Baker Ing Bulletin: 23rd February 2024

Polymetal's Move, German Bets, CEE Shakes, EU Sanction Storm, and Germany's Economic Outlook — Baker Ing Bulletin

Is it Friday already?! Welcome once again to The Baker Ing Bulletin, where we serve up a dish of the week’s most tantalising economic tales, all with a side of trade credit intrigue.

First up, Polymetal International bails on Russia faster than you can say “sanctions,” flipping its operations for a cool $3.69 billion. Meanwhile, German firms are pouring cash into the US like it’s the last round at a bar. Over in the CEE, wages are popping like champagne corks, stirring up the pot for businesses banking on stable costs. Then there’s the EU’s latest sanctions saga turning the heat up on Russia, pulling Chinese companies into the mix. And for the grand finale, we offer a deep dive into Germany’s economy, providing credit professionals with intel they need to navigate the stormy seas ahead with confidence.

Buckle-up…

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Gold Rush or Bust? Polymetal Ditches Russia 🏃💰

The divestiture of Polymetal International plc’s Russian operations to JSC Mangazeya Plus for $3.69 billion is particularly interesting due to the nuanced interplay of geopolitical risk and its direct implications on credit management within the precious metals sector and beyond. The transaction, set against a backdrop of potential nationalisation/expropriation by the Russian government, offers insights for managing credit risks in volatile geopolitical environments.

The valuation of Polymetal Russia at 5.3 times its enterprise value/EBITDA under the terms of the deal serves as a valuable reference point when evaluating companies facing similar geopolitical challenges or operating in at-risk industries. Valuations are influenced not just by a company’s financials but also by external geopolitical pressures – Polymetal gives us an indication of by how much this might be so. By integrating this valuation as a scenario-based metric in credit risk models, credit managers may be able to better understand the impact of geopolitical tensions on company valuations and their subsequent creditworthiness. Adjusting risk premiums to reflect this layer of uncertainty helps ensure these models are more aligned with the real risk environment.

The transaction’s strategic rationale, aimed at removing or substantially mitigating critical political, legal, financial, and operational risks points towards the importance of continuously monitoring geopolitical developments and their potential impact on the creditworthiness of counterparties. Furthermore, Polymetal’s board recommendation for shareholder approval of the deal highlights the role of corporate governance in managing credit risks. Trade credit should advocate for and participate in cross-functional teams that assess and respond to geopolitical risks, ensuring that credit perspectives are integral to corporate strategy and risk management frameworks. Here’s your case study to get that buy-in.

Polymetal International’s divestiture of its Russian operations to JSC Mangazeya Plus is not just a manoeuvre to evade the risks of nationalisation or expropriation; it is a case study in the imperative for credit professionals to integrate geopolitical risk assessment into credit management strategies and to be involved in corporate strategy. This transaction illustrates the need for dynamic, nuanced approaches to managing trade credit risks in industries and regions susceptible to geopolitical volatility – which is increasingly many.


American Dream or EU Nightmare? German Giants Bet Big 🇩🇪🇺🇸

There’s been quite the surge of German capital investment into the United States lately, highlighted by a record $15.7 billion in 2023. This influx, largely incentivised by the Inflation Reduction Act and Chips and Science Act, signals a strategic pivot not just for German corporations but for credit professionals too.

Its not merely in the volume of capital flowing from Germany to the US that’s interesting, but the fact that as German companies ramp up their presence in the US, particularly within the manufacturing sector, trade credit is presented with a complex matrix of risks and opportunities to decode…

Firstly, the move reflects a broader trend of diversification away from traditional markets like China, in favour of the perceived stability and growth potential within the US. This shift, underscored by significant projects like Volkswagen’s Scout Motors’ $2 billion investment in South Carolina, necessitates a recalibration of risk assessment models. The geopolitical undertones of this shift—from Europe’s stringent regulatory environment and China’s market uncertainties to the US’s welcoming investment climate—add layers of complexity to credit decision-making.

Understanding the strategic motivations behind these investments is crucial. German firms are not merely seeking safe harbour; they are strategically positioning themselves within a market that promises substantial growth, driven by a robust policy framework and incentives for manufacturing and tech innovation. For credit managers, this requires a deeper dive into the stability and long-term prospects of these investments, beyond conventional financial metrics and into geopolitical and policy-driven risks and opportunities.

Moreover, the sector-specific nature of these investments—largely centered on manufacturing and technology—presents a double-edged sword. On one hand, there’s the potential for enhanced business with new entrants and expanded operations of existing players, offering a broader base for trade credit activities. On the other, there’s increased competition and sectoral volatility, particularly as new technologies and manufacturing capabilities evolve under the banner of these investments.

The role of trade credit in this evolving shift extends beyond mere risk assessment to strategic partnership and advisory, guiding clients and customers through the complexities of engaging with or competing against these German investments. This entails not just adjusting credit policies and terms to reflect the new risk landscape but also identifying opportunities for collaboration and growth that these investments may herald.

The surge in German investment into the US, therefore, is not just a testament to shifting global capital flows but a call to trade credit managers. It demands a sophisticated, nuanced approach to credit management that accounts for the geopolitical, sectoral, and policy dimensions shaping the future of US-German trade relations. As this new chapter unfolds, the strategic insights and actions of credit professionals will be pivotal in navigating the opportunities and challenges ahead, ensuring that our firms can capitalise on this wave of investment whilst mitigating the inherent risks it brings.


CEE's Wages: Tightrope Walk for Shared Service Centers 📈🌍

As Central and Eastern Europe (CEE) showcases a vibrant tableau of economic indicators, the spotlight turns sharply to the burgeoning wage growth across the region—a trend stirring both optimism and caution among credit professionals. With Poland leading the charge, boasting a remarkable 12.8% year-on-year wage growth in January, a wider view unfolds across the CEE, revealing a complex dance of economic vitality and inflationary pressures.

At the heart of matters for many credit functions is the burgeoning challenge for businesses leveraging shared service centres in the CEE. These hubs, central to the operational efficiency of multinational corporations, now face the headwinds of escalating labour costs, underscored by wage growth figures out of Poland, Croatia, and beyond. Croatia’s real wage growth, hitting an impressive 8.6% year-on-year in December, mirrors a region-wide trend that, while signalling economic health, also poses nuanced challenges for maintaining competitive operational costs long-term.

This economic dynamism, however, isn’t confined to wage metrics alone. The CEE’s unemployment offers additional layers of insight, with Slovakia maintaining a modest 5.2% in January, juxtaposed against Croatia’s uptick to 6.8%. These figures, when parsed alongside wage growth, paint a detailed picture of labour market tightness and the resultant wage pressures.

Moreover, the currency strength observed across the CEE adds another layer for consideration. The recent appreciation of CEE currencies against the euro not only impacts the cost-competitiveness of exports but also recalibrates the cost structure of shared service centres in the region. For multinational corporations, this currency movement could potentially inflate the local currency cost base.

Navigating this intricate economic environment necessitates engaging in a delicate balancing act, aligning operational and credit risk strategies with the new and nuanced economic realities of the CEE. This includes a proactive engagement with currency hedging mechanisms to mitigate the financial impact of currency fluctuations and even, perhaps, a strategic diversification of service centre locations to dilute the risk concentration in any single market long-term.

The evolving wage growth and economic conditions in the CEE region present a multifaceted challenge for trade credit managers. The path forward calls for a nuanced understanding of local economies, an agile approach to risk management, and a strategic recalibration that aligns operational efficiencies with the economic realities of wage inflation and currency movements. As we move deeper into 2024, the ability to navigate these complexities will increasingly define the resilience and competitiveness of businesses operating in the vibrant, yet challenging, economies of Central and Eastern Europe.


EU's Russia Sanctions Shake-Up: Credit Alert 🌍🔒

On the eve of the second anniversary of the conflict in Ukraine, the European Union has escalated its economic offensive against Russia, unfurling a new suite of sanctions that casts a wider net to include about 200 companies and individuals, notably bringing Chinese firms into the fold for their alleged support to Moscow’s military efforts. This latest manoeuvre, hailed as one of the EU’s broadest sanction packages, underscores an intensification of pressure.

For credit managers, particularly those navigating the complexities of international trade within and beyond the EU, this development could be a critical juncture. The inclusion of Chinese companies in the sanctions list is a clear signal of the EU’s commitment, potentially reshaping the landscape of global trade relationships and credit risks. The measures cut deep into the energy sector, banking, and high-technology components, presenting a multifaceted challenge. This extension of trade restrictions necessitates a recalibration of risk management strategies, especially for those with exposure to or operations within the targeted sectors.

Trade credit must now scrutinise the indirect exposure of our portfolios to sanctioned entities, including the complex supply chains that may inadvertently link to the Russian military-industrial complex or sanctioned Chinese companies. This involves a granular review of counterparties and their affiliations to ensure compliance and mitigate the risk of entanglement in the sanctions web.

The introduction of sanctions against Chinese companies suspected of supporting Russia’s military efforts also introduces a novel dimension of geopolitical risk. This could have ripple effects on the global supply chain and trade dynamics, necessitating a reassessment of credit risks associated with affected regions and industries. We’ll need to closely monitor the unfolding economic repercussions and adjust credit policies to navigate fallout.

As the sanctions take effect, staying ahead of the curve will be paramount for maintaining stability and resilience.


Navigating the Waters: Germany's Economic Landscape 🇩🇪🔍

In the rapidly evolving economic climate of 2024, the insights from Baker Ing’s Germany Spotlight Report gain new significance, especially in light of recent developments that impact Germany’s position on the global stage. With Germany at the forefront of the European Union’s latest sanctions against Russia and the nation’s strategic economic manoeuvres, such as substantial investments in the US, understanding the underlying dynamics of Germany’s economy is more crucial than ever for trade credit.

This report dives into the drivers of Germany’s economy, such as technological advancement and its role within the EU; instrumental in evaluating how recent economic policies and global events might influence Germany’s economic resilience and, consequently, credit risks.

Don’t miss the opportunity to gain a competitive edge in one of the world’s most influential economies. You can download the Germany Spotlight Report now at https://bakering.global/product/germany-spotlight-2023/


And so, as we close the book on another illuminating chapter of The Baker Ing Bulletin, I hope we have helped you traverse the labyrinthine world of credit with the curiosity of a scholar and the insight of a sage.

To our distinguished connoisseurs of commerce, those sagacious scholars of the ledger and ledgerdemain, we must remember that being well-informed is not just a feather in one’s cap; it is, indeed, the secret sauce to triumph! For a deeper dive into the narratives that shape our economic day-to-day, we encourage you to visit https://bakering.global/global-outlook/.

Until next time, may your balance be bountiful and your risk merely a mirage…


Baker Ing Bulletin: 16th Feb 2024

UK Stumbles, VW's Ethics Quagmire, EU's Law Limbo, Eurozone's Fiscal Shuffle, 3PL Exposé — Baker Ing Bulletin: 16th February 2024

Ah, the melodrama of the credit world! Welcome back to The Baker Ing Bulletin, where we take a wry squint at the week’s financial foibles and fumbles, focusing on what they might mean for trade credit.

Leading our parade of pecuniary puzzlements is Blighty’s own economy – less of a catastrophic collapse and more like an aristocrat fainting onto a chaise lounge – a peculiarly British spectacle of economic ennui.

Vorsprung durch Technik? Not on this occasion. Volkswagen finds itself in a bit of a pickle, with Uncle Sam’s boys in blue nabbing their swanky motors over some rather unsavory supply chain secrets. It’s a tale of high-end horsepower meeting low-end ethics, all unfolding like a Shakespearean tragedy set in a car showroom.

As for the Eurocrats, they’ve been busy (or perhaps not busy enough) with the Corporate Sustainability Due Diligence Directive. The grand plan for cleaning up corporate supply chains is, much like our well-intentioned New Year’s resolutions, facing the risk of being quietly shelved.

And then there’s the Eurozone, where the economic outlook is about as hard to pin down as diplomat dodging a direct question.

And for the pièce de résistance, we present Baker Ing’s own magnum opus on Third-Party Logistics. This report, peppered with insights, cuts through the complexities of logistics to deliver sharp analysis without delay.

So, dear readers, settle in for a jaunt through the week’s monetary maze, where every twist and turn is more intriguing than the last. It’s credit, but not as you know it…

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UK Economy Hits a Snag: Recession Creeps In 📉😬

The UK economy, often seen as a bastion of stability, has hit a rough patch, slipping into a recession that’s more about a slow burn than a dramatic plunge. With a GDP dip of 0.3% in the final quarter of 2023, it’s clear that the nation is facing a period of economic stagnation, a context that will have significant repercussions for credit professionals.

This recession, while modest in numbers, is a red flag for those in the business of credit. It’s not just about the current contraction, but the broader implications of a prolonged period of tepid growth that could well reshape the business landscape for the long-term. Key sectors like manufacturing, construction, and wholesale are already feeling the pinch, signaling potential cash flow challenges that could ripple through their credit chains.

In such times, the lessons from previous periods of economic stagnation are particularly instructive. They suggest a need for a more nuanced approach to credit risk assessment, going beyond traditional financial metrics to include a closer examination of current cash flows, market position, and the broader economic context. This level of analysis is crucial in identifying early warning signs of financial stress in client businesses.

The situation also calls for a strategic adjustment in credit policies. In a stagnating economy, businesses will seek longer payment terms to manage tight cash flows. While it’s important to support client relationships, trade credit must balance this with the increased risk of extended receivables. Crafting flexible but prudent credit solutions is key in this landscape. A scalable resource at the ready is also advisable to react quickly to changing circumstances.

Looking ahead, credit professionals must also keep an eye on policy responses from the government and central bank. While these measures aim to stimulate economic growth, they could have varied implications for different sectors. Understanding these policy shifts will be crucial in adjusting strategies accordingly.
The UK’s economic stagnation presents a complex challenge for credit. It requires a blend of in-depth financial analysis, adaptive credit policies, and a keen understanding of the broader economic environment. As ever however, for those that can navigate through these challenging times, there is now as much opportunity to reap rewards as there is succumbing to risk.


Volkswagen's Luxury Car Crisis: US Customs Cracks Down 🚗🚓

The recent seizure by US customs of thousands of luxury cars from the Volkswagen Group, including high-end brands like Porsche, Bentley, and Audi, has sent shockwaves through the automotive industry and beyond. This enforcement action, triggered by allegations of forced labor in China’s Xinjiang region (a risk previously covered in this Newsletter), shines a spotlight on the intricate and often opaque world of global supply chain management.

At the heart of this issue is the use of electronic components suspected of being produced under unethical labor conditions. The implications for Volkswagen are immediate and multifaceted. The company faces not only the logistical hurdle of replacing these components across thousands of vehicles, a process expected to stretch until the end of March, but also the broader challenge of scrutinising and potentially overhauling its supply chain practices.

This situation is a stark reminder of the complexities faced by companies operating in highly globalised markets. In the automotive sector, where supply chains are deeply integrated and span across multiple countries and suppliers, ensuring ethical compliance at every level is challenging. Volkswagen’s response to this crisis, including their investigation and potential actions against suppliers, will be closely watched by industry peers and credit professionals alike.

For trade credit, the Volkswagen case underscores the importance of a comprehensive understanding of a client’s supply chain. The financial health of a company is no longer just about balance sheets and profit margins; it now involves a critical assessment of supply chain ethics and compliance with international labor laws. The risk of association with unethical practices, even indirectly, can lead to significant reputational damage, legal repercussions, and financial loss.

This incident reflects a broader trend towards greater accountability and transparency in supply chains, driven by both regulatory pressures and a growing consumer demand for ethically produced goods. The ripple effects of this shift are likely to be felt across a range of industries, prompting companies to reevaluate their supply chain strategies and practices.


EU Ethics Drama: Italy and Germany Throw a Spanner in the Works 🇪🇺🔧

The European Union’s recent stumble in advancing the Corporate Sustainability Due Diligence Directive (CSDDD), legislation aimed at enforcing ethical supply chain practices, echoes the broader global narrative on corporate responsibility. The delay, primarily due to Germany and Italy’s abstention, adds a layer of uncertainty to an already complex international trade environment, further complicated by the recent US actions against Volkswagen.

This is significant, as it reflects growing tensions between the drive for ethical supply chains and concerns over economic and bureaucratic burdens for businesses. The CSDDD, designed to hold companies accountable for forced labor and environmental damage within their supply chains, mirrors the objectives of the Uyghur Forced Labor Prevention Act (UFLPA) in the US, which led to the seizure of Volkswagen’s vehicles. Both legislative actions signify a hardening stance on corporate responsibility in global supply chains, yet the EU’s hesitation reveals the challenges in balancing these ethical objectives with practical business concerns.

Germany, traditionally an EU integration engine, now appears to be a brake, with its finance minister Christian Lindner citing the directive’s potential to overburden businesses. For credit professionals, the postponement of the CSDDD, alongside the Volkswagen incident in the US, suggests a period of regulatory uncertainty ahead. Businesses operating within the EU, or those with significant ties to the region, might face a shifting compliance landscape, affecting their operational costs, reputational risks, and ultimately, their creditworthiness.

The EU’s postponement of the CSDDD , set against the backdrop of the US’s actions on Volkswagen, highlights the growing global focus on ethical supply chains, underscoring the need for adaptability and a broadened risk assessment scope that considers not just financial health but also compliance with evolving international regulations and ethical practices.


Eurozone's Economic Wobble: Growth Slows to a Crawl 🐌💸

The European Commission’s recent revision of its growth and inflation forecasts for the eurozone in 2024 signals a nuanced shift, with growth expected to slow to 0.8% and inflation to drop to 2.7%. These forecasts, influenced by the European Central Bank’s interest rate hikes and ongoing geopolitical tensions, bring varied implications for different sectors…

In the construction and real estate sectors, this economic forecast presents a contrasting scenario. Whilst slower growth could dampen investment and consumer spending, potentially impacting the financial stability of businesses in these spaces, the anticipated ECB rate cuts later in the year might stimulate investment, offering some respite.

