Measurements provide context, helping focus on what matters ....enabling us to manage better, as we all have heard: "You manage what you measure".
We set targets and plan activities – develop 'budgets', track actual performance against them and re-plan based on variances – all with the aim of more effectively and consistently achieving our objectives.
But is it enough to know only how your business or department is travelling in absolute terms? Unless your business is one of the extremely rare structural monopolies – no
We all have competitors...and we hear frequently: "The level of competition seems to be ever increasing". And surprising as it may seem, some of these competitors might be doing some things better than you are.
So how important is it then to know how your performance stacks up against others?
Think how many times the questions has been asked – "Where are we sitting?" or "How are we tracking versus the competition?" In racing it is vital to know who is in front of you, who is next to you and who is behind you ... and what they are doing....it's the same in business.
Typically all that is available today to assist in answering these questions are ad hoc reports – which are limited in terms of accuracy, frequency and cost, and Publicly Reported Series Data – which is limited in terms of range and relevance of metrics, and often accuracy.
The ideal approach to understanding relative/competitive performance is benchmarking – or more specifically in this case a continuous programme of gathering and sharing specifically comparable and relevant data covering the end to end credit lifecycle (on a strictly anonymised basis) by design.
Unlike Ad Hoc Reports or Publically Reported Series Data, benchmarking is interactive.…and whilst that means it involves input on your behalf the outputs are assured to be comparable and much more relevant hence far more actionable for benefit.
AICM is looking to make such information available for AICM members offering Trade Credit
AICM have teamed up with the Benchmarking Division of RFi Group, a global business intelligence provider specialising in Financial Services and are looking for expressions of interest from AICM members to pilot a trade credit specific benchmarking program.
The RFi Group benchmarking team have been operating a number of Risk and Collections Managers' Roundtables in both Australia and New Zealand since 2002 – benchmarking portfolio, collections and repayment performance for loan books across Mortgages, Credit Cards, Personal Loans, Auto Finance, SME and Commercial Lending. Subscribers to their benchmarking programmes include all major and second tier banks, plus a number of Mutuals and Finance Houses.
Now you can gain the same benefits they have from this type of activity.
What would be involved for the Trade Credit benchmarking Pilot?
Firstly it's important to stress that participation in the Pilot comes with no obligation to continue with the programme should it prove to be a success and becomes ongoing (which history suggest will be the case). There would be no cost for participation in the Pilot (aside from administrative and IT costs related to activities described below). Assuming the Pilot is successful the service will be offered on an annual subscription basis anticipated at this stage to be in the vicinity of $3,500.
In terms of Timing:
— Kick off within the month subject to getting sufficient interest.
— The intention is to run the pilot and present results back to participants within a couple of months with a summary of the exercise to be presented back to the wider membership. Input required from Pilot participants:
— Attendance at/on a kick off meeting or conference call (date tba)
— A small amount of paperwork – a two way non-disclosure agreement (NDA); and
— Gathering the required data, relating to your organisation type and your trade credit activities and performance – information that you are likely to have ‘readily’ available.
What Pilot participants will receive in return:
- Output reports – showing you clearly where you stand relative to the other participants…though the other participants’ performance will not be individually identifiable.
- A facilitated review – either face to face as a group or via a conference call where we’ll review what the reports say, and discuss what they mean.
What is envisaged if the Pilot is successful:
- Ongoing quarterly reports – (most likely containing monthly data) – the same type as in the Pilot and potentially expanded based on what can be done with the data that is captured.
- Facilitatedzreviews – either face to face as a group or via a conference call. NOTE: These will be optional and at additional cost to the subscription.
Recommendation (Figure 1):
Having participated in a number of benchmarking forums, I know first-hand the value of this type of information. In fact, each time I have explained this to the various executive groups and Boards that I have reported to, they have all insisted benchmarking be included as a regular part of their reporting.
One fact that may help you make a decision:
Since starting the Risk and Collections Managers' Roundtables back in 2002, not a single participating organisation has ever left .... zero attrition over 13 years! We are looking for at least 10 to start (and will accommodate a few more). 6 members have already said they wish to participate...and a number of others seeking Executive/Board approval to get involved.
If you are interested please contact either Nick Pilavidis, CEO of AICM at firstname.lastname@example.org or myself, Michael Hartman at Mhartmanau@gmail.com
Michael Hartman is one of the Principal Consultants at Inflexion Point Consulting. Email: email@example.com, www.inflexionpoint.com.au