New Times Call for New Thinking; Dallas, Texas Is Site of 98th Annual NACM Credit Congress, May 18-21, 1994

Article excerpt

Great sessions, weather, and location conspired to make the 98th Annual NACM Credit Congress in Dallas, Texas, May 18-21, 1994, one of the most energizing and thought-provoking ever.

NACM President Paul J. Mignini Jr., CAE led the call "for new thinking" in his opening remarks as he reflected on the two major business trends affecting the credit profession: "globalization" and "restructuring."

As business has become increasingly globalized, Mignini said, so NACM has sought to bolster its international presence and educational offerings, particularly in Mexico, Canada, Australia, Britain, and Japan.

"You should be proud to know that as an NACM member, you belong to the largest credit and financial management association in the world," he said.

Just as the credit profession must be better equipped to compete internationally, so restructuring is changing the role of credit and financial management itself within corporations.

"Credit managers must become major players in corporate planning, learning to wear more hats, particularly in treasury, information management, and strategic planning," he said. "A corporate management position is emerging that embraces much of the credit function, but not necessarily all, and possibly configures its many facets in different ways."

Author and lecturer, Robert J. Kriegel reenforced the overall convention theme as he urged attendees to use "out-of-box" thinking and "go on sacred cow hunts." As the profession changes, those who wish to remain on the cutting edge have to "lead the change rather than merely keep up with it," he contended. As a former sports psychologist, he was able to draw some apt analogies about passion, courage, and the ability to take new risks in business.

"Passion is what differentiates the average from the outstanding," he said. "As a leader, you must pass your fire on to other people."

Exams, Certificate Sessions, Industry Day, Awards, and More ...

With this is mind, it was on to four days of education, recognition, achievement, and committee service as attendees reviewed for exams, completed certificates, and attended sessions on an array of subjects, ranging from international market differences that influence market conditions to bankruptcy basics.

Special certification areas included: business communications, case studies in credit management, financial statement analysis, and principles of commercial credit and collections. The vast majority of remaining sessions carried continuing education and/or recertification points. A tiny fraction of the offerings are presented here.

Quantifying A/Rs' Impact on Cash Flow

Because the collection of accounts receivable by credit represents 98 percent of all cash flow generated by most firms, management of this asset is key to being a viable, competitive, and successful operation.

Basil P. Mavrovitis, CCM, CCE, vice president and treasurer, Bertelsmann, Inc. New York, N.Y., provided insight and an array of techniques for managing, analyzing, strategizing, and reporting on working capital management. Mavrovitis' approach zeros in on working capital management methods, using DSO to manage and analyze working capital performance, and measuring and enhancing performance to favorably affect liquidity, cash flow, the balance sheet, and the P&L statement.

In the first area, Mavrovitis seeks to cut collection delays or errors and thereby increase liquidity through optimizing the lockbox process; to identify and correct delays or lags in the shipping and invoicing process; to aggressively police unearned discounts; and calculate, track, and minimize the lost opportunity costs of extended terms.

In lockbox management, for example, "while treasury might improve cashflow through the use of lock boxes by two or three days, as credit managers you have the ability to improve cash flow by weeks," he said.

Each technique should require articulation of a formalized policy and procedure, Mavrovitis asserted, and communication with all levels of credit, treasury, and marketing concerning the underlying philosophy and effects on the firm's working capital. …