Energy-intensive industries, such as manufacturing, might find some relief in the forecasted drop in inflation, reflecting lower energy prices. This could ease the cost burdens these sectors have been facing, possibly improving their financial health and ability to manage credit obligations.

Conversely, consumer spending is likely to tighten in response to the eurozone’s reduced growth outlook, impacting the retail and consumer goods sectors. Credit professionals should be particularly vigilant about businesses in these areas, as reduced consumer spending could affect their sales and cash flows, influencing creditworthiness and payment behaviours.

Automotive and machinery sectors could also feel the pinch of the economic slowdown. With potential declines in demand for high-value items like cars and machinery, companies in these sectors may encounter reduced orders and extended payment cycles, necessitating a closer review of credit risks and terms.
The situation in Germany, as the eurozone’s largest economy, deserves special attention. The significant downgrade in its growth forecast is indicative of challenges in key industries like automotive and manufacturing. This necessitates a cautious approach for trade credit dealing with clients in these sectors, as they might be more vulnerable to the impacts of the slowdown.

Meanwhile, in France, the outlook, albeit slightly better than Germany’s, still calls for caution. Sectors like tourism and luxury goods, sensitive to consumer spending and global economic trends, may face hurdles despite the slightly more optimistic forecast.
In summary, the European Commission’s revised forecasts for the eurozone in 2024 present a complex sector-specific outlook. For credit professionals, understanding these nuances is crucial. While some sectors will see opportunities in the easing of inflation and potential rate cuts, others will need careful monitoring due to the broader economic slowdown. Navigating this requires a detailed understanding of each sector’s unique challenges and opportunities in the context of the broader eurozone economy.


Baker Ing Spills the Beans on 3PL: A Deep Dive into Logistics 🕵️📦

Baker Ing’s latest release, a compelling report on Third-Party Logistics (3PL), hits the mark in a week when supply chain and economic developments are making headlines. Now available on LinkedIn and for Download, this detailed analysis offers a sharp look into how global economic shifts are reshaping the logistics landscape.

At a time when companies like Volkswagen are navigating complex supply chain challenges, this report is essential reading. It delves into the impact of booming e-commerce and explores how sustainability is becoming a crucial factor in logistics operations. The report also navigates through the latest technological advancements, including AI and IoT, which are transforming operational and financial strategies within the logistics sector.

A must-read for credit professionals in 3PL and beyond. It’s not just about understanding the current state of logistics; it’s about being prepared for what the future holds in this dynamic industry and how it impacts us all.

View and download the report to stay ahead in the evolving world of Third-Party Logistics.

🔗 View Online: View Online

🔗 Download: Download for In-Depth Insights


And so, we bring down the curtain on yet another week of The Baker Ing Bulletin, with more twists and turns than a politician’s promise.

To our astute aficionados of finance, those shrewd navigators of the ever-twisting maze of credits, debits, and daring deals, let this be your mantra: in the world of credit, knowing the score isn’t just savvy – it’s your ticket to the treasury. Sneak a peek at https://bakering.global/global-outlook/ for more insight and analysis.

Until our paths cross again, keep your assets liquid and your liabilities laughable…


Global 3PL Shake-Up: Brexit, Pandemic, and War Reshape Logistics

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Download this paper from Global Outlook: Download

Presented by Baker Ing: Your Guide Through the Complex 3PL Industry

Venture into the intricate world of Third-Party Logistics (3PL), where global events and technological advancements continuously transform the industry. Baker Ing, renowned for our prowess in managing high-value and sensitive accounts, delivers customised solutions designed for key players in this dynamic field.

At Baker Ing, we combine the strengths of our experienced credit professionals with targeted strategies, equipping you to excel in the challenging 3PL sector.

Explore the unique advantages offered by Baker Ing and understand how our collaboration can elevate your approach to receivables management and credit control in an industry where precision and strategic foresight are paramount.


Baker Ing Bulletin: 26th Jan 2024

U.S. Growth Galore, Red Sea Rerouting, Lithium Lows, China's Latin Leap, Credit Insights Unveiled — Baker Ing Bulletin: 26th Jan 2024

Welcome back to the Baker Ing Bulletin, your weekly dose of financial savvy mixed with straightforward credit intelligence.

This week, we’re zooming in on a variety of stories in an increasingly China-centric world – looking at the U.S.’s economic resilience and China’s bold maritime strategy to the ripple effects of lithium’s price drop, China’s investment game-changer in Latin America, and the latest gems from our ‘Credit Frontier 2024’ webinar.

So, let’s get to it…

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1️⃣ U.S. Economic Surge: A Resilient Force in Global Trade 📈🇺🇸

In a striking display of economic muscle, the U.S. economy clocked a formidable 3.3% growth in its fourth quarter, shattering expectations and silencing doomsayers. This isn’t just a dry statistic; it shakes-up what we were beginning to think was the status quo.

The ripple effect of this economic surge on the U.S. dollar is something to watch. A beefed-up economy usually gives the dollar a shot in the arm, but this isn’t a straightforward win for trade credit. A brawny dollar could mean U.S. exports get pricier, potentially squeezing cash flow for American exporters. On the flip side, it’s good news for those importing goods into the U.S., as cheaper imports could be on the cards. Credit managers need to keep their eyes peeled for these currency swings.

Then there’s the Federal Reserve, whose interest rate moves are dictated by the economy’s performance. With the U.S. economy flexing its muscles, immediate rate cuts seem off the table. But here’s the kicker: a robust economy could mean the Fed keeps rates steady or even hikes them to keep inflation in check. This could crank up the cost of borrowing, impacting businesses’ creditworthiness. It’s a tightrope walk for credit; we’ll need to juggle these changes while keeping an eye on both local and international credit risks.

And let’s not forget the driving force behind this growth spurt: consumer spending. With consumers opening their wallets, businesses in sectors like retail and hospitality could see more stable cash flows, making them potentially safer bets for credit managers. It’s a sign of a consumer market buzzing with activity.

Moreover, this economic growth is backed by a number of factors, including government spending and business investments, pointing to an economy that’s not just improving but also balanced. This could mean smoother sailing for trade credit, as growth is not tied to any single sector.

Overall, this robust performance from the U.S. economy in the last stretch of the year provides a complex but largely upbeat start to the new year. The forecast? A mix of currency jitters, shifting borrowing costs, and a consumer market surge. For those managing trade credit, it’s about staying sharp, flexible, and ready to pivot as the economic winds change direction.

2️⃣ Strategic Shift in the Red Sea: Chinese Shipping Lines Make a Calculated Move 🚢🌏

In a move that’s set supply chain gurus abuzz, Chinese shipping lines are boldly steering into the Red Sea, a strategic play that’s rewriting the rules of global trade at a time when other operators are shying away. This development is laden with implications for credit professionals navigating the turbulent waters of international commerce.

The Red Sea, a vital maritime artery, has been a hotspot of geopolitical tension, notably due to the Houthi rebel attacks. The entry of Chinese operators into these troubled waters signals not only a bold assertion of commercial presence but also a willingness to engage in an environment where risk is as prevalent as opportunity. For industries heavily reliant on these maritime routes, such as energy, automotive, and manufacturing, the presence of Chinese lines could offer a semblance of stability and an alternative to the disrupted logistics pathways. However, this comes with an added layer of geopolitical risk, given the volatile nature of the region and geopolitical tussles. Trade credit must now factor in these geopolitical elements into their risk assessment models, considering the upside but also potential for disruptions and the cascading effects on supply chains and payment cycles.

This development also prompts a reevaluation of trade patterns and alliances. Chinese shipping lines may offer new trade routes or partnerships, potentially leading to shifts in trade flows and dependencies. We must keep a vigilant eye on these emerging patterns, understanding how these changes could impact the creditworthiness of businesses engaged in these routes, and adapting their credit policies accordingly.

The potential influence on shipping costs is another important consideration. If Chinese operators manage to offer more competitive rates or efficient services, this could alter cost structures for many businesses, particularly those in sectors like retail and consumer goods. Credit professionals need to stay ahead of these cost implications, reassessing the financial stability and liquidity of businesses that might benefit from or be challenged by these shifts.

The key going forward is in enhanced monitoring of geopolitical developments, particularly in the Red Sea region, and closely tracking the movements and strategies of Chinese shipping lines, as well as Chinese geopolitical developments generally. Developing a nuanced understanding of the interplay between these new maritime routes and global trade dynamics will be crucial. Additionally, fostering relationships with logistics experts and leveraging advanced risk assessment tools will be essential in adapting to, and capitalising on, these changes.

3️⃣ Lithium's Price Plunge: A Jolt to the EV Market 🌏🔋

The electric vehicle (EV) industry is at a critical juncture due to a dramatic drop in lithium prices, with a decrease of over 80% in the past year. While this steep decline in a key component for EV batteries might initially be a positive development for manufacturers, it brings with it a complex array of challenges and opportunities for credit professionals.

Initially, companies heavily reliant on lithium for battery production will benefit from reduced input costs, leading to lower production expenses and improved profit margins. However, such price volatility introduces a high degree of unpredictability into financial planning and budgeting going forward. Lower prices are good, but such a large drop so quickly presents raises long-range concerns.

The development will likely favour Chinese lithium producers due to their extensive domestic reserves and government support. Unlike their Western counterparts, Chinese producers like Ganfeng Lithium and Tianqi Lithium have better resilience against market volatility due to strong domestic support and established production infrastructures. As prices drop, Chinese producers could potentially offer more competitive pricing, increasing their market share and influence in the global supply chain. This realignment might lead to a greater dependency on Chinese lithium, giving China a strategic edge in the global EV industry. With increased reliance on Chinese lithium, global supply chains become more exposed to geopolitical risks and trade policies between major economies like the US and China. Any tension or policy changes in these relations could significantly impact the availability and pricing of lithium worldwide.

Companies that benefit from the lower lithium prices, like EV manufacturers, might warrant higher credit limits in the short-term due to improved cash flow. However, the instability caused by these market changes also demands a more cautious approach to credit assessment in the long-term.

The sharp decline in lithium prices is a complex development for the EV industry, presenting both risks and opportunities. For trade credit, it’s crucial to understand the broader implications of this market shift, not only for EV manufacturers but also for the entire supply chain and adjacent industries like consumer electronics. It requires a multifaceted approach, blending detailed market analysis with flexible credit strategies and proactive client support to effectively navigate this period of significant change. Its important to balance capitalising on short-term gains with avoiding the long-range pain could result from such.

4️⃣ China's Strategic Pivot in Latin America: Reshaping Global Trade Dynamics 🌐💡

China’s recent strategic investment shift in Latin America, concentrating on technology, renewables, and critical minerals, is sending waves across global trade. Moving away from their traditional focus on infrastructure projects, this pivot is reshaping competitive dynamics and supply chain structures in these essential sectors, presenting a a new era for credit professionals to get to grips with.

While China’s overall investment in Latin America has decreased, down from an average of $14.2 billion per year between 2010 and 2019 to $6.4 billion in 2022, the focus has sharpened. High-profile projects like BYD’s electric vehicle plant in Brazil and Tianqi Lithium’s acquisitions in Chile demonstrate a keen interest in sectors critical to China’s economic growth and global standing.

Alignment with sectors such as telecommunications, fintech, and energy transition mirrors China’s ‘new infrastructure’ initiative, signaling a deep and strategic interest in these areas. The move not only indicates a long-term investment strategy but also positions China in direct competition with the US and Europe.

The implications for credit should not be overlooked, with new credit risks and opportunities. We’ll need to closely monitor the financial health and creditworthiness of companies within these sectors, particularly those that may become increasingly reliant on Chinese investments or face heightened competition. Further, investment in critical minerals and renewable energy could also lead to a restructuring of supply chains in these sectors. This shift could affect companies in adjacent industries, such as manufacturing and technology, impacting their supply chain reliability and cost structures.

The growing presence of Chinese investments in strategic sectors also brings geopolitical considerations into play. We must factor in potential political risks, such as changes in trade policies or diplomatic tensions, that could impact the creditworthiness of businesses in the region. Continuous monitoring of China’s investment trends and their impacts on Latin American markets is essential. Understanding how these investments influence market demand, pricing structures, and economic growth in the region will be crucial for making informed credit decisions.

5️⃣'Credit Frontier 2024' Webinar: A Treasure Trove of Economic Insights Now Available On-Demand

The recent ‘Credit Frontier 2024’ webinar has been hugely popular. This event brought together the minds of Shaun Rees, Markus Kuger, and Ray Massey, providing a comprehensive analysis of the economic and credit challenges anticipated for 2024.

Navigating Through Economic Uncertainties: Kuger’s insightful presentation highlighted the crucial economic indicators for the year, painting a picture of weak growth coupled with rising credit risks. The varied performance across sectors – with services showing resilience but basic materials and consumer goods lagging – presents a complex landscape for trade credit professionals.

Unique Perspectives from the Insurance Sector: Ray Massey’s engaging keynote provided an invaluable underwriting perspective, focusing on the record-high corporate insolvencies. His emphasis on the importance of robust relationships with credit underwriters in these challenging times was particularly enlightening.

Real-World Business Impacts: Shaun Rees brought the economic trends down to a practical level, discussing their direct impacts on businesses. His session underscored the necessity of strategic risk management and the need for adaptive credit strategies amidst technical recessions and inflationary pressures.

For those who missed the live webinar or are keen to revisit the insights, the full session is now accessible on-demand here: https://us02web.zoom.us/webinar/register/4017049731603/WN_yZiKFa2NRFqJm10EG5GKDw#/registration

Moreover, the speakers’ presentations are available on Baker Ing’s LinkedIn page, providing an opportunity to delve into the details of their analyses here: https://www.linkedin.com/feed/update/urn:li:activity:7156278886576640000

An in-depth report elaborating on the webinar’s discussions is now live on Global Outlook. This report is a comprehensive guide to arm credit professionals with the knowledge we need to navigate the turbulent waters of 2024’s economy: https://bakering.global/product/credit-frontier-2024/

In a year that promises both challenges and opportunities, staying informed through current, expert insights is key. Engage with the ‘Credit Frontier 2024’ resources and ensure you’re equipped to navigate the evolving credit landscape.

And that’s a wrap on this edition of the Baker Ing Bulletin.

To all you financial wizards and decision-making maestros out there, don’t forget that staying informed is your secret weapon. Global Outlook is your gateway to clarity in a world of credit complexity. Keep ahead of the game by visiting: https://bakering.global/global-outlook/

See you next week!


Webinar Wrap-Up: Credit Frontier 2024

What a session! A huge thank you to our speakers – Shaun ReesMarkus Kuger, and special guest Ray Massey – for a deep dive into 2024’s economic and credit landscape.


Here’s a quick recap for those who joined us and a glimpse for those who missed out:


📊 Economic Update 2024:
Markus Kuger revealed key economic indicators facing weak growth and rising credit risks. Insights into sectoral trends showed a mix of resilience and challenges, with services leading improvements but basic materials and consumer goods lagging. Consumer confidence has shown slight improvements, but inflation and global GDP growth projections indicate a cautious approach for 2024.

🌍 Insider’s Perspective from Insurance:
Ray Massey‘s keynote brought a unique underwriting perspective, discussing the all-time high in corporate insolvencies and the significance of maintaining robust relationships with credit underwriters in challenging times.

🏗️ Credit Risk and Business Impact:
Shaun Rees provided an in-depth analysis of how these economic trends translate into direct impacts on businesses. From technical recessions to inflationary pressures, the session highlighted the importance of strategic risk management and adaptive credit strategies in an uncertain market.


Key Takeaways

  • Prepare for a challenging year ahead with potential technical recessions.
  • Anticipate continued inflationary pressures but with some subsidence.
  • Adapt to rising credit risks with strategic adjustments in risk assessments and collection strategies.
  • Embrace a proactive approach in credit management, leveraging insights into sector-specific trends and economic indicators.


As promised, attendees will shortly receive an exclusive detailed report from our speakers for a deeper understanding. Keep a look out for this tomorrow.

Missed the live session? Want the report? Don’t worry, you can still register to watch the recording and access the report here: LINK

Stay tuned for more updates. In the meantime check out all the complimentary resources at Global Outlook.


Baker Ing Bulletin: 19th Jan 2024

Cognac's Challenge, Brexit Borders, Corporate Credit Crunch, Eurozone Rate Rigidity — Baker Ing Bulletin: 19th Jan 2024

Welcome to the latest Baker Ing Bulletin, where sharp financial insights meet no-nonsense debt expertise.

We’re taking a deep dive into the week’s hottest topics – from cognac market shake-ups and Brexit border blues to the rising tide of corporate debt. It’s all about the big moves and their bigger impacts on trade credit.

So grab your tea/coffee, and let’s get stuck into this week’s headline grabbers…

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1️⃣ Cognac Conundrum: Luxury Spirit's Trade Tensions Stir Up Global Market Storm 🍷🌍

The cognac industry, emblematic of luxurious excess, is now grappling with significant market shifts, particularly in the U.S. and China, triggering credit concerns for the industry, as well a ripple effect across global trade.

In the U.S., traditionally a robust market for cognac, a noticeable decline in demand is emerging, largely attributed to the African-American community, a key consumer demographic. Rising living costs and inflationary pressures have led to altered consumer spending habits. This trend indicates a potential pivot towards more affordable luxury alternatives and different types of spirits. For trade credit, being aware these shifts – both as regards cognac but extrapolating this across the luxury goods and FMCG sector generally – is crucial for a realistic assessment of debtors’ financial health and market positioning.

Concurrently, the cognac industry faces a complex situation in China. The government’s anti-dumping investigation amidst EU-China trade tensions could result in tariffs and trade barriers, adding more layers of uncertainty. This demands proactive risk management, with close monitoring of political developments and preparing for a range of outcomes. Trade credit must consider the potential impact of tariffs on client profitability and cash flow, as well as the overall stability of trade relations.

