northwest, agrees that the networking opportunities made available from industry credit groups is advantageous. Monson praises the Association’s roundtable groups for giving members of an industry the ability to get to know others in the same line of work, while allowing them to build up trust in the information they are receiving about the payment history of a customer.
The trust fostered in industry credit groups results in reliable data that can protect a credit manager from making a costly mistake. “The decisions made in the credit departments can directly affect a company’s finances and cash flow,” says Natalie Wriston, Manager of Groups Services for NACM Chicago Midwest, who is responsible for the Affiliate’s 40 industry credit groups. “The cost of the dues and meeting expenses frequently pay for themselves on just one piece of insight gained from group participation.”
And in some cases, the information shared in industry credit groups not only saves a company from financial loss, but protects it from being the victim of a crime. “I know of one incident in the Truck and Trailer industry that helped the authorities catch a fraud ring that was targeting their industry,” says Terry Campos, Credit Information Services Manager of CMA Business Credit Services, NACM’s largest Affiliate.
Fact: Membership Has Its Responsibilities
Although NACM actively encourages the free flow of credit information, industry credit groups are required to follow the high standards set by federal antitrust laws designed to ensure that free trade is not curtailed. Specifically, for members of NACM’s 1,500 industry credit groups, this means that any activity that would blacklist potential customers, divide markets, or limit the free judgment of a group member is strictly prohibited.
The adherence to antitrust regulations “is first and foremost in the operations of an industry credit group,” says NACM Chicago’s Natalie Wriston. “A trained administrator must attend every single meeting. An antitrust statement is read aloud at every meeting and the administrator must moderate the account discussions to ensure all conversations are in compliance. Further, some industry groups even go to the extent of hiring an antitrust lawyer to attend the meetings.”
While industry credit groups are somewhat limited by antitrust regulations, there is a vast amount of potential information that can be exchanged during roundtable discussions. But this is only possible by the dedication of NACM members. Harold Booth, President, Pennsylvania Association of Credit Management, stresses the importance of member participation, and says that industry credit groups can become even stronger “by obtaining more members and by having existing members attend meetings more often.” The more that members contribute to industry credit groups, the more they will benefit from them.
And that’s a fact.
The National Association of Credit Management (NACM), headquartered in Columbia, Maryland supports more than 25,000 business credit and financial professionals worldwide with premier industry services, tools and information. NACM and its network of Affiliated Associations are the leading resource for credit and financial management information and education, delivering products and services which improve the management of business credit and accounts receivable. NACM’s collective voice has influenced legislative results concerning commercial business and trade credit to our nation’s policy makers for more than 100 years, and continues to
play an active part in legislative issues pertaining to business credit and corporate bankruptcy.
