Magazine article Business Credit

Credit Managers Must Stress 'Fundamentals over Noise'

Magazine article Business Credit

Credit Managers Must Stress 'Fundamentals over Noise'

Article excerpt

The percentage of financially troubled firms globally dropped by the end of July to its lowest level this year, according to metrics tracked by Hawaii-based research firm Kamakura Corp. While good news on the surface, the short-term surge in stability in some ways should be taken with a grain of salt, in favor of ground-level analysis, just as the "Brexit" news should have been when it happened, said Kamakura President/CEO Martin Zorn.

"If we track back to the initial reaction of the 'Brexit' in June, almost everyone overreacted and thought the world was going to fall apart," Zorn told NACM. "You saw extreme volatility then. In July you saw a quick and large recovery, which can also be an overreaction. There are still big risks out there to credit grantors."

Zorn believes B2B credit managers now must remind their staff (and themselves) to stress fundamentals and analysis, not recurring mainstream media frenzies, which are often overblown, or one-month aberrations in data, positive or negative. …

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