Moreover, the cognac industry, known for its long-term planning, must adapt to rapid global market changes. This calls for a flexible approach to credit management, where adapting to short-term market fluctuations is as crucial as maintaining long-term strategies.

The industry’s challenges highlight the interconnectedness of global supply chains. A downturn in U.S. sales affects not only cognac producers but also the broader agricultural, manufacturing, and logistics sectors. Similarly, trade tensions with China could necessitate a reconfiguration of supply routes and partnerships. This underscores the importance of a robust, responsive supply chain that can withstand market pressures. Adjacent industries, particularly within luxury goods and high-value agricultural products, can learn from these challenges. Diversifying markets and supply chains is key to mitigating risks and ensuring preparedness for unexpected shifts.

The cognac industry’s situation mirrors wider global market trends. Export-heavy industries are experiencing the impact of increasing international market fluctuations and political turbulence, emphasising the need for agile risk assessment and a balanced approach to risk and customer support.

2️⃣ Brexit Borders Beckon: UK's New Checks Rattle Supply Chains 🇬🇧🔗

The UK stands on the brink of a significant trade transformation as new post-Brexit import checks are set to kick in from January 31. This pivotal shift, ending a series of postponements since January 2021, introduces fresh paperwork requirements for EU businesses exporting animal and plant products to the UK, with physical inspections commencing in April. The implementation of these checks, a critical aspect of the EU-UK Trade and Cooperation Agreement, has sent ripples of concern across industries, from food importers to horticultural suppliers.

At the heart of these changes, credit professionals find themselves navigating a new landscape of risk. The looming checks are not just a procedural shift but a potential disruptor for businesses heavily reliant on smooth imports. For sectors like food retail and agriculture, timely and efficient importation is the lifeblood of their operations. The prospect of delays and additional bureaucracy at the border poses a serious threat to cash flow and operational efficiency.

The situation is acutely felt in the food industry, where importers are bracing for potential delays at ports, which could translate into shortages on supermarket shelves and increased prices for consumers. The horticultural sector, particularly Dutch flower growers, faces a logistical challenge with the new checks falling around key commercial events like Valentine’s Day and Mother’s Day, times of peak demand and tight supply chains.

For credit managers, this demands a swift and strategic response. The potential for supply chain disruptions calls for a reevaluation of credit risks and perhaps even a restructuring of credit terms for affected businesses. There’s a need for heightened vigilance and flexibility, as clients may face unforeseen challenges in maintaining liquidity and meeting financial obligations.

The UK government remains steadfast in its commitment to these changes, promising a technologically advanced border system to streamline the process. However, for industries and credit professionals, the upcoming transition period is nonetheless worrying.

As the UK moves forward with post-Brexit trading, the impact of these border checks will be a litmus test for the resilience and adaptability of businesses and trade credit. It’s a critical moment to demonstrate our expertise in risk management, offering support and thinking innovatively to navigate through these uncharted waters of post-Brexit trade.

3️⃣ Default Dilemma: Corporate Debt Crises on the Horizon 📉💳

As the clock struck midnight on a tumultuous December, a report from Moody’s revealed a startling surge in global corporate defaults, painting a grim picture for the future of low-grade, highly leveraged businesses. With twenty companies defaulting last month, up from just four in November, the annual count soared to 159. This uptick in defaults, the highest since the economically tumultuous period following the coronavirus pandemic, sets a concerning tone for trade credit.

The surge, predominantly hitting U.S. and European companies, reflects the challenges simmering beneath the surface for borrowers with lower credit ratings. The sharp rise in interest rates, notably in the U.S., has left these companies grappling with steep funding costs. The situation is particularly dire for loan issuers with floating debt payments, now facing the squeeze of rising borrowing costs.

What stands out in Moody’s analysis is the sectors bearing the brunt of these defaults. Business services and healthcare, with 15 and 13 defaults respectively last year, find themselves in the eye of the storm. High-profile bankruptcies like Air Methods and LendingTree’s “distressed exchange” are stark reminders of the fragility in these sectors.

For credit professionals, this landscape demands a strategic recalibration. The rising default rates signal an urgent need for a more nuanced risk assessment, particularly for clients in vulnerable sectors. It’s a scenario that calls for vigilance and perhaps a more conservative approach to extending credit, especially to businesses in industries with a high proportion of floating-rate loans. Particularly vulnerable are sectors like healthcare, where such loans are common for funding expansions; real estate and construction, which depend on them for development projects; retail, with its thin margins and operational costs; and media and entertainment, including cinema chains, which often use these loans for large-scale funding.

Moody’s projection for 2024 doesn’t offer much respite. With the anticipation of more defaults, particularly in sectors tied closely to consumer spending, the task ahead for credit managers is clear. There’s a need to closely monitor the financial health of clients in these sectors, preparing for the possibility of tighter cash flows and increased credit risk.

It’s a balancing act between managing risk and supporting clients through an economic period marked by uncertainty and shifting monetary policies. Navigating this requires a blend of expertise, foresight, and agility, ensuring that risk management strategies are robust yet adaptable to the evolving economic climate.

4️⃣ ECB's Rate Cut Caution: A Tightrope for Credit in the Eurozone 💶🧐

Despite a drop in consumer inflation expectations, the ECB’s resistance to cutting interest rates anytime soon has credit professionals weighing their options carefully. It suggests that the journey back to lower interest rates might be more gradual than what the market’s hopeful eyes saw.

For credit, this is more than just central bank chatter, it’s a pivotal moment that could shape their strategies in the months ahead. The prolonged period of high interest rates, now looking more likely than before, is a critical factor for businesses across the Eurozone, especially those with debts tied to fluctuating rates. Credit professionals are now in a position where they must reassess the financial stability of their clients under these sustained conditions.

The implications are particularly stark for sectors such as real estate and healthcare, where the sensitivity to interest rate changes is often more pronounced. Here, the prospect of continued high rates could strain finances and challenge their ability to meet obligations, including those to trade credit.

This environment demands a nuanced approach from trade credit managers. We find ourselves balancing on a tightrope, needing to manage risks prudently whilst also offering support to clients navigating these turbulent times. The key is to understand the unique challenges of each sector and client, being ready to adapt credit strategies as the economic winds shift. Deep dive time – financial, operational, commercial – everything has to be considered insofar as how customers and clients will hold up under this sustained strain.

But it’s not just about managing risks; we can also seize opportunities. In this environment, by providing insights and guidance, we can help clients hedge against these interest rate uncertainties, optimise their cash flows, and steer through the economic tumult. The more deftly we can do som the greater competitive advantage we offer vs. those businesses that will employ a more blunt approach.

As the ECB continues to navigate the choppy waters of inflation and economic recovery, the message for trade credit is clear: in a world where economic certainty is a luxury, then agility, in-depth market understanding, and proactive client engagement are the tools that will help us chart a course. This period is a test of resilience and adaptability for credit.

5️⃣ Callisto Grand and Baker Ing Join Forces to Tackle Credit Disruption 🤝💼

Callisto Grand, a vanguard in credit management training, and Baker Ing, specialists in managing high-value and sensitive receivables, have announced a groundbreaking three-year strategic partnership. This collaboration aims to tackle the impact of rapidly changing global economic conditions and ongoing technological revolution within credit management.

The partnership is a direct answer to the increasing complexities credit professionals must tackle. With economic uncertainties looming large and technological advancements like AI automation reshaping the industry, there’s an urgent need for credit professionals to evolve their strategies and skillsets. This alliance brings together Callisto Grand’s cutting-edge educational methodologies and Baker Ing’s operational excellence, aiming to equip credit professionals with the necessary tools to navigate these turbulent times.

Mark Harrison, CEO of Callisto Grand, highlights the significance of this partnership, “By combining our educational expertise with Baker Ing’s operational acumen, we’re creating a holistic solution that addresses today’s volatile economic landscape.” This sentiment is echoed by Lisa Baker-Reynolds, CEO of Baker Ing, who emphasises the timeliness of this collaboration in equipping businesses with the skills and strategies vital for the new era of credit management.

For credit professionals, this alliance promises a blend of practical insights and forward-thinking approaches. It underscores a commitment to ensuring that professionals are not merely coping with today’s challenges but are also geared up to lead the charge for future innovations in credit. As this partnership unfolds, it will serve as a critical resource for those looking to stay ahead in an increasingly AI-driven and economically fluid world.

As we wrap up this week’s Baker Ing Bulletin, it’s time to roll up our sleeves for the rest of 2024. This year’s shaping up to be a cracker, packed with twists, turns, and big chances for those who dare to take them.

For all you eagle-eyed number crunchers and gutsy decision-makers, remember that Global Outlook is your ace in the hole. It’s where we cut through the financial fog and get the lowdown on what matters to credit professionals. Keep one step ahead by checking out: https://bakering.global/global-outlook/

Catch you next week for another round of credit thrills and spills…


PRESS RELEASE: Callisto Grand and Baker Ing Forge Strategic Alliance

Callisto Grand and Baker Ing forge strategic alliance in response to global economic shifts and technological disruption.

In an innovative move responding to the rapidly evolving credit landscape, Callisto Grand, a trailblazer in credit management training, and Baker Ing, a leader in managing high-value and sensitive receivables, have announced a landmark three-year partnership. This alliance is a strategic response to forecasted global economic fluctuations, rapid technological developments within the credit management profession, and a commitment to leading the industry through this period of significant change.

Addressing today’s challenges and tomorrow’s solutions.

As global markets face unprecedented economic uncertainties and technological disruptions, there is a pressing need for credit professionals to adopt more robust, adaptable credit management strategies alongside augmented, nuanced skillsets fit for this new era. The partnership between Callisto Grand and Baker Ing merges the latest in educational methodologies with cutting-edge operational expertise. This union is poised to provide businesses and professionals alike with a comprehensive toolset and the knowledge necessary to navigate the complexities of a credit profession in flux.

“The partnership is a game-changer,” states Mark Harrison, CEO of Callisto Grand. “We’re bringing together the best of both worlds – our expertise in developing top-tier educational content and Baker Ing’s operational excellence. Together, we offer a unified solution that’s critically needed in today’s volatile environment.”

Lisa Baker-Reynolds, CEO of Baker Ing, emphasises the partnership’s timeliness: “This partnership will be key to equipping businesses with the skills and strategies needed for success as we enter a new era of credit management,”

A commitment to setting new industry benchmarks.

With rapid technological advances and shifting economic landscapes, the alliance between Callisto Grand and Baker Ing stands as a pivotal evolution in credit management training and practice. This partnership is uniquely positioned to transform how credit professionals navigate the complexities of an AI-driven, economically fluid world.

Credit professionals will gain insights and skills that are deeply attuned to both best practice and the new realities of AR automation, predictive analytics, and economic fluctuations. This is to be delivered within an educational and operational framework that is forward-thinking whilst being firmly grounded in real-world application. The approach aims to ensure professionals are not just ready for today’s challenges but are prepared to lead tomorrow’s innovations.

For more information

About Callisto Grand

Callisto Grand has been a vanguard in professional development within credit management, shaping skilled practitioners ready to tackle today’s challenges.

About Baker Ing

Baker Ing International specialises in high-value, sensitive receivables management, offering tailored solutions through a global network of expert credit managers and legal professionals.

For More Information

To learn more about the Callisto Grand-Baker Ing partnership, please contact marketing@bakering.global

 

Baker Ing International Ltd., Office 7, 35-37 Ludgate Hill,, London,, EC4M 7JN

admin@bakering.global

+44 (0)207 871 1790

 

END OF PRESS RELEASE


Baker Ing Bulletin: 12th Jan 2024

Motor Money Matters, Oil Oscillations, Red Sea Ripples, Credit Frontier — Baker Ing Bulletin: 12th Jan 2024

Welcome to this week’s Baker Ing Bulletin, where high-brow finance meets debt collection savvy.

Buckle up, we’re on a wild ride; from the complex tangle of Taeyoung Engineering’s debt restructuring to the rollercoaster of oil prices post-military strikes, every story is crossroads for trade credit.

So, let’s unwrap these January gems…

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1️⃣ Maersk CEO's Warning: Extended Red Sea Crisis Impacting Credit 🌍🚢

Global trade is facing a significant challenge. The CEO of Maersk, Vincent Clerc, has publicly warned of prolonged disruptions in the Red Sea, caused by Yemen’s Houthi rebels’ attacks, predicting that the crisis could last for months. This stark warning has crucial implications for trade credit, highlighting the need for strategic adaptation in the face of extended supply chain disruptions.

Clerc’s forecast being a long-term is particularly alarming. Extended disruptions mean prolonged delays in shipping times, as vessels are rerouted around the Cape of Good Hope. This not only impacts delivery schedules but also severely strains trade credit arrangements globally. Companies relying on the timely arrival of goods for production and sales are now forced to reevaluate their payment terms and credit strategies, dealing with the ripple effects of these logistical setbacks.

The prospect of a months-long disruption is prompting a reassessment of credit risk and liquidity needs across various sectors. Credit managers are finding themselves in a position where they must extend payment terms and/or increase collections efforts to account for these delays. This situation is compounded by the surge in cargo prices, adding further pressure on businesses already navigating tight margins and challenging market conditions.

For credit professionals, this prolonged crisis calls for a heightened focus on risk management and client support. There is an increased need to closely monitor clients’ financial health, particularly those heavily reliant on goods passing through the Red Sea. The situation demands not only a reevaluation of existing credit policies but also a proactive approach in offering flexible solutions to clients affected by the prolonged disruptions, as well as ramping up the sophistication of collections.

Vincent Clerc’s warning serves as a critical indicator for trade credit. The extended duration of the Red Sea disruptions requires us to be vigilant and adaptable now to the evolving needs of our clients. Staying informed and prepared will be key in navigating the complexities and challenges posed by this ongoing maritime crisis.

2️⃣ Oil Price Surge Amid Military Strikes: Credit Spotlight 🛢️⚠️

Following recent U.S.-U.K military strikes on Yemen’s Houthi rebels, trade credit is now grappling with another critical development – a significant surge in oil prices. This increase, recorded on January 11th 2024, with Brent and West Texas Intermediate futures climbing sharply, comes in the context of the already disrupted shipping routes in the Red Sea covered earlier. This combination of events presents a compounded set of challenges for credit.

The situation demands a refined analysis and a proactive response. The direct impact is increased cost of fuel, affecting the operational expenses of businesses across a range of sectors. This rise in costs will likely lead to tighter cash flows and necessitate a reevaluation of credit terms and conditions for affected businesses.

Moreover, given the context of disrupted shipping routes in the Red Sea, the oil price surge exacerbates the existing challenges. Companies are already facing extended delivery times and supply chain uncertainties due to the rerouting of ships. The additional burden of rising fuel costs adds another layer of complexity to managing trade credit risks….Its a burden which will be too heavy for some.

We must consider both these aspects. One the one hand, it will require strategies for managing increased operational costs, such as exploring alternative logistics solutions or renegotiating supplier contracts. On the other hand, there may be a need for increased flexibility in credit arrangements to accommodate the compounded impact on businesses’ cash flows and financial stability, as well as more robust collections activity.

In response to this double whammy of middle east developments, credit professionals should take specific, targeted actions. Key sectors like manufacturing, logistics, and retail, which are heavily reliant on fuel and efficient shipping, are most at risk and need immediate attention. Credit managers should consider reassessing credit limits and payment terms for clients in these sectors, potentially extending payment deadlines to accommodate for increased operational costs and delayed shipments, whilst shoring-up receivables collection capabilities. We must also advise clients to explore more cost-effective shipping routes or alternative suppliers to mitigate supply chain disruptions. Additionally, implementing more rigorous credit monitoring and risk assessment procedures for these vulnerable sectors will be crucial.

3️⃣ Taeyoung Engineering's Debt Restructuring Rattles Credit Analysts 🚧💳

The recent announcement by Taeyoung Engineering & Construction to undergo debt restructuring with the Korea Development Bank has raised significant concerns in the sector. This move by the mid-sized South Korean builder is not just another restructuring case; it mirrors the preceding events leading up to financial shockwaves in 2022 when the default of a Legoland theme park developer led to significant turmoil. That default led to a spike in corporate borrowing costs and a liquidity crunch, exemplifying how the failure of a single high-profile project can have widespread repercussions on the broader credit market.

Taeyoung’s decision is particularly alarming due to its possible domino effect within the vulnerable construction sector, which is highly sensitive to economic fluctuations. The company’s financial troubles, marked by a dramatic 15% drop in its share value, reflect not only on its own stability but also point to underlying vulnerabilities within the entire sector. This scenario is worrisome for trade credit, as it could mark the beginning of a series of financial difficulties for other companies in construction.

The sector’s importance to global trade and commerce can’t be overstated, and it is often heavily reliant on trade credit. A significant entity like Taeyoung struggling financially raises red flags about the sector’s health and its capability to fulfill financial commitments.

For credit professionals, Taeyoung’s restructuring necessitates a reassessment of risk, particularly within the construction sector. The potential for increased defaults and payment delays is real and could significantly affect the stability of trade credit. Time to review and possibly recalibrate risk models, considering the heightened uncertainty. More conservative credit terms and enhanced risk management practices are likely.

4️⃣ FCA Probes Motor Finance Sector: Implications for Credit Assessments 🚗🔍

The Financial Conduct Authority (FCA) in the UK has announced a thorough investigation into the motor finance industry, a move that holds significant implications for credit. This scrutiny, sparked by rising consumer tensions over commission arrangements, is set to impact the financial stability of companies within this sector, making a deep understanding of these developments essential for evaluating creditworthiness and potential risks.

The FCA’s focus stems from a ban implemented in 2021, prohibiting incentives for brokers that led customers to pay higher interest rates for motor finance. Despite this ban, numerous customer complaints have surfaced, alleging unfair commission arrangements before the prohibition. In response, most motor finance companies have rejected these complaints, asserting compliance with the legal and regulatory standards of the time.

