Everything All at Once

Article excerpt

Credit Concerns for 2013 Paint a Complex Picture of a Divided Nation

Answering a question about the future isn't easy. Our worst fears lie in anticipation, and what looks daunting this January can seem easy by the next.

Still, the question has value, particularly in a future-focused field like credit and risk management. If any conclusion could be gleaned from the latest edition of NACM s annual survey of the most pressing concerns for credit professionals in 2013, it would be that the profession is as gripped by uncertainty as the rest of the country.

For the first time in its brief history, the most popular concern was something other than the overall health of the economy. When asked, "looking forward to 2013, what are your biggest concerns as a credit professional?" the most popular response was "slow payment, delinquencies and general customer creditworthiness," with 21.4% of participants choosing that as one of their three responses. "The state and future of the economy" came in second, with 19%.

These two concerns are obviously related, and have tangoed over the top spot in nearly every survey, but digging deeper into less popular choices, like "large customers dictating unfavorable terms" (17.3%), "lack of information on potential customers" (10.9%) and "U.S. election results" (10.2%), the results don't seem to suggest much in the way of economic certainty, even among the most optimistic. Reading the survey comments presents a growing economy that's about to collapse, a delinquent customer base that's becoming more creditworthy and a job market that's firing as its hiring. Together, it seems that the credit profession isn't sure whether this year will be better, worse or just another year of unanswered questions.

Dire Predictions

Conducted in October, a mere month before the United States re-elected President Barack Obama and left the ideological composition of the U.S. Congress largely unchanged, the survey of top concerns drew out its share of fevered predictions should one candidate win and another lose.

"Our economic health is at its lowest ebb in decades," said one respondent. "Under the current administration, the job market has only continued to decline and I have no faith in [the president's] ability to get it straightened. Possibly new blood has a better background in the job force and the ability to create new markets, but that will be a slow turnaround."

Others that felt a bit better about the economy were keeping their fingers crossed for a continuation of the last four years, policy-wise. "We are finally beginning to see some recovery from the mess the Bush administration made during their tenure," they said. "I am very concerned with a slide backward if we do not continue on our pathway to improvement- and what that will mean to the global economydown to my company specifically."

"We are currently in a huge hiring mode - creating jobs. I don't want that to change," they added.

Other comments mirrored a number of economists, including NACM Economist Chris Kuehl, PhD, who have noted that the election wasn't likely to settle anything. "We are a nation divided against itself," said one participant. "I doubt that the election will break this trend, but a new Congress may settle the haze of doubt on our economy." Another respondent thought that businesses were paying too much attention to the election to begin with, and that real growth could be realized regardless of who wins or loses. "So much has been projected on businesses delaying actions until after the election that you have to wonder if they will then procrastinate based on the election results," they said. "Time to move forward, not continue on an excuse that has been accepted by the media."

The great equalizer on everyone's lips, however, was the so-called fiscal cliff, or sequestration, a series of automatic spending cuts which, at press time, were set to take effect on January 1, 2013. …