Magazine article Business Credit

Old Risks, New Tasks

Magazine article Business Credit

Old Risks, New Tasks

Article excerpt

When FCIB was founded in September of 1919, U.S. exporting was accomplished through specialized export houses and a few of the very large U.S. corporations largely clustered in the Northeast. The granting of terms and collecting of funds was complicated by tedious export documentation, and the absence of established legal and regulatory guidelines made it a risky undertaking.

Export credit executives gathered for monthly luncheons at that time to exchange ideas and provide mutual assistance. Gathering international credit information was cumbersome and slow as it was accomplished by boat mail and accessible only through the proper banking channels. Some of the larger corporations, having invested time and money in identifying their acceptable client list offshore, guarded that credit information.

FCIB emerged as a concept in that period as the result of an informal luncheon group that met monthly to exchange information. A clearinghouse organization was needed for foreign credit information and FCIB was formed.

The new clearinghouse organization was named the Foreign Credit Exchange Bureau (FCIB). Its operations were simple in permitting members to request credit information on a limited number of names which were then circulated to all members for credit experience. That system worked well until the mid-1980s when the interchanges became less valuable and more costly.

During the next 60-year interval, a number of changes took place in the export field. Exports actually shrank in the depression years and grew only modestly through the end of World War II. Management resources were lean; experienced credit/export managers were scarce after that.

The following 1950s and '60s saw a great expansion in corporate growth. The rebuilding of Europe and conversion of military supplies to consumer and manufacturing goods gave birth to wealth, and in turn, the desire to expand overseas. This was the era of multinational growth. Like all periods of growth it brought excesses which were typified by the corporate buying binges of the late 1970s. Many of the acquisitions domestically and internationally had to be restructured with new management to justify the costs paid. Europe followed the same pattern after rebuilding from the war years, although its multinational growth was directed more to the U.S. and other European countries.

Until that time, FCIB provided the Foreign Credit interchanges and a few related services. The monthly luncheons, called Round Tables, were largely unchanged until the late 1980s. The minutes were recorded and shared with U.S. and European members. The Round Tables provided the training resource for new personnel to listen to seasoned managers discuss problems.

In Europe, credit management faced slightly different challenges. They, too, had a shortage of qualified people and a changing market. Their needs differed considerably from the U.S. FCIB members. FCIB, with the help of key members, formed a chapter in Europe in 1967. The European chapter is unique in that credit management among major European companies tends to be more export oriented and more centralized.

In the U.S., and to a lesser extent in Europe, the international credit manager had gained a good deal of independence from domestic credit as the result of having to establish credit policies and procedures for the international acquisitions that had different regulations, training, and language requirements. The International Credit Executives (ICE) group emerged to meet some of these new needs. FCIB to this day still plans and organizes ICE functions to address these multinational areas in the U. …

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