The investigation is poised to significantly impact the entire automotive industry. This probe may lead to tighter financing options as financing firms fall to cost pressures stemming from FCA action, directly affecting car sales and the financial health of manufacturers and dealerships. The potential financial strain on motor finance companies could result in a broad recalibration of credit terms and availability, which would in turn ripple through the automotive supply chain.

As a response, credit professionals should consider conducting a comprehensive reassessment of credit risks within the UK automotive sector. This includes evaluating clients’ exposure to these financial shifts and their capacity to withstand tightened financing conditions. The potential for reduced sales and increased financial strain calls for a meticulous review of clients’ financial stability and resilience.

Staying ahead of FCA’s findings is crucial. This means not only closely monitoring the developments but also proactively adjusting credit and collections models, as well as terms, to reflect the changing risk landscape. Trade credit providers might consider more conservative credit limits and enhanced due diligence for clients within the automotive sector, particularly those heavily reliant on motor finance avenues.

Moreover, this situation demands we engage in proactive dialogue with clients, advising them on diversifying their financing options and preparing for potential sales downturns. This could involve exploring alternative credit facilities or restructuring existing debts to mitigate the impact of tightened financing.

The FCA’s investigation into the motor finance sector requires a sophisticated and dynamic approach from credit professionals. It is essential to balance vigilance with strategic flexibility, preparing for different outcomes of the investigation. The key is to anticipate market shifts, adapt credit policies accordingly, and actively support clients in navigating through these challenges, thereby safeguarding the interests of both parties in a rapidly evolving space.

5️⃣ Credit Frontier 2024 - Decoding Economic Trends for Credit Excellence 🔍💡

In a move that’s buzzing through the corridors of credit and beyond, Baker Ing is rolling out the red carpet for ‘Credit Frontier 2024’ on Thursday January 25th. This webinar is billed as the convergence of high-flying economic intellect and savvy credit tactics.

At the heart of this event is Markus Kuger, Baker Ing’s Chief Economic Advisor. Kuger, a maestro of economic trends, is set to dish out insights on the EU’s economy and global financial currents. His session is tipped to be vital for attendees keen to decode the complex economic puzzle of 2024.

Then Shaun Rees, known for turning economic forecasts into no-nonsense, practical strategies, will transform theoretical knowledge into solid, actionable plans for Credit Managers. Expect tips and tricks that could make the difference between thriving and merely surviving in 2024’s credit landscape.

What really sets ‘Credit Frontier 2024’ apart is its extended Q&A. Here’s where the rubber meets the road – an unscripted, anything-goes opportunity for attendees to pick the brains of the speakers. Its a front-row seat to a brainstorming session with some of the sharpest minds in the business.

Post-event, attendees will be treated to exclusive, detailed reports from Kuger and Rees, accessible from the Global Outlook section of Baker Ing’s website; your credit playbook for the year.

Registration is now open for this high-octane, insight-packed event. ‘Credit Frontier 2024’. Set your reminders – this is one lunchtime session that could redefine your credit strategy playbook for 2024: https://bakering.global/webinar.

As this week’s Baker Ing Bulletin draws to a close, let’s stride confidently into the rest of 2024. This year is already unfolding with opportunities and challenges, each requiring a blend of keen insight and bold action.

With that in mind, for all the sharp-eyed analysts and the fearless decision-makers out there, don’t forget that Global Outlook is your go-to resource for cutting through the complexity of credit narratives. Stay ahead of the curve by visiting: https://bakering.global/global-outlook/

We’ll see you next week for another cocktail of credit challenges and opportunities..


Media and Advertising 2024: Inside the High-Stakes World of Global M&A

Please notify me of updates:

Download this paper from Global Outlook: Download

Presented by Baker Ing: Your Navigator in the Media & Advertising Maze

Step into the fast-evolving world of Media and Advertising, where cutting-edge technology and consumer trends are constantly reshaping the landscape. Baker Ing, renowned for our expertise in high-value and sensitive accounts, offers bespoke solutions tailored for global brands in this dynamic sector.

Navigating the M&A Jungle with Precision and Insight

At Baker Ing, we bring together seasoned credit professionals and industry-specific strategies to help you stay ahead in the competitive Media & Advertising arena.

Discover the Baker Ing difference and see how our partnership can revolutionise your approach to receivables management and credit control in a sector where every move counts.


New! EU Late Payment Directive Report

The “EU Payment Directive 2024: Navigating New Norms” report is an indispensable resource for professionals navigating the complexities of the revised European Payment Directive (Directive 2011/7/EU). This detailed study presents a thorough analysis of the directive’s significant regulatory overhaul, impacting commercial transactions within the European Union.

Tailored for credit managers, legal experts, and policy analysts, this report dives deep into the directive’s key revisions: uniform 30-day payment terms, stringent enforcement mechanisms, and a strong focus on digital financial tools. It dissects the directive’s industry-specific implications, offering a critical view on how sectors like manufacturing, construction, and retail are adapting to these changes.

The report provides an exceptional exploration of the directive’s effects on international transactions, especially considering the post-Brexit landscape. It also anticipates future amendments and their potential impacts on businesses operating within and outside the EU.

“EU Payment Directive 2024: Navigating New Norms” is designed to equip decision-makers with strategic insights, enabling them to effectively respond to the evolving EU commercial ecosystem. It’s an essential guide for those seeking to understand and leverage the new regulatory environment for business growth and compliance.

 

🔗 Download “EU Late Payment Directive Reporrt” Here: http://www.bakering.global/product/france-spotlight-2023/


Baker Ing Bulletin: 5th Jan 2024

Red Sea Alert, Global Tax Reforms, VC Shifts, Italy's EV Leap, EU Payment Overhaul — Baker Ing Bulletin: January 5th, 2024

Welcome to the first Baker Ing Bulletin of 2024, your trusted guide navigating the dynamics of trade credit. As we embark on a new year, the landscape of global commerce and finance continues to evolve at pace, bringing both challenges and opportunities.

Fasten your seatbelts; we’re revving up for a year where every twist and turn in global finance and receivables brings a new adventure. From the high seas’ strategic maneuvers to Italy’s electrifying auto ambitions, let’s unwrap these early-year surprises with a dash of insight and a pinch of foresight..

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1️⃣ Red Sea Ripples: Houthi Rebel Defiance Escalates Maritime Tensions 🌊⚠️

The recent audacious move by Houthi rebels in the Red Sea, involving the detonation of an unmanned surface vessel, has sent shockwaves through the global shipping community and trade credit sectors. This act, narrowly missing US Navy and commercial ships, poses a grave threat to one of the world’s most vital shipping lanes, accounting for a significant 15% of global maritime trade, including crucial supplies of oil, grain, and natural gas.

For trade credit, this escalation is not just a distant geopolitical skirmish but a pivotal event with direct implications. The primary concern is the potential rerouting of shipping lines around the Cape of Good Hope. This detour could lead to longer transit times and increased costs, severely impacting the operational efficiency and financial stability of businesses dependent on these trade routes.

The immediate action for trade credit departments is to assess the heightened risks associated with companies in sectors like energy, agriculture, and manufacturing. The supply chain disruptions could significantly impact these businesses, warranting a re-evaluation of existing credit policies and risk exposure. There’s a crucial need to monitor the ongoing situation and its potential impacts on global trade dynamics continuously.

Moreover, this development calls for a proactive approach in supporting clients affected by these disruptions. It may involve offering flexible payment terms or reassessing credit limits to accommodate the increased operational costs and potential delays in shipment. Also, advising clients on diversifying their supply chain sources and routes could mitigate the risk of concentrated reliance on a volatile trading path.

The Houthi rebels’ actions demands not only a keen understanding of the evolving geopolitical landscape but also a flexible and responsive approach in managing credit risks. As the situation unfolds, maintaining a vigilant and adaptive strategy will be crucial for navigating the complexities of this challenging maritime environment.

2️⃣ Global Tax Gamechanger: Multinationals Under New Fiscal Spotlight 🌐💰

The recent enactment of the global minimum tax reform marks a seismic shift in international corporate taxation, with profound implications for the world of trade credit. Spearheaded by the OECD and supported by 140 countries, this initiative sets a groundbreaking precedent by imposing a minimum 15% tax rate on multinational corporations. This move, expected to generate an estimated $220 billion (€200 billion) annually, aims to curtail the long-standing practice of tax avoidance through havens and shift the fiscal landscape significantly.

For credit professionals, this shift presents both challenges and opportunities. The change in tax policy could impact the profitability and cash flows of multinational clients, especially those previously benefiting from lower tax jurisdictions. This new fiscal environment necessitates a thorough reassessment of the creditworthiness of these corporations. Companies may see changes in their financial strategies as they adapt to the higher tax obligations, potentially affecting their liquidity and credit needs.

In this new tax era, we must closely monitor how these changes influence the financial health of clients. The reform could lead to alterations in corporate investment patterns, operational shifts, and even changes in global supply chain strategies. As a result, the demand for trade credit might fluctuate, requiring a flexible and responsive approach.

As we navigate this transformed fiscal landscape, staying informed and adaptable is key. The global minimum tax reform is not simply a change in taxation; it may well represent a new chapter in international trade and finance.

3️⃣ Venture Capital Downturn: Navigating the New Investment Terrain 📉🚀

In 2023, U.S. venture capital investments plummeted to $170.6 billion, marking a substantial 30% drop from the previous year and reaching a six-year low. This downturn, however, is not confined to the U.S. alone; globally, venture capital investments have decreased by 35% to $345.7 billion, the lowest since 2017.

Traditionally, venture capital has been a cornerstone of innovation and growth, nurturing behemoths like Amazon, Google , and OpenAI. The dynamics of venture capital – how funds are raised and deployed – have profound implications on economic and technological progress. Yet, the landscape has shifted post-pandemic, moving from the investment euphoria of 2021 towards a search for new stability.

For credit professionals, this downturn presents unique challenges and necessitates a nuanced approach. The reduced flow of venture capital funds signals potential financial stress for startups and tech-focused businesses, which often rely on these investments for their operations and growth. . Tighter cash flows and altered financial trajectories for these companies will impact their ability to meet credit obligations. The scenario requires credit managers to engage in a deeper assessment of the financial stability and future prospects of businesses in these sectors, particularly those that are venture-backed, and more so those that are not yet profit-making.

Trade credit should consider a more cautious strategy, possibly tightening credit terms or reducing exposure to higher-risk sectors affected by the venture capital decline. This approach involves a closer examination of a company’s financial stability, including their access to capital, revenue projections, and overall business model viability in a less favorable funding environment.

Furthermore, this shift in the venture capital landscape may lead to increased demand for alternative financing options, including trade credit. Companies that previously relied on venture capital might turn to trade credit as a source of working capital, leading to an influx of new credit requests from sectors that are experiencing funding shortages.

It is also essential we closely monitor industry trends and developments, as the ripple effects of reduced venture capital investment can extend beyond the directly affected sectors. Supply chains may experience disruptions if key players in the chain face financial constraints due to reduced funding.

The current downturn in venture capital investments calls for re-evaluation of credit risk profiles, and an adaptable approach to credit management strategies.

4️⃣ Italian Renaissance in EVs: Rome's Bold Move to Rev Up Electric Car Sales 🚗⚡

The Italian government’s ambitious plan to stimulate a shift towards electric vehicles (EVs) with a €930 million ($1 billion) incentive package marks a pivotal change in the automotive industry. This initiative, targeting the replacement of older petrol and diesel cars with electric models, may well transform the European EV market.

Aiming to rejuvenate Italy’s aging vehicle fleet, one of the oldest in Europe, this initiative is not just an environmental manoeuvre but also a measure to bolster the domestic auto industry. With a 19% increase in new-car registrations in 2023 and Italy’s current EV market share trailing behind other European countries, this policy shift arrives at a crucial time.

For credit professionals, this development has a few implications. Firstly, the anticipated boost in EV production and sales is likely to impact supply chains across the automotive sector. Companies within this chain may experience shifts in demand, affecting their financial stability and creditworthiness. Trade credit should, therefore, reassess their risk exposure to these companies, considering the potential increase in business volume and the corresponding financial risks/opportunities.

Secondly, the focus on domestically produced electric vehicles emphasises the importance of regional market dynamics. Understanding how policy changes influence local industries is crucial for assessing credit risks accurately. We need to closely monitor green-policy developments within different regions, and adjust our credit strategies accordingly.

This policy shift is indicative of a broader trend towards sustainable automotive solutions and the potential ripple effects across related industries. Trade credit must stay informed about these developments, adapting credit management strategies to align with the evolving demand patterns, supply chain dynamics, and financial health of businesses in this rapidly changing sector.

Italy’s drive towards electric mobility is a significant step that may set a trend in Europe’s EV industry. For credit professionals, it’s essential to balance the opportunities and risks, and ensuring that our approaches are flexible and responsive to the market’s evolving demands and challenges.

Don’t forget, you can download the latest Baker Ing in-depth report on the automotive industry here, free and in full: https://bakering.global/product/automotive-2023/

5️⃣ EU Payment Directive Overhaul: Setting New Standards in 2024 📜💼

As we usher in a promising 2024, Baker Ing remains committed to delivering crucial insights that keep you ahead in the ever-evolving world of trade credit. We’re excited to introduce our latest comprehensive report: “EU Payment Directive 2024: Navigating New Norms.” This report serves as your new year espresso shot of regulatory updates – strong, invigorating, and precisely crafted to jumpstart your year.

We delve into the intricacies of the revised European Payment Directive (Directive 2011/7/EU), a legislative transformation poised to redefine commercial transactions across the European Union. It’s tailored for credit managers, commercial managers, and policy analysts who are keen to stay abreast of the significant changes in the regulatory landscape.

Key highlights of the proposed revision include the establishment of uniform 30-day payment terms, stringent enforcement mechanisms, and a concerted alignment with digital financial tools. These changes are not just procedural but represent a fundamental shift in how businesses across sectors like manufacturing, construction, and retail will manage their transactions and receivables.

As we step into 2024, we highlight our commitment to providing proactive collaboration and insightful solutions. Whether you’re grappling with the challenges of ageing receivables or navigating the pressures of rising inflation rates, Baker Ing is here to guide and support your business’s journey towards growth and stability.

🔗 Download the report now at https://lnkd.in/e_Ys46s5

As we find our way through this next chapter, let’s embrace the thrills and spills with a blend of caution and courage. Here’s to a year filled with discovery, growth, and strategic mastery.

Whether you’re the eagle-eyed analyst or a bold decision-maker, Global Outlook is your trusted ally in deciphering trade credit narratives: https://bakering.global/global-outlook/

Happy New Year, and may 2024 be a landmark year in your trade credit journey.


Baker Ing Bulletin: 29th Dec 2023

Sanctioned Success, ECB's Rate Riddles, UK Housing Hurdles, Schengen Shifts, SSC Strategies — Baker Ing Bulletin: 29th Dec 2023

Welcome to this week’s indispensable guide through the ever-shifting sands of trade credit.

As we find ourselves in the serene interlude between Christmas and New Year, we’re not taking a breather. Instead, we’re keeping a finger on the pulse.

So, settle in with a cup of your favourite holiday beverage, and let’s dissect this week’s pivotal developments in trade credit.

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1️⃣ Huawei's Resilient Surge: Navigating Credit in a Sanctioned Landscape 🌐🔍

Huawei Technologies’ reported a remarkable revenue increase, marking its highest in three years. The company announced that its full-year sales for 2023 would surpass Rmb700bn ($99bn), up 9% from the previous year, though still trailing its 2020 peak by 20%.

This development, against the backdrop of severe US restrictions, underlines the resilience and strategic pivoting of Huawei. These sanctions, rooted in concerns over national security and Huawei’s alleged links to the Chinese state and military, have significantly constrained the company’s access to essential technologies and markets. Yet, Huawei’s ability to navigate this challenging landscape and report robust sales figures indicates a remarkable level of agility and resourcefulness.

Huawei’s situation is particularly instructive, as it highlights the need to consider a company’s geopolitical exposure and its capacity to adapt to rapidly changing international trade environments. In high-risk sectors, such as technology and communications, where political dynamics can dramatically influence market accessibility and supply chain robustness, the ability to anticipate and respond to these changes becomes critical.

Credit professionals should focus on holistic evaluation of such companies, with an emphasis on supply chain resilience. Equally important is diversification of revenue streams, which can signal a company’s ability to mitigate risks associated with specific markets or political climates. A significant investment in research and development is another crucial marker, suggesting a commitment to evolving and staying competitive despite external pressures. Additionally, a keen understanding of geopolitical and regulatory landscapes, demonstrated by proactive strategies to counteract trade barriers and sanctions, is vital. This is complemented by scrutinising the company’s financial health, of course. Lastly, the effectiveness and agility of a company’s management in navigating past challenges can offer valuable insights. By integrating these aspects into our analysis, credit professionals can develop a more comprehensive view of a company’s capacity to adapt and maintain creditworthiness in a dynamic global context.

The impact of the sanctions on Huawei reverberates across its supply chains, affecting suppliers and customers alike. This interconnectivity underscores the importance of comprehensive risk assessments that account for external geopolitical influences on trade credit terms and overall market stability. Huawei’s success is not just about overcoming adversity but also about the evolving landscape of trade credit in a world where economic and political considerations are deeply intertwined. It highlights the importance of agility, scenario planning, and a keen understanding of global trade’s political dimensions for effective risk management and decision-making.

2️⃣ ECB Interest Rate Cuts Forecast for 2024: Navigating the Turning Tide 🌊💹

The European Central Bank (ECB) is poised to begin reducing interest rates in 2024. This anticipated shift comes amidst a complex interplay of market expectations and ECB caution.

Market analysts and traders currently predict a high likelihood of rate cuts as early as March 2024, with expectations extending to almost seven cuts throughout the year. This contrasts with the ECB’s more guarded stance, stemming from concerns about wage-driven ‘domestic’ inflation and its potential impact on overall price stability. The ECB’s hesitancy is rooted in the need to fully grasp why domestic inflation, predominantly influenced by wages, persists despite other inflation measures showing signs of abating.

This divergence in inflation outlooks between the ECB and market analysts is at the heart of the concerns. While the ECB projects inflation to remain above its target, market forecasts suggest a quicker decline. The implications for trade credit are manifold. Firstly, the uncertainty surrounding the exact timing and extent of rate cuts necessitates a flexible approach to managing interest rate risks and credit terms. Companies in the Eurozone might experience varying borrowing costs, affecting their liquidity and ability to meet financial obligations. Secondly, the broader economic environment, teetering on the brink of recession, calls for heightened vigilance in monitoring clients’ financial health and industry-specific trends.

It’s important to closely monitor the interest rate trends and economic indicators, such as inflation and wage growth, as these will directly influence clients’ financial stability and creditworthiness. Regularly reviewing and adjusting credit risk models to incorporate these variables is essential.

Additionally, credit managers should engage in dynamic scenario planning, creating and frequently updating financial models based on potential economic outcomes, such as delayed or accelerated rate cuts by the ECB. By doing so, we can better predict and prepare for the impacts these changes might have on clients’ ability to meet financial commitments.

In practical terms, these developments could mean reassessing credit limits, payment terms, and the risk profiles of clients in industries more sensitive to interest rate changes, like real estate and construction, automotive and manufacturing, retail and consumer goods, as well as SMEs, financial services, and energy and utilities. These industries may face impacts ranging from borrowing cost changes to shifts in consumer spending. Proactive monitoring and regular financial health assessments of businesses in these sectors are crucial. Adjusting credit strategies, including reassessment of credit limits and payment terms, will be key to effectively managing the heightened risk landscape and ensuring stable credit operations.

3️⃣ UK Housing Market: A Tightrope Walk in 2024 🏠📉

The UK’s housing market is a pivotal barometer of the economy and is navigating a precarious time right now, with Nationwide predicting a continuation of the 2023 trend, where house prices saw a notable 1.8% drop. This forecast for 2024 paints a picture of a market grappling with the impacts of high mortgage rates and cautious buyer sentiment. The Bank of England’s shift from a historic low-interest rate of 0.1% in late 2021 to a 15-year high of 5.25% has notably cooled the housing market’s momentum, especially impacting regions like East Anglia, which experienced a significant 5.2% price drop.

This isn’t just a housing market concern though. It echoes broader economic signals of changing consumer confidence and economic health, influencing businesses’ financial stability and creditworthiness. The trend points towards a more cautious and restrained consumer spending pattern, which could ripple across various sectors.

Retail, particularly big-ticket items, construction, home improvement, and the automotive industry are likely to experience a downturn in demand due to reduced consumer confidence and spending. Financial services, including mortgage and loan providers, will also face challenges as the housing market cools, impacting their revenue streams.

However, the emerging divide between mortgage-dependent buyers and cash purchasers creates a polarised market. For trade credit, understanding this polarisation is essential. Businesses serving mortgage-dependent clients, like those in the residential construction and home improvement sectors, could face heightened challenges due to restricted consumer spending. Conversely, entities catering to cash-rich buyers or operating in sectors less directly affected by housing market shifts, such as commercial real estate developers, and providers of essential services, may demonstrate greater resilience. This understanding is key to accurately assessing the credit risk of clients.

While some analysts remain optimistic, citing resilience against high borrowing costs and a potential easing of mortgage rates, trade credit must exercise caution. The key is closely monitoring the housing market trends, reassessing exposure to related sectors, and preparing for scenarios ranging from a slight rebound to a more pronounced downturn. As the UK housing market continues its tightrope walk, we must ensure robust risk management strategies are in place for the challenges and changes 2024 will likely bring.

4️⃣ Schengen Expansion: New Horizons for Romania and Bulgaria 🇪🇺 🛂

Romania and Bulgaria are poised to join the European Union’s passport-free travel zone exclusively for flights and sea travel starting in March. This ease of movement across borders is likely to increase business travel and networking, potentially boosting trade activities. For credit professionals, it suggests a probable increase in demand for credit, as businesses in Romania and Bulgaria seek to expand operations and explore new market opportunities within the Schengen zone.

Moreover, the entry into the Schengen zone may influence risk assessments for businesses operating in these regions. The development could have broader implications, especially in industries where ease of travel and personal networking are crucial for growth and operations, such as technology, services, and tourism.

Adjusting strategies and managing risks associated with cross-border trade within Europe becomes more pertinent in light of these developments. The move signals a shift in the European business environment, necessitating vigilance and adaptability from credit professionals to accommodate potential increases in demand for credit and changes in risk assessments.

Romania and Bulgaria’s entry into the Schengen area underscores the ongoing balancing act in the European Union between fostering integration and addressing concerns such as illegal immigration and border security. As the situation evolves, we must stay informed and adapt our strategies to harness the opportunities and mitigate associated risks in this changing landscape.

5️⃣ The Strategic Evolution of in Central & Eastern Europe Amidst Geopolitical Changes 🌍🔗

Central and Eastern Europe are increasingly pivotal hubs for Shared Service Centres (SSCs), a trend underscored by the evolving geopolitical landscape. This complimentary report delves into the dynamics shaping this shift, offering crucial insights for professionals navigating the complexities of the current global economy.

The report highlights the significant factors making Central & Eastern Europe attractive for SSCs. These include geographical and cultural proximity to major European markets, a workforce with superior education levels and diverse language skills, and competitive wages. These elements position the region as an efficient, cost-effective location for business process outsourcing and shared services.

The insights from this report are especially relevant considering the recent inclusion of Romania and Bulgaria in the Schengen zone. This expansion may well facilitate greater business mobility and networking opportunities within the European Union. For Shared Service Centres in Central & Eastern Europe, this could mean enhanced connectivity with key markets and an increase in cross-border collaborations and service delivery efficiencies. The ease of movement is likely to impact sectors critical to SSC operations, like technology and services, potentially boosting demand and operational capabilities in these hubs.

Download this report for necessary insights and guidance in navigating these changes, empowering professionals to make strategic decisions in an increasingly interconnected and dynamic business world: https://bakering.global/product/shared-service-centres-in-central-eastern-europe-2023/

As we hover in the quiet lull between the festive celebrations of Christmas and the fresh beginnings of the New Year, it’s a time to pause and ponder. In the intricate world of trade credit, each number weaves a tale, and every policy change brings a new turn in the story. Keep your wits about you and your insights keen as we step out of this year’s complexities into the unknowns of the next. For every credit manager, from the analytics aficionado to the strategic visionary, Global Outlookis here to guide you through these narratives with depth and clarity.

As 2023 rolls to a close, let’s gear up for a year of informed decisions and strategic triumphs.

Wishing you a reflective holiday season and a year ahead filled with success and insight.


2023: Wrapped

As we bid farewell to 2023, Baker Ing reflects on a vibrant year of growth, innovation, and industry impact. It’s been a period where we not only consolidated our expertise in credit and receivables management but also expanded our reach and influence across the industry.

A standout achievement this year has been the launch of these very Baker Ing Bulletins. These weekly insights are quickly becoming a cornerstone of industry intelligence, amassing nearly 2000 subscribers in just a few short months, already reading weekly. The popularity of these updates underscores our aim to provide thought leadership and act as your trusted advisors in the trade credit space.

Commitment to in-depth analysis and actionable insights was further evident in the release of a whole raft of new sector-specific research reports. Covering diverse areas like Healthcare, Automotive, FMCG, and Beauty & Perfumes, these reports offered strategic guidance, helping our clients navigate the complexities of their markets. These publications have been offered free in full for all, and we continued to improve access by offering online viewing of the reports with dynamic updates.

2023 also saw key additions to the Baker Ing family. The arrival of industry experts such as Bill Dunlop EAICD FCICM-MIEx EIICM EACCEE and John Kelly marked a significant expansion of our capabilities. Their expertise in international credit and order-to-cash processes has greatly enriched our service offerings and client interactions, enhancing our reputation as a global leader in our field.

Another highlight this year was our active participation in pivotal events like the Credit Expo Belgium, AICDP – Association Of International Credit Directors and Professionals , Credit Matters XII with Callisto Grand, and the Irish Credit Team Awards with Declan Flood which showcased our commitment to industry engagement and professional development. Additionally, our hosted events and webinars, including the Baker Ing Credit Cruise in London, and the Situation Room in Krakow have been not just platforms for knowledge sharing but also celebrations of our vibrant professional community.

As we look towards 2024, Baker Ing is poised to continue our trajectory of impactful growth and innovation. We are committed to building on the successes of this year, furthering our mission of delivering exceptional services and fostering a community of well-informed and connected credit professionals.

We have a whole lot more planned!

2023 has been a remarkable year for Baker Ing. Our journey has been a testament to the dedication, excellence and leadership of our people, partners and clients. We look forward to the new year with renewed enthusiasm, ready to embrace new challenges, new opportunities, and to continue our journey of innovation and excellence in high-value and sensitive accounts receivable.

Merry Christmas.


Baker Ing Bulletin: 22nd Dec 2023

Market Turbulence, Argentine Overhaul, UK Housing Shifts, Eurozone Fiscal Challenges — Baker Ing Bulletin: 22nd Dec 2023

Welcome to this week’s festive foray into the ever-evolving world of trade credit – it may be Christmas in much of the world but credit continues!

This week, we’re delving into the robust resurgence of UK retail in November, exploring the transformative economic reforms in Argentina under President Milei, and deciphering the complexities of the UK housing market’s latest twists. We’ll also unravel the implications of the Eurozone’s fiscal tightening and reflect on Baker Ing’s vibrant journey through 2023.

Grab your cup of choice and settle in…

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1️⃣ Retail Resurgence in November: Implications for Trade Credit 🛍️🔍

In an unexpected turn of events, the UK’s retail sector demonstrated a robust rebound in November, defying the gloomy economic forecasts. According to the Office for National Statistics (ONS), retail sales volumes surged by 1.3%, a figure significantly higher than the anticipated 0.4% growth. This surge was not just a random spike but a reflection of strategic consumer spending, heavily influenced by Black Friday promotions and an early start to Christmas shopping.

For credit professionals, this development could be a bellwether of shifting consumer trends and economic resilience. The ONS’s upward revision of October’s figures, from an initial 0.3% decline to zero growth, further underscores this resilience. Particularly noteworthy was the performance in non-food stores and household goods sectors, which saw a rise of 2.3% and 3.5%, respectively. This indicates a consumer preference for quality and durability in goods, potentially influenced by the ongoing global challenges.

The food sector presented a mixed bag of results. While supermarkets reported a modest growth of 0.1%, specialist food shops like butchers and bakers enjoyed a significant 8.5% increase. This suggests a growing consumer inclination towards specialised, possibly artisanal, choices, likely driven by an early foray into festive shopping.

For trade credit, these figures may necessitate a reconsideration of strategies. The robust sales in certain sectors present an opportunity to reassess credit risks and potentially extend more favourable credit terms to businesses in these thriving areas. However, this enthusiasm must be tempered with caution. The festive season brings a temporary surge in consumer spending, which may not accurately reflect the long-term health of these sectors.

Moreover, the varied growth rates across different sectors highlight the need for a sector-specific approach in credit analysis. While some sectors like household goods are showing promising growth, others are grappling with challenges. This calls for a more granular analysis of sector-specific trends, supply chains and consumer behaviour patterns.

November’s retail figures paint a complex picture of the UK’s economic landscape. For credit professionals, it’s a reminder that in a dynamic market environment, staying attuned to consumer trends and sector-specific developments is crucial. As the year comes to a close, the retail sector’s performance not only reflects the current economic resilience but also provides key insights for informed decision-making.

2️⃣ Milei's Argentine Overhaul: A New Economic Paradigm 🇦🇷💼

The recent decree by new Argentine President Javier Milei, heralding a series of radical economic reforms, marks a pivotal moment for credit professionals with interests in Argentina or connected to this market. Milei’s announcement, focusing on deregulation and privatisation, is poised to entirely reshape the country’s economic landscape, currently struggling with a dire economic crisis.

Milei’s approach, rooted in anarcho-capitalism, signals a significant shift from traditional economic policies. His commitment is to “return freedom and autonomy to individuals” and dismantle regulatory barriers, The privatisation plans, though lacking specific details, hint at substantial opportunities in a range of sectors, potentially including the state-owned oil company YPF.

For trade credit, the shift towards a more market-driven economy will introduce new players and dynamics, altering the creditworthiness of existing and prospective clients. This necessitates a reassessment of current credit portfolios and strategies, considering the potential for rapid changes in the financial stability of Argentine businesses.

Milei’s “shock therapy” for the economy, characterised by deep spending cuts and significant devaluation of the peso, aims to tackle the daunting challenge of triple-digit inflation. This aggressive approach, whilst aiming for long-term stabilisation, may bring short-term volatility. The devaluation of the peso, over 50% since Milei took office, presents a critical concern for foreign creditors. Exchange rate fluctuations could affect the repayment capacity of Argentine debtors, requiring closer scrutiny of currency risks in trade credit agreements.

President Milei’s economic overhaul in Argentina presents an exciting/scary and complex new chapter for credit professionals connected to this market. It demands a vigilant, adaptable approach, considering the potential impacts of deregulation, privatisation, currency devaluation, and the resultant socio-political dynamics. As Argentina embarks on this bold economic journey, staying informed and agile will be key to navigating the evolving trade credit landscape.

3️⃣ UK Housing Market Shifts: A Complex Puzzle 🏠🇬🇧

Recent data from the Office for National Statistics (ONS) reveals a £3,000 drop in average UK house prices in October 2023 compared to the previous year, juxtaposed with a record rise in private rental prices, this duality reflects underlying economic trends that could significantly impact risk assessment and management strategies.

The 1.2% average fall in property values across the UK, more pronounced in England and Wales, indicates a cooling housing market. This shift, more acute in London with the steepest price fall since 2009, could well be a bellwether for broader economic trends. For trade credit, this raises pertinent questions about the financial health of stakeholders in the housing sector, from developers and construction companies to retailers of home goods. The declining property prices could signal a contraction in these sectors, potentially affecting their creditworthiness and payment behaviours. This is evidenced further by the slow-to-a-crawl of planning applications.

Conversely, the surge in rental prices, especially in London, highlights a burgeoning demand in the rental market, potentially buoyed by those priced out of property ownership. This aspect of the housing market may present opportunities for trade credit. Businesses catering to the rental market, including property management firms and suppliers of rental properties, might see a boost in their financial standing.

The 6.2% rise in UK rental prices, the largest since records began, coupled with a 6.9% annual increase in London, underscores the growing pressure on households. This pressure will likely ripple through the economy, affecting consumer spending patterns and the financial stability of businesses dependent on discretionary spending.

The broader economic context, highlighted by the easing UK inflation to 3.9% in November, also plays a crucial role. The slowing inflation encourages consumer spending and business investments, potentially offsetting some of the negative impacts of the cooling housing market. We must therefore balance these contrasting economic indicators when evaluating credit risks.

In summary, the UK housing market’s current dynamics – falling house prices and rising rental rates – combined with broader economic trends, require a nuanced and cautious response from credit professionals. It’s crucial to continuously monitor these trends, recalibrating risk assessment models to reflect the evolving economic landscape. This approach not only aids in managing current risks but also in identifying emerging opportunities in the fluctuating UK housing market. There are likely tough times ahead…but opportunities too.

4️⃣ Eurozone's Fiscal Squeeze: Strategic Implications 🤔

Recent developments in the Eurozone, marked by a shift towards tighter fiscal policies, present another complex set of considerations for trade credit professionals. As EU finance ministers agree to new fiscal rules leading to lower public spending, the anticipated curtailment of economic growth in the bloc demands a strategic reassessment of credit risks and opportunities.

The Eurozone, which saw a contraction of 0.1% in the third quarter after stagnating for most of this year, is entering a phase where restrictive budget measures are set to become the norm. This shift marks a stark contrast to the supportive fiscal policy stance adopted since the onset of the pandemic in 2020. For countries with high debt, such as Italy, the impact is expected to be particularly challenging. These countries will now have to lay out plans to reduce debt and deficits more aggressively, potentially dampening domestic demand and economic activity.

For credit managers, this heralds a need for heightened vigilance, especially in high-debt countries. The focus should be on considering the potential squeeze government spending will have downstream on various sectors. This will likely entail a more conservative approach to credit terms and heightened monitoring of payment practices, with more robust collections policies.

The situation in Germany, the EU’s largest economy, deserves particular attention. The recent court ruling that created a budget crisis is expected to exert a ‘fiscal drag’ on the economy. With economists slashing Germany’s growth forecast for next year, credit professionals should brace for potential impacts on German businesses and their ability to meet credit obligations.

In this evolving fiscal environment, trade credit must adopt a proactive and dynamic approach. It’s crucial to stay abreast of policy changes and economic forecasts and understand their implications on our customers’ industries and markets within the Eurozone. Regularly revisiting credit risk models, incorporating potential fiscal drags and reduced government spending into these models, and staying in close contact with clients to gauge their financial health will be key.

As the Eurozone moves into a more restrictive fiscal phase, credit professionals need to balance caution with opportunity. Identifying sectors less impacted by government spending cuts or those that might benefit from any potential ECB rate cuts will be essential. The current fiscal squeeze in the Eurozone is not just a challenge; it’s an opportunity for astute credit managers to demonstrate their expertise in navigating complex economic landscapes.

5️⃣ Baker Ing's 2023: Wrapped 🌟🌐

As we bid farewell to 2023, Baker Ing reflects on a vibrant year of growth, innovation, and industry impact. It’s been a period where we not only consolidated our expertise in credit and receivables management but also expanded our reach and influence across the industry.

A standout achievement this year has been the launch of these very Baker Ing Bulletins. These weekly insights are quickly becoming a cornerstone of industry intelligence, amassing nearly 2000 subscribers in just a few short months, already reading weekly. The popularity of these updates underscores our aim to provide thought leadership and act as your trusted advisors in the trade credit space.

Commitment to in-depth analysis and actionable insights was further evident in the release of a whole raft of new sector-specific research reports. Covering diverse areas like Healthcare, Automotive, FMCG, and Beauty & Perfumes, these reports offered strategic guidance, helping our clients navigate the complexities of their markets. These publications have been offered free in full for all, and we continued to improve access by offering online viewing of the reports with dynamic updates.

2023 also saw key additions to the Baker Ing family. The arrival of industry experts such as Bill Dunlop EAICD FCICM-MIEx EIICM EACCEE and John Kelly marked a significant expansion of our capabilities. Their expertise in international credit and order-to-cash processes has greatly enriched our service offerings and client interactions, enhancing our reputation as a global leader in our field.

Another highlight this year was our active participation in pivotal events like the Credit Expo Belgium, AICDP – Association Of International Credit Directors and Professionals , Credit Matters XII with Callisto Grand, and the Irish Credit Team Awards with Declan Flood which showcased our commitment to industry engagement and professional development. Additionally, our hosted events and webinars, including the Baker Ing Credit Cruise in London, and the Situation Room in Krakow have been not just platforms for knowledge sharing but also celebrations of our vibrant professional community.

As we look towards 2024, Baker Ing is poised to continue our trajectory of impactful growth and innovation. We are committed to building on the successes of this year, furthering our mission of delivering exceptional services and fostering a community of well-informed and connected credit professionals.

We have a whole lot more planned!

2023 has been a remarkable year for Baker Ing. Our journey has been a testament to the dedication, excellence and leadership of our people, partners and clients. We look forward to the new year with renewed enthusiasm, ready to embrace new challenges, new opportunities, and to continue our journey of innovation and excellence in high-value and sensitive accounts receivable.

Merry Christmas.

As we close the chapter on this week’s credit tales, let’s pause to appreciate staying ahead in this dynamic arena is more than a skill; it’s an art. Keep honing your analytical acumen and strategic thinking – Global Outlookis your indispensable guide through the intricate world of trade credit.

Until next time, stay informed, stay sharp, and may you enjoy this time of year for some peace and rest.


FMCG 2023: Charting a Path Through FMCG's Changing Landscape

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Presented by Baker Ing: Specialists in High-Value and Highly-Sensitive Accounts Receivable

Dive into the dynamic and ever-changing universe of Fast-Moving Consumer Goods (FMCG), a sector where quick adaptation meets strategic foresight. Baker Ing stands as a beacon of expertise, particularly skilled in managing high-value and highly-sensitive accounts. Our bespoke services are crafted for global brands that operate in the fast-paced FMCG industry, ensuring they stay ahead in a market defined by rapid consumer trends and shifting preferences.

Seeking a Strategic Partner in the FMCG Sector?

Experience the advantage of specialised expertise with Baker Ing. Our team, comprised of seasoned credit professionals, excels in crafting tailored strategies to navigate the unique challenges of the FMCG landscape. We invite you to engage with us and discover how a partnership with Baker Ing can revolutionise your collections.


Baker Ing Bulletin: 15th Dec 2023

Global Debt Dilemma, UK Economic Dip, SME Banking Battle, China's Market Malaise — Baker Ing Bulletin: 15th Dec 2023

Welcome to this week’s dive into the dynamic world of trade credit.

We’re navigating the choppy waters of the UK’s economic slowdown, where GDP dips are stirring more than just a nice cup of tea. Across the world, China’s property sector is playing Jenga with global trade risks, and we’re keeping a keen eye on small businesses wrestling with the big banks.

So, buckle up and adjust your office chairs – let’s go…

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1️⃣ Navigating the Debt Quagmire: Precision Tactics for Trade Credit Professionals 📉🔍

The World Bank’s reporting of skyrocketing debt repayments by developing countries rings alarm bells for trade credit professionals. As interest rates soar, these nations face a daunting $443.5 billion repayment bill in 2022, diverting crucial funds from vital sectors like health and education. This unprecedented financial strain, exacerbated by the global shift in monetary policy, notably the US Federal Reserve’s response to inflation, is a critical point of concern for those dealing with emerging markets.

The crux of the challenge lies in the nuanced risk profiles of these markets. Traditional credit assessment models may not adequately capture the heightened geopolitical risks, economic instability, and potential policy shifts in these regions. It’s crucial to enhance country-specific risk analysis. Credit managers should delve deep into the fiscal policies, political stability, and economic health of each country. This involves not just skimming through general economic indicators but also analysing the country’s specific debt composition, repayment schedules, and the proportion of foreign currency debt. Such a detailed approach can help in identifying vulnerabilities that might not be apparent in a broader analysis.

Moreover, credit professionals can seek to actively engage with local financial institutions, credit insurers and international receivables specialists within these markets. These entities often have a more nuanced understanding of local businesses and market dynamics. Collaborating with them can provide insider perspectives, facilitating more informed credit decisions.

The World Bank’s report underscores the need for an even more discerning, hands-on approach to emerging markets. By combining detailed country-specific analysis, strategic diversification, local collaboration, and dynamic credit terms, trade credit can better navigate the complexities and risks.

2️⃣ UK's Economic Contraction: Implications for Trade Credit in Turbulent Times 🇬🇧💼

The unexpected contraction of the UK economy, by 0.3% in October, paints a concerning picture for credit professionals. The broad-based downturn, touching services, manufacturing, and construction, underscores the pressing need for a strategic recalibration in credit risk assessment and management.

For trade credit, this contraction is a red flag. The decline across multiple sectors, especially in services – the backbone of the UK economy – suggests that businesses may face increasing liquidity challenges. This situation is exacerbated by the cost of living crisis, which impacts both consumer spending and businesses’ operational costs. Therefore, a critical review of the creditworthiness of companies, particularly those in the hardest-hit sectors, is essential.

The legal and IT sectors, which experienced notable declines, traditionally have been considered stable credit risks. However, the current downturn necessitates a more cautious approach. Credit professionals should closely monitor these sectors for signs of continued distress, potentially tightening credit terms or seeking additional assurances to mitigate risk.

Moreover, the Bank of England’s stance on interest rates, while aimed at controlling inflation, is likely to add further stress to businesses already grappling with higher costs. This situation could lead to an uptick in defaults and delayed payments, making it crucial for credit managers to reassess their exposure to interest rate-sensitive sectors.

Whilst the government’s measures, including tax cuts to stimulate growth, aim to revive the economy, credit managers should remain vigilant. The anticipated economic stimulus may not immediately translate into improved business performance or creditworthiness. A cautious, forward-looking approach is advised, considering potential delays in economic recovery.

The flatlining of output over the recent quarter is a stark reminder of the fragile economic environment. As credit professionals, we must engage in proactive dialogue with our clients to understand their specific challenges and adjust credit terms accordingly. It demands a dynamic, responsive approach. Ongoing reassessment of risks, close monitoring of sectoral health, and strategic portfolio recalibration are essential.

3️⃣ UK Small Businesses vs. Banking Practices: Walking a Trade Credit Tightrope 🏦🔍

The outcry from UK small businesses calling for regulatory intervention over what they perceive as ‘harsh’ banking practices presents is particularly pertinent, as it sits at the intersection of financial regulation, banking conduct, and the operational realities of small businesses – central to credit management.

The FSB’s super-complaint to the FCA brings to light a significant concern in small business operations: the overuse of personal guarantees. This practice, often seen as a straitjacket for business growth, places pressure on entrepreneurs, compelling them to risk personal assets for business loans. Such demands, particularly on small loans, it is argued stifle business innovation and growth, as owners become cautious, often abandoning or scaling back business or growth plans.

This move by the FSB could potentially reshape SME lending. The prevalent use of personal guarantees, while acting as a security, arguably casts a shadow of risk aversion among small business owners. The fear of losing personal assets could have led many to sidestep opportunities for growth, opting instead for a conservative approach that might safeguard personal interests but stymies business expansion.

As we stand at this crossroads, the potential regulatory responses to the FSB’s complaint could herald a new era in SME lending. Any adjustments in the regulatory framework could tilt the scales either towards easing the burden on small businesses or maintaining the status quo. Trade credit professionals must therefore keep a keen eye on these developments, understanding that the outcome could significantly influence the financial health and creditworthiness of small enterprises.

Moreover, it shines a light on the need for a nuanced approach to lending – one that balances the need for security with growth opportunities. As stewards of credit, we must factor in these shifts, continually optimising for the delicate balance between risk and opportunity that defines the small business landscape.

In summary, the FSB’s super-complaint is more than just a challenge to current banking practices; it’s a call to rethink how risk is perceived and managed in small business financing. As the story unfolds, trade credit should be ready to adapt, ensuring that we are not just evaluators of creditworthiness but also insightful interpreters of an evolving financial ecosystem.

4️⃣ China's Property and Retail Woes: A Tangled Web for Trade Credit 🏙️📉

Property investment fell by 9.4% from January to November year-on-year, (following a 9.3% drop in January-October), and retail sales in November rose by 10.1% (a rate lower than the anticipated 12.5%). However, industrial output grew by 6.6% in November, a positive sign amidst the downturn. Overall, November’s data paints a picture of a Chinese economy struggling to regain its pre-pandemic vigor, with the property sector and consumer spending emerging as key areas of concern.

The downturn in China’s real estate market is a global trade credit headache. With sales and investment plummeting, the ripple effects are felt worldwide, given the sector’s extensive links to a whole range of global industries. This downturn has a cascading effect on the construction, raw materials, and consumer goods sectors, all pivotal elements in international trade credit.

Moreover, the broader retail sector’s underperformance signals a weakening in domestic demand, a crucial driver of global economic activity. Trade credit must now factor in the potential for extended payment terms and increased credit risks associated with Chinese businesses and their international partners.

However, it’s not all doom and gloom. The uptick in industrial output, driven by auto production and power generation, offers a silver lining. This divergence within the economy highlights the need for a nuanced approach to risk assessment. Credit managers must discern between sectors showing resilience and those mired in challenges.

Strengthening relationships with well-performing sectors while carefully navigating the troubled ones will be key to maintaining a healthy cash flow during these uncertain times.

This involves a deeper engagement with industries showing resilience, like automotive production and power generation, which have exhibited growth despite the overall economic slowdown. For credit professionals, this means not just extending credit but also understanding the specific dynamics and growth trajectories of these industries. It’s about becoming a partner, not just a financier.

Simultaneously, navigating through troubled sectors requires a careful balancing act. It’s not just about minimising exposure but also about understanding the long-term potential of these sectors. For instance, the retail sector, despite its current struggles, is integral to China’s long-term growth. Therefore, the approach here should not be to withdraw completely but to recalibrate the terms of engagement. This could mean more stringent credit assessments or adjusted terms that reflect the heightened risk while still keeping the door open for future opportunities.

As China’s property woes and retail sluggishness intertwine, they create a complex web for credit professionals. Navigating this landscape demands agility, insight, and a keen eye on the subtle shifts within China’s economy and its global implications.

5️⃣ Embracing the Spirit of Giving: Supporting Alzheimer's Society 🎄💜

With Christmas almost upon us, Baker Ing is filled with gratitude and warm wishes for our colleagues, clients, and partners.

This year, our Christmas spirit is channelled towards an incredibly worthy cause – supporting the Alzheimer’s Society. This organisation dedicates itself to combating Alzheimer’s disease and offering crucial support to those affected. Their work not only aligns with our values of compassion and commitment but also reminds us of the power of community and the impact we can have when we come together.

In this spirit of unity and giving, we extend an invitation to join us in supporting the Alzheimer’s Society. Your generosity, no matter the size, has the potential to bring significant change and hope to countless lives. To contribute to this noble cause, please visit Alzheimer’s Society Donation Page.

As we celebrate this season in our unique ways (or not) whether by enjoying a well-earned rest, continuing our vital work, or engaging in personal traditions, let us unite in making a positive difference in the world.

From all of us at Baker Ing, we wish you a Christmas filled with joy, peace, and the warmth of shared goodwill. Merry Christmas! 🌟🎁

As we turn the final page of this week’s trade credit saga, let’s take a moment to reflect. In a world where numbers weave intricate stories and policy shifts create plot twists, staying ahead is key. Keep your analytical edge sharp and your strategic mind sharper: Global Outlook is your compass in the dynamic landscape of trade credit.


Wishing you a joyful Christmas

As Christmas draws near, all of us at Baker Ing wish to extend our warmest greetings. Whether you’re looking forward to a well-deserved break, continuing your important work, or celebrating in your own unique way, we hope this season brings you joy and peace.

This year, we’re embracing the spirit of giving by supporting the Alzheimer’s Society – an organisation dedicated to fighting Alzheimer’s disease and providing invaluable support to those affected. Their mission deeply resonates with our values of care, commitment, and community.

We invite you to join us in supporting this worthy cause. Every contribution, big or small, can make a significant difference to the lives of many: https://lnkd.in/d8inmzHp

As we celebrate, or not, in our different ways, let’s unite to make a meaningful impact.

Wishing you a joyful Christmas.


Baker Ing Bulletin: 8th Dec 2023

EU-China Challenge, Irish Tax Triumph, German Investment Gloom, Hottest Tickets in Town — Baker Ing Bulletin: 8th Dec 2023

Welcome to this week’s whirlwind tour of trade credit.

We’re peering through the diplomatic fog of the EU-China trade skirmish, and, in Ireland, it’s raining euros as corporate taxes hit the jackpot. Meanwhile, Germany’s investment brakes have credit in a tizz, and The Situation Room has become the hottest ticket in town.

So, grab your notepad (and perhaps a strong coffee) as we dissect this week’s happenings…

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1️⃣ Navigating Sino-European Trade Surplus 🌐🔍

In the wake of the EU-China summit, the sprawling €400bn trade surplus in China’s favour has emerged as a significant point of contention indicating potential for shifting trade winds that could influence risk across industries.

The surplus itself is emblematic of deeper systemic issues—namely, China’s restrictive market practices and aggressive state support for domestic industries, which have long been bones of contention in Sino-European relations. The EU’s pointed criticism suggests a brewing storm of policy recalibrations that could see European credit managers grappling with the ripples across global supply chains.

For industries ranging from manufacturing to high-tech, European companies may see tighter credit terms and increased premiums as insurers and credit managers weigh the risks of policy-induced market disruptions. Conversely, Chinese companies facing potential EU retaliatory measures could experience credit squeezes as European financial institutions reassess their exposure to these markets. Moreover, with China’s EV market burgeoning under hefty subsidies, European credit managers must now factor in the competitive disadvantages domestic manufacturers may face, which could, in turn, affect their credit ratings.

What now? Granular assessment of exposure to Chinese markets, a comprehensive review of counterparty risk, and an appraisal of how shifts in policy could affect payment terms and credit availability. The EU’s stance could signal a more assertive trade policy era, with credit departments needing to forecast and model scenarios ranging from the imposition of tariffs to the introduction of quotas.

As the EU and China continue their dance of economic interdependence and rivalry, we must adopt an anticipatory and scenario-based approach to credit management. This will be vital in steering through an era where trade policy, politics, and credit risk are increasingly intertwined.

2️⃣ EV Tariff Delay Fuels Credit Strategy Shift 🚗⏳

The European Commission’s decision to extend the transition period for new trade rules in the electric vehicle (EV) sector, coupled with a €3bn investment in the EU’s battery manufacturing, is a significant development. Whilst the immediate focus is on the automotive industry, particularly in the EU and UK, the ripple effects of these changes are expected to be felt across the broader supply chain. The delay in implementing stringent rules provides a temporary reprieve for automotive manufacturers, but it also signals a period of adjustment and realignment for suppliers in related industries.

For credit professionals in automotive and sectors beyond, including electronics, energy, and manufacturing, this development necessitates a reevaluation of risk exposure. Suppliers and businesses within these interconnected industries might experience shifts in demand, production adjustments, and changes in their financial performance as a result of these evolving dynamics in the EV market. Companies supplying components, raw materials, and technology to the EV industry could see changes in order patterns and payment terms, impacting their credit risk profiles.

Furthermore, the EU’s investment in battery manufacturing signals a strategic move towards localising production, potentially reducing reliance on non-EU sources. This could lead to shifts in global trade patterns, affecting suppliers and businesses in regions currently dominant in battery production, like China. Trade credit in these regions will need to monitor developments closely, as they could lead to changes in export volumes, payment terms, and overall market demand.

The extension of the transition period also reflects broader themes of supply chain resilience and diversification, which have become increasingly crucial in the post-pandemic world. For credit managers, this means considering not just the direct impacts on specific industries, but also the indirect effects on the global supply chain. This includes assessing the financial stability and creditworthiness of companies in sectors that may be indirectly impacted by these changes.

3️⃣ Ireland's Tax Windfall Signals Credit Caution 🇮🇪💼

Ireland’s record collection of €6.3bn in corporation tax during November, after a period of concerns about weakening performance, is significant. The government’s decision to set up a sovereign wealth fund with this windfall, and the broader context of Ireland benefiting from tax reforms that attract major global companies, create a multi-layered impact for trade credit.

The surging corporate tax receipts are a result of major companies like Apple restructuring their affairs to declare more profits in Ireland, reflecting the country’s low-tax, high-activity status. This restructuring, driven by global pressures for tax transparency, has led to substantial real operations by these corporations in Ireland, contributing to this tax boom.

The significant increase in corporation tax revenue suggests a robust economic environment, potentially enhancing the creditworthiness of Irish businesses, particularly in the technology sector. This sector’s strong performance implies a stable and potentially growing market for trade credit. However, Finance Minister Michael McGrath’s caution about the volatility of this revenue stream and the end of an era of persistent over-performances must be heeded. The reliance on these temporary receipts for permanent fiscal commitments could lead to future financial instability, a factor that credit managers must account for in their risk assessments.

Furthermore, the impending increase in the headline tax rate from 12.5% to 15% for the largest firms, in response to a global minimum tax rate, adds another layer of complexity. This change may not yet have led to behavioural changes among multinational groups, but its long-term implications on Ireland’s attractiveness as a tax-friendly jurisdiction, and consequently on the businesses operating there, could be significant.

While the current fiscal strength of Ireland presents a favourable environment for trade credit, the shifting tax landscape and potential long-term implications of global tax reforms require a cautious and forward-looking approach.

4️⃣ German Investment Retreat Prompts Credit Reassessment 🏭📉

The stark downturn in German investment plans, as reported by the Ifo Institute, is a critical indicator for credit professionals. With the net investment index plummeting from 14.7 to just 2.2, reflecting a steep decline in business confidence and spending intentions, this trend poses significant challenges for credit management within and beyond Germany.

This shift in investment sentiment, primarily in the manufacturing sector and notably among energy-intensive industries, signals potential cash flow and creditworthiness issues. Trade credit must now closely monitor our German business partners, assessing any increased risk of delayed payments or financial instability. The changing landscape also means revisiting and possibly tightening credit terms and exposure limits for affected companies.

Furthermore, the broader economic implications of this downturn extend to the entire supply chain. Companies that rely heavily on German manufacturing might also face increased risks, necessitating a review of their credit strategies. Given this context, credit professionals should now delve deeper into sector-specific analyses. This required assessing how the curtailment in investment might ripple through the financial health of companies in these sectors. Understanding the intricacies of each sector’s reaction to the current economic climate is crucial.

Moreover, engaging in regular dialogue with German business partners becomes imperative. The objective must be to glean insights into their strategies for navigating these turbulent economic waters. How are they planning to mitigate risks? What measures are they taking to ensure financial stability? These conversations can offer invaluable perspectives that go beyond quantitative analysis, providing a clearer picture of the potential credit risks and opportunities.

5️⃣ A Full House Underlines Industry Trends 🎟️📈

Baker Ing, in partnership with Callisto Grand, successfully hit a nerve in our industry’s zeitgeist with the “Situation Room: Mastering Cash Collection” workshop. The event, which swiftly reached full capacity, is a bellwether of the acute interest in sophisticated cash collection techniques and strategic client communication within credit management.

The event agenda was tailored to the pulse of modern receivables management, addressing advanced methodologies for optimising cash flow and reducing credit risk. Key focus areas included leveraging data-driven KPIs for AR teams, navigating the intricate web of stakeholder relationships, and a holistic approach to collections that marries the ‘why’ with the ‘how.’ This holistic view is particularly pertinent in a business environment where the efficacy of communications can pivotally affect a company’s liquidity and financial health.

The overwhelming response and rapid booking of the seminar underscore the profession’s recognition of the intricate interplay between robust receivables strategies and overarching business success. It reflects a broader industry trend towards not only embracing the quantitative but also the qualitative aspects of financial interactions in a world where soft skills have become as valuable as financial acumen.

Responding to the high demand, Baker Ing and Callisto Grand are set to replicate the success of the seminar with an additional session in Łódź, Poland. This follow-up promises to distil further the essence of effective credit management for professionals seeking to enhance their tactical approach in an ever-evolving market landscape.

In a world where the landscape of trade credit is perpetually shifting, Baker Ing and Callisto Grand’s Situation Room series stands out in continuous professional development, ensuring that the credit community remains agile, informed, and ahead of the curve.

Contact Lisa Garofalo-Moss for more details.

As we close this chapter, remember: every number tells a story, and every policy shift is a plot twist. Stay sharp, stay savvy, and don’t let the fast-paced drama of trade credit catch you off-guard. Whether you’re a numbers master or a strategy guru, Global Outlook is your go-to for in-depth insight and analysis for credit managers.


Update on The Situation Room in Katowice, Poland 📣

We are delighted to announce that our training session on Collections, Communication and Leadership, co-hosted by Callisto Grand and Baker Ing, is now fully booked.

Due to the overwhelming response and to accommodate the high demand, we’re excited to plan another session in Q1. The proposed location for this event is Łódź, Poland.

Interested in participating? We invite you to reach out for more information and early registration for the next event: Please contact Christina Onofrei for more information.

#ProfessionalDevelopment #CreditManagement #LeadershipTraining #BakerIng #CallistoGrand #NetworkingOpportunity


Baker Ing Bulletin: 17th Nov 2023

Retail Rumbles, Far-East Farewell, Germany's Real Estate Rethink, UK Carbon Tax, and Beauty's Bold Blueprint — Baker Ing Bulletin: 17th Nov 2023

Ready to unravel the latest twists in trade credit?

This week, we’re navigating the frosty trails of UK retail, where plunging sales and tightened belts cast long shadows over credit strategies.

As we step into the complex dance of the UK and EU’s carbon tax tango, we’re recalibrating our moves to match the rhythm of this new eco-nomic beat.

Meanwhile, the US Pension Fund Gambit’s retreat from Hong Kong and China echoes through the corridors of global investment, prompting a strategic reshuffle.

And in Germany, the housing market’s seismic shifts send ripples through real estate and construction credit.

So, grab your financial binoculars and let’s zoom in on this week’s dynamic display of credit conundrums and opportunities.

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1️⃣ A Chilly Season for UK Retail 🛍️❄️

The latest tremor in UK retail, marked by a 2.7% plunge in October retail sales year-on-year, is a significant indicator for those of us navigating credit. Against the backdrop of high interest rates and economic tightening, this downturn demands a detailed analysis.

The most striking thread is the consumer spending shift. With wallets snapping shut, discretionary spending is taking a back seat. This behavioural change isn’t just about consumers spending less; it’s about them spending differently. The implications for credit are huge, as this shift necessitates a recalibration of credit risk assessments across a range of retail segments. Retailers reliant on non-essential spending are now in murkier waters, calling for a more cautious credit approach.

The potential response from the Bank of England, hinting at a trim in interest rates next year, adds another layer of complexity. While this move might provide a lifeline to some sectors of retail, it also signals deeper economic concerns that credit professionals must navigate. The anticipation of this change underscores the need for a strategic reassessment of credit terms and payment behaviour expectations, particularly in sectors more susceptible to interest rate oscillations (e.g., Consumer Durables and Home Appliances, Automotive Retail, Real Estate and Home Improvement Retail, High-end Retail and Luxury Goods, Electronics and High-Tech Retail)

Furthermore, the retail downturn isn’t isolated; it affects manufacturers and suppliers linked to the sector. For credit professionals, this means keeping a vigilant eye on the entire supply chain, identifying potential vulnerabilities, and adjusting strategies to buffer against disruptions. While some segments like luxury goods or online retail might offer safer harbours, traditional high-street retail could face rougher seas. Identifying these sector-specific risks and opportunities is key to navigating this changing landscape.

The current state of UK retail is complex with far-reaching implications for trade credit. The challenge is significant, but so are the opportunities for those poised to understand and act on these nuanced shifts.

2️⃣ US Pension Fund Gambit: Shifting Sands in Global Investments 🇺🇸🔄🌏

The Federal Retirement Thrift Investment Board’s (FRTIB) recent withdrawal of investments from Hong Kong and China, marks a pivotal moment for international credit. This decision, steering the helm of a massive $771 billion fund away from its traditional investment indices in these regions, echoes the heightened geopolitical tensions and evolving global risk profiles. For credit professionals, this move signifies a deepening intertwining of geopolitical dynamics with financial strategies, necessitating a re-evaluation of risk management and investment approaches.

The withdrawal from these markets is a manifestation of growing concerns over the stability and predictability of these regions. It reflects an apprehension about the political and economic uncertainties, emphasising the need for credit professionals to reassess their exposure in these markets. It impacts not only direct investments in affected regions but also the broader network of trade relationships.

In response to this development, credit professionals need to scrutinise their portfolios, especially those with significant ties to Hong Kong and China. A comprehensive analysis of the potential impact of these geopolitical tensions on their creditworthiness is crucial. This involves not just looking at direct investments but understanding the extended network of trade relationships that could be affected. Diversification across different markets and sectors becomes critical in mitigating the risks associated. Expanding portfolios to include more activity in more politically stable regions or sectors less susceptible to geopolitical influences is now more important than ever. This strategy is not just about reducing risk but also about capturing opportunities in other markets that might emerge as more attractive due to these shifts.

Moreover, adopting dynamic credit policies that can quickly adapt to changing geopolitical landscapes is imperative. Establishing flexible credit terms and conditions that can be modified in response to evolving international events will be crucial in maintaining the agility needed in today’s volatile market. Trade credit must integrate geopolitical risk analysis into regular market assessments. This enhanced monitoring will ensure we remain aware of emerging risks and opportunities, helping us make more informed decisions.

In navigating these complexities, professionals must maintain a balance between risk mitigation and seizing new opportunities presented by the shifting global economic landscape. Opportunities may arise in industries that are less impacted by global political shifts, such as healthcare, essential consumer goods, and industries focused on domestic markets with lower export risks. Additionally, there’s a chance to reevaluate credit terms to better align with the evolving risks and opportunities in these new markets, potentially offering more flexible or innovative credit solutions to customers in less volatile regions or industries. This strategic shift in focus requires a keen understanding of the changing global dynamics and an agile approach to risk management, ensuring that credit decisions are both prudent and opportune in this new economic context.

3️⃣ UK's Carbon Charge Crusade: A New Tax Frontier in 2026 🇬🇧💨🌿

Brace yourselves, trade credit, as we navigate the latest turn in the UK’s climate policy odyssey. In a bold stride towards ‘environmental responsibility’, the UK government, under Chancellor Jeremy Hunt’s stewardship, is setting the stage for a groundbreaking Carbon Border Tax by 2026.

The introduction of CBAM and similar policies signals a move towards penalising high-carbon imports, which will inevitably affect the cost structures of companies reliant on carbon-intensive production processes or supply chains. Credit professionals need to closely monitor these changes, understanding how they might impact the creditworthiness and financial stability of their clients. This requires a deeper analysis of the supply chain and production methods of clients to evaluate their exposure to these new carbon taxes.

Moreover, this shift towards a ‘greener’ economy opens up new opportunities. There is potential for innovative credit products that incentivise low-carbon operations, such as preferential rates or terms for companies demonstrating strong sustainability credentials or investing in green technologies. Staying ahead in this new tax frontier will require us to be more agile and adaptive in our strategies than ever. This might involve developing new risk assessment models that take into account a company’s carbon footprint and its preparedness for a low-carbon economy. It also means being proactive in understanding the varying carbon tax policies across different regions and their potential impact on international trade dynamics.

CBAM and the EU’s carbon tax policies are not just regulatory changes; they are reshaping international trade and commerce. Credit professionals must navigate this new terrain with a keen focus on sustainability, redefining our credit strategies to not only manage risks but also to seize opportunities in a world where environmental considerations are becoming central to economic decisions.

4️⃣ Germany's Housing Market Crisis: Echoes of Economic Concern 🏠📉

The downturn in Germany’s housing market, marked by a shift from robust demand and construction to a period of insolvencies and affordability crises, poses critical challenges for trade credit professionals. This dramatic transformation in Europe’s largest economy requires a reevaluation of credit strategies, especially for those engaged in sectors tied closely to real estate and construction.

The situation is further complicated by external economic factors, such as soaring raw material costs and the European Central Bank’s interest rate hikes. These elements have not only affected market dynamics but also altered the risk profiles of companies within these sectors. Credit professionals must now factor in these heightened risks, adjusting their exposure to these markets accordingly.

For those involved in extending credit to construction and real estate businesses, the current downturn requires a heightened emphasis on liquidity analysis and stress testing of borrowers. Understanding the cash flow dynamics and resilience of businesses in these sectors becomes crucial in ensuring that extended credit lines are secure. The approach should be geared towards identifying early warning signs, adapting credit terms to reflect changing market realities, and ensuring a balanced portfolio that can withstand the fluctuations of this volatile market.

The downturn in Germany’s housing market, beyond its direct impact on construction and real estate sectors, creates significant ripple effects across the economy, affecting a range of interconnected industries. The slowdown in construction not only impacts suppliers of raw materials, furnishings, and equipment but also has broader implications for financial institutions and insurance companies. This situation demands that credit professionals adopt a holistic view of their risk assessments, considering the wider economic repercussions. They must closely monitor these developments, adjusting their credit policies and strategies to manage the increased risk exposure across these interconnected sectors.

5️⃣ Beauty & Perfumes 2023: Navigating New Aromas and Aesthetics 💄🌸

In the beauty and perfume business, change is the only constant and the much-anticipated Beauty & Perfumes 2023 report from Baker Ing has arrived, offering an incisive look at the sector’s evolving dynamics. With a Moderate Worldwide Risk Score (WRS) of 4.5 out of 10, the industry stands at a crossroads of challenge and opportunity.

As the report illustrates, the beauty and perfume industry thrives on a complex network of global manufacturers, suppliers, distributors, and e-commerce platforms. It’s a world where large multinational corporations set the tone, and supply chains stretch across continents. On the flip side, there are challenges; adapting to diverse regulations, rapidly shifting consumer preferences, and the need for innovation to remain competitive. This report highlights the importance of standing out in a crowded market and the necessity of embracing technological advancements like augmented reality (AR) and artificial intelligence (AI) to enhance product formulations and customer experiences.

For credit professionals, the Beauty & Perfumes 2023 report encourages a proactive approach to navigating risks and capitalising on the opportunities that arise from the industry’s ebbs and flows: https://bakering.global/product/beauty-perfumes-2023/

As we draw the curtains on this week’s credit saga, remember, for those looking to chart a course through these turbulent times, our Global Outlook remains your steadfast compass, guiding you with insights and analysis for credit professionals: https://bakering.global/global-outlook/

Until our next rendezvous in risk and reward, keep your eyes on the horizon and your strategies sharp!


Beauty & Perfumes 2023: Navigating a World of Elegance and Uncertainty

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Download this paper soon from Global Outlook: Download

Presented by Baker Ing: Specialists in High-Value and Highly-Sensitive Accounts Receivable

Step into the vibrant world of beauty and perfumes, where elegance meets the cutting edge of industry trends and market shifts. Baker Ing offers unparalleled expertise in navigating such high-value, sensitive accounts. Our services are tailored for global brands seeking to flourish amidst the fluid beauty landscape, providing clarity and strategic foresight in a world of ever-changing styles and preferences.

Looking for a Strategic Ally in the Beauty & Perfume Industry?

Discover the power of specialised expertise with Baker Ing. Our team, composed of adept credit professionals, is dedicated to developing custom solutions that meet the unique challenges of the beauty and perfume sector. We invite you to connect with us and explore how a partnership with Baker Ing can transform your approach and guide your journey to success in the world of beauty and perfumes.


Baker Ing Appoints Bill Dunlop, International Credit Visionary, as Associate Director.

Baker Ing Appoints Bill Dunlop, International Credit Visionary, as Associate Director.

Baker Ing is thrilled to announce the appointment of Bill Dunlop EAICD FCICM-MIEx EIICM EACCEE as Associate Director.

Bill brings over four decades of international credit and collections expertise to Baker Ing. His stellar reputation in credit management is reinforced by his role as President & Founder of the AICDP – Association Of International Credit Directors and Professionals.

“We are exceptionally pleased to welcome Bill Dunlop to our team,” states Sarah Ing, COO, Baker Ing International. “His wealth of experience and in-depth industry insights are unparalleled, and we are excited for the strategic value he will bring to our global operations.”

Bill’s accession to Baker Ing solidifies our commitment to delivering top-tier credit control, debt collection, and in-country legal services. His wealth of experience promises to strengthen Baker Ing’s already formidable global infrastructure and facilitate streamlined operations through swift, expert decision-making. Bill has been lauded for his exemplary leadership, particularly in his role with the AICDP – Association Of International Credit Directors and Professionals, where he continues to be instrumental in defining the role of International Credit Director for senior personnel. This aligns perfectly with Baker Ing’s ethos of delivering client-centric solutions with an emphasis on quality.

We empower brands with unparalleled receivables management, specialising in high-value, sensitive accounts, we strengthen client relationships whilst ensuring financial resilience.

With Bill onboard, Baker Ing further cements its role as a client-centric firm, combining robust people, technology, and data for customised collections. His meticulous approach to risk assessment and commercial risk considerations will add an extra layer of precision to Baker Ing’s service offerings.

For more information about our world-class receivables management services and the recent appointment of Bill Dunlop as Associate Director please contact us:

admin@bakering.global
+44 (0)207 871 1790
Office 7, 35-37 Ludgate Hill, London, England, EC4M 7JN


Baker Ing Bulletin: 10th Nov 2023

Sanofi Scrutiny, WeWork Woes, AI Arms Race, Apple's Appeal, and Spain Spotlight — Baker Ing Bulletin: 10th Nov 2023

Ready to dive straight back into the thick of it?

This week, we’re balancing on Sanofi’s tightrope as credit in pharma faces confidence and caution. We’re mapping the fallout in WeWork wonderland, where the promise of endless expansion meets the reality of real estate. As the AI arms race accelerates, credit analysts buckle up for a wild ride through Silicon Valley’s latest frontier. And, with Apple’s tax tangle in the EU spotlight, we’re crunching the numbers on what this means for the fiscal fabric of trade credit.

Meanwhile, Spain’s economic stage is set for a performance that could see trade strategies either taking a siesta or charging like a bull.

Let us pull back the curtain on this week’s ensemble of economic intrigue…

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1️⃣ Sanofi Scandal: Credit Under the Microscope 🔍💊

Sanofi’s potential market manipulation casts a significant shadow over the pharmaceutical industry, particularly for credit. France’s financial prosecutor’s inquiry into alleged dissemination of false information and price manipulation pertaining to Sanofi’s financial communications underscores the fragility of investor confidence and stock valuations, two critical elements influencing credit conditions and insurance terms within the sector.

As credit professionals, we must scrutinise the direct impact of such investigations on the creditworthiness of pharmaceutical companies. Sanofi’s robust defense against the allegations and its aggressive legal stance suggest a potential escalation of the situation. The heightened scrutiny and the associated risks could lead to more stringent credit terms and higher insurance premiums for companies within the industry, especially for those relying heavily on the performance of singular blockbuster products.

Sanofi’s remarkable sales growth of Dupixent, which significantly contributes to its revenue, is a double-edged sword. While it reflects the company’s commercial success, it also highlights a dependency that could be perceived as a credit risk in light of the investigation. The resultant investor skepticism, mirrored in the nearly 20% share price drop after the reduction in earnings forecasts, further complicates the credit landscape.

The Sanofi market manipulation probe is a stark reminder of the interconnectivity between corporate governance, regulatory scrutiny, and the trade credit environment. As professionals, we must maintain a vigilant eye on the developments of this case, preparing for the ripple effects across the credit terms, insurance conditions, and risk assessments within the pharmaceutical sector.

2️⃣ From Co-Working to Cautionary Tale 🏢📉

The descent of WeWork into the abyss of bankruptcy is a narrative of overreach within the vibrant world of flexible workspaces. WeWork’s journey from emblem of urban cool to a cautionary tale underscores the volatility inherent in the commercial real estate sector and carries significant implications for trade credit. The company, once a darling of investment portfolios, found itself struggling beneath the yoke of $13 billion in office lease obligations, an albatross that precipitated its filing for bankruptcy.

This unraveling has cast ripples affecting not only office landlords, who are grappling with a paradigm shift towards remote work, but also the broader financial ecosystem that supports the commercial property market. WeWork’s attempt to renegotiate its leases and shed future rent obligations by $12 billion speaks to a larger industry trend where flexibility is king, and the rigid structures of the past no longer suffice.

While WeWork’s saga could seem an isolated case of mismanagement and flawed business models, it’s a stark reminder to credit professionals of the importance of diligence and the agility required in today’s market. The shift towards hybrid working models, accelerated by the COVID-19 pandemic, presents both a challenge and an opportunity for the flexible working sector. Companies like IWG and Industrious are navigating these turbulent waters with varying strategies, with some distancing themselves from WeWork’s approach, favoring more sustainable models like management agreements and joint ventures.

The repercussions of WeWork’s downfall are multifaceted for credit managers. The scrutiny of flexible workspace providers will intensify, with a keen eye on the sustainability of their operational models. Credit terms may tighten, and risk management practices will need to evolve to anticipate and mitigate the risks associated with such seismic industry shifts.

In the end, WeWork’s bankruptcy is not merely the end of a company but a reflection of a rapidly transforming sector. It serves as a critical lesson; to survive and thrive in this new landscape requires an adaptive mindset and a forward-looking approach to financial strategies, ensuring that flexibility is woven into the very fabric of operations.

 

3️⃣ Tech Titans' $42 Billion Bet 💻🚀

In a strategic move that is reshaping the technology industry, Google, Microsoft, and Amazon have collectively invested a staggering $42 billion to bolster their cloud infrastructure, marking a clear trajectory towards the burgeoning field of generative AI.

The move indicates that other players in the technology sector might follow suit, increasing their investment in AI and cloud technologies to keep pace. This trend could lead to a ripple effect of increased borrowing and investment across the sector, necessitating a reassessment of credit risk not only for the big three but for the entire technology industry.

As these tech giants scale up their operations in AI and cloud infrastructure, their suppliers and partners may also need to expand their operations to meet new demands. This situation could result in increased credit requests from smaller entities within the supply chain, who may not have the financial robustness of their larger counterparts. Additionally, the substantial investment in AI by these leaders is expected to intensify competition in the tech sector, potentially leading to market consolidation.

The focus on AI and cloud technologies is poised to drive rapid innovation and disruption within the tech sector. This could mean faster obsolescence of existing technologies and business models, affecting the creditworthiness of companies that fail to adapt quickly. Credit professionals must stay attuned to these rapid changes, as they have significant implications for credit risk assessment.

As the tech giants race towards AI dominance, their actions are setting new standards and challenges for credit strategies, heralding a new era for credit management. 

4️⃣ Apple's Tax Tango 🍎⚖️

International tax law and the European Union’s legal framework is brought into sharp relief by the recent developments in Apple Inc’s tax case. The European Court of Justice’s Advocate-General has recommended that a previous ruling, which found in favoUr of Apple and Ireland in a €14.3 billion tax dispute, be overturned. This recommendation, though not binding, often foreshadows the court’s final decision, potentially upending the 2020 judgment that absolved Apple of receiving illegal tax advantages.

The implications of this case stretch far beyond Apple’s ledger. A final judgment aligning with the Advocate-General’s opinion could recalibrate the landscape of trade credit assessments and reshape country risk profiles across Europe. The potential reclamation of billions in back taxes by Ireland, which has been held in escrow pending appeal, has broader ramifications for the EU’s approach to national tax arrangements and the competitive advantages they may confer.

Apple’s case is emblematic of the broader EU crackdown on preferential tax deals, which has seen mixed success. The ongoing legal challenges faced by the EU in asserting its state-aid rules against member states reflect a complex dance of sovereignty, competition, and investment incentives. The pending ECJ ruling, therefore, is a bellwether for future regulatory actions and serves as a critical point of analysis for credit managers and investors alike.

Ireland’s low corporate tax policy, a significant driver of its economic success, is also under scrutiny. With the country poised to raise its corporate tax rate to 15% under an OECD agreement, the outcome of Apple’s case may influence the fiscal strategies of other EU nations. For trade credit and financiers, the case underscores the need for vigilant reassessment of credit terms and the importance of regulatory developments in strategic decision-making.

In sum, the Advocate-General’s opinion against Apple in the EU court represents a potential pivot point. It signals a call for rigorous attention from trade credit managers to the evolving tax landscape and its ramifications on multinational corporations and the broader European economic environment.

5️⃣ Spain 2023 🇪🇸📈

The release of the Spain Spotlight 2023 report offers credit managers an essential resource for navigating this intricate economic landscape. Comprehensive analysis provides a deep dive into the the Spanish economy, from the resurgence of its vital tourism sector to the contrasting developments in the construction and manufacturing industries.

The report offers a granular examination of Spain’s economic resurgence, focusing on the rejuvenation of its tourism industry, a critical component of national revenue that suffered a dramatic downturn during the pandemic. It balances this by shedding light on the slowing factory activity, presenting a nuanced view of the opportunities and risks that lie within these key sectors.

A spotlight is cast on the recent uptick in insolvencies, coinciding with new bankruptcy laws. This analysis is imperative for credit managers to identify potential red flags and adjust their credit practices accordingly.

Payment behaviors and standard terms are evolving too, and the Spain Spotlight 2023 report ensures credit managers are kept informed of these changes, enabling them to adjust their credit terms in alignment with the current market environment.

For optimal utility, credit managers are encouraged to bookmark the online version of the report, which provides a dynamic and interactive experience with updates not available in the static PDF version. This ensures that you have access to the most current data and analyses, allowing for agile decision-making in an ever-changing economic landscape: https://bakering.global/product/spain-spotlight-2023-copy/

As we sign off on this edition of high stakes and ledgers, keep an eye on the horizon where the winds of market change are as swift as the AI algorithms. For acumen and foresight check out Global Outlook here: https://bakering.global/global-outlook/

 We’ll see you next week with another edition. Until then, fine-tune your figures and fortify your foresight!


Spain Spotlight 2023

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Presented by Baker Ing: For High-Value and Highly-Sensitive Accounts Receivable

As Spain continues its economic recovery, opportunities abound for growth-oriented companies. Baker Ing stands ready to support your success, leveraging in-depth expertise in the Spanish market to inform strategic decisions. Our services, relied upon by leading organisations, enable proactive planning and incisive action.

 

RiskPulse Dashboard: Precision at Your Fingertips

The full Spain Spotlight 2023 report is available to view online here anytime at no cost for your convenience. However, you may also download the entire report in PDF format from Global Outlook if you prefer an offline viewing experience. While the downloadable version provides portability, we recommend viewing the report online here for the best interactive experience, including dynamic updates not available in the PDF version: download

 

Recognise the value of strategic partnership

Envision the transformative impact of aligning with focused expertise. Engage with our team of credit professionals, each dedicated to creating bespoke solutions tailored to your unique needs in Spain: Contact us


Transforming Credit Management in the Print Industry

Ready to Revolutionise Your Financial Journey?

Don’t let legacy challenges hinder your progress. Embrace the future with confidence and clarity. Reach out to Baker Ing today and let’s craft a bespoke solution tailored to your needs in the print industry.

Your sustainable, prosperous future awaits.

Contact Us Now and take the first step towards reimagining your financial landscape.


Automotive 2023: Your VIP Guide to Risk & Opportunity, Now Hassle-Free and Open Access

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Presented by Baker Ing: Specialists in High-Value and Highly-Sensitive Accounts Receivable

In the ever-shifting landscape of the automotive industry, discerning and navigating risks and opportunities as they arise is critical. Baker Ing is uniquely positioned at this intersection, employing international expertise in managing high-value and sensitive accounts to facilitate insightful decision-making. Trusted by global brands, our services enable clients to strategically anticipate changes and act with foresight.

Looking for a Strategic Partner?

If you value the transformative effects of aligning with specialised expertise, we invite you to engage with our team. Our credit professionals are committed to designing solutions that are as unique as the challenges you face in the automotive sector. To explore how a partnership with Baker Ing can benefit you, please contact us.


Healthcare 2023

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Presented by Baker Ing: For High-Value and Highly-Sensitive Accounts Receivable

In today’s dynamic healthcare environment, the ability to discern emerging trends and risks is paramount. Baker Ing stands at the forefront, leveraging international expertise in high-value, sensitive accounts to empower informed decision-making. Our services, relied on by global leaders, facilitate strategic foresight and proactive action.

RiskPulse Dashboard: Precision at Your Fingertips
Understanding that time is a premium asset for professionals, we offer the RiskPulse Dashboard as a companion to this report – a distilled version to provide essential insights in a concise format. You can download the dashboard here (click here)

Recognise the value of strategic partnership? Envision the transformative impact of aligning with focused expertise. Engage with our team of credit professionals, each dedicated to creating bespoke solutions tailored to your unique needs: Contact us


Industry-Changing Appointment

Baker Ing Welcomes Global Order to Cash Expert John Kelly to spearhead collections innovation.

Baker Ing announces the strategic appointment of John Kelly as Global Order to Cash Consultant. Kelly’s unparalleled expertise in operational efficiency and financial objectives introduces a transformative edge to Baker Ing’s already robust client offerings.

John Kelly, renowned for his multidisciplinary business acumen, has joined the Baker Ing team from Ireland. Formerly Global Process Lead and Senior Consultant, He brings to the table experience that ranges from establishing GBS green field operations for Fortune 500 companies to driving existing GBS systems to the next level, specifically within the key work streams of O2C, P2P, and S2P in both centralised and decentralised business models.

What sets Kelly apart is his unique capability to seamlessly integrate technology into operational processes. Specialising in ERP/AI/Robotics Design and implementation, he has mastered the art of fusing technology and human expertise for optimum cost control and efficiency. His robust approach to risk identification and mitigation fortifies Baker Ing’s commitment to data-driven performance and sets new benchmarks for quality and reliability in the sector.

Kelly’s strategic vision is poised to enrich Baker Ing’s current portfolio, propelling the firm further into its role as a market leader for complex and high-value collection solutions. His multidimensional skill set—from business development to financial planning—is perfectly aligned with Baker Ing’s culture of excellence and will be integral to the firm’s continued success.

“John’s appointment signifies more than a new team member; it represents the next evolutionary step in receivables management. We’re not only expanding our team but also redefining what efficiency and client-centric can mean in our industry,” says Lisa Baker-Reynolds MCICM, CEO, Baker Ing International.

Welcome to the team, John.


The Changing Tides of France's Trade Credit

In the streets of Paris, cafes bustle with conversations about politics, art, and lately, the state of the economy. Amidst the whiff of freshly baked croissants, another aroma lingers: the subtle scent of financial anxiety. As France grapples with the aftershocks of global events, businesses find themselves in a peculiar position, especially when it comes to credit.

Once considered a routine part of doing business, extending credit to trade partners in France has evolved into a high-stakes game. Businesses are increasingly contending with longer payment terms. In fact, the average payment period has stretched to 53 days, significantly longer than the traditional 30-day norm. This extension reflects a broader shift in the French economy, characterised by the impact of global disruptions and local political decisions.

But what does this mean for businesses on the ground? The answer is clear: collections have never been more critical. Ensuring that invoices are paid on time has become both an art and a science. The challenges of the modern economic landscape require a nuanced approach to collections, one that melds digital innovation with the age-old power of relationship building.

Here’s the crux of the matter: while longer payment terms might ease immediate pressures on buyers, they can strain supplier relationships and threaten the financial health of businesses that don’t have robust collections processes in place. And, as state-guaranteed loans become a double-edged sword, the risk of default grows.

For businesses in France, navigating this terrain demands a sector-specific approach. Different industries face distinct challenges. The hospitality sector, for example, has been hit hard by the pandemic and political unrest, leading to a spike in insolvencies. On the other hand, France’s tech startups, bolstered by a supportive ecosystem, offer a brighter picture, with fewer defaults. Recognising these differences within the broader macroeconomic context is key.

It’s not just about chasing overdue payments. Collections in this new era are about understanding your customer’s position, offering flexible solutions, and leveraging digital tools to streamline processes. Businesses need to be proactive, anticipating challenges before they arise and addressing them in a manner that balances financial prudence with empathy.

Navigating the multifaceted economic landscape of France requires an in-depth understanding. From the ripples of the Russia-Ukraine conflict to the ever-present spectre of inflation and the complexities of energy prices, the challenges and opportunities are abundant. But how does one manoeuvre through these challenges and harness the opportunities?

For a comprehensive analysis, insights, and guidance tailored specifically for Credit Managers, consider the latest “France Spotlight 2023” report. This meticulously curated document delves deep into the current economic status of France, offering a thorough examination of market trends, political shifts, and their implications on trade credit decisions.

The French saying, “C’est la vie,” or “Such is life,” captures the essence of acceptance in the face of unpredictability. But when it comes to trade credit in France, acceptance isn’t enough. Businesses need strategy, foresight, and adaptability. As France’s trade credit environment continues to evolve, those who master the art of collections will not only survive but thrive, turning challenges into opportunities.

 

Chris Snelson, CFO, Baker Ing International 

 

🔗 Download “France Spotlight 2023” Here: http://www.bakering.global/product/france-spotlight-2023/


Automotive 2023

The automotive industry stands at the complex intersection of innovation, geopolitics, and financial intricacy; a juncture that presents unique challenges in credit management. While the Worldwide Risk Score (WRS) of 5.5 may suggest a moderate landscape, the subtleties at play deserve a closer examination. In this industry, multiple factors often converge to affect credit risk in surprising ways.

 

Consider how supply chain disruptions due to semiconductor shortages can lead to extended payment terms. In isolation, this might be manageable. However, layer in the potential for geopolitical unrest, which could disrupt supply chains even further or freeze assets, and the credit risk escalates substantially. When companies are also engaged in mergers or acquisitions, often accompanied by restructuring debts and complex payment structures, the credit landscape becomes even more volatile.

Moreover, companies in the automotive industry often need to channel substantial funds into R&D to stay competitive. While this leads to long-term growth, it also induces short-term liquidity strains, affecting credit risk almost immediately. What complicates this further is the ever-changing regulatory environment around emissions, safety standards, or trade, which can swiftly alter a company’s ability to honour its debts.

 

What we see detailed in this paper is not just a list of isolated factors but a web of interconnected variables. This paper aims to unpack these complexities, offering a robust framework that captures the multidimensional nature of trade credit risk in the automotive industry. We go beyond identifying individual factors, striving instead to understand how these elements interact to shape a fluid and ever-changing credit risk landscape.

In an industry marked by both its dynamism and complexities, effective risk management means understanding not just the components but also their interplay. With this in-depth analysis, we hope to provide you with the tools to assess, adapt, and thrive in this challenging yet rewarding sector.

 

I hope you’ll find this paper useful.

 

Lisa Baker-Reynolds,

CEO, Baker Ing International

 

Access in-depth analyses, comprehensive data, and insights that can shape your strategic decisions. Download the full Automotive 2023 report and arm yourself with the knowledge to navigate the intertwined future of cybersecurity and business.

 

🔗 Download the Full Report Now

 

Stay ahead. Stay informed with Baker Ing.


Learning from the Past: Trade Credit Insights from Historical Interest Rate Shifts

Introduction

In recent years, we've witnessed significant fluctuations in interest rates globally, a phenomenon that has undoubtedly grabbed the attention of financial experts, businesses, and consumers alike. For those in the credit profession, these shifts aren't merely headlines or statistics; they directly influence strategies, decision-making processes, and, ultimately, profitability. With central banks such as the Bank of England, Federal Reserve, and others either tightening their monetary policies or contemplating doing so, the cost of borrowing and the credit landscape are evolving.

But this isn't the first time in history that interest rates have played a defining role in shaping the economic and trade credit landscape. Several instances in the past century have seen interest rate upheavals with profound impacts on global economies and trade credit patterns.

So, why should trade credit professionals revisit these past eras? Simply put, the past can provide valuable insights. By delving into historical contexts and understanding how trade credit dynamics played out during different interest rate scenarios, we can extract lessons, strategies, and valuable perspectives. These insights, when juxtaposed with today's technological and geopolitical landscape, can offer a robust playbook for navigating the current and upcoming challenges in the credit sector.

 

1. Late 1970s to Early 1980s: The Interest Rate Surge

The late '70s and early '80s were a tumultuous period for the global economy. In a bid to tame the rampant inflation of the era, central banks, notably the Federal Reserve, enacted sharp interest rate hikes. The UK was not immune to this global trend, with stagflation taking a firm hold.

As businesses faced soaring borrowing costs, traditional credit sources dwindled. Many firms turned to trade credit as a lifeline. Extended payment terms became commonplace, allowing businesses crucial breathing space. However, this period underscored the perils of excessive reliance on such flexibility, with many firms later grappling with cash flow challenges.

The importance of agility in trade credit terms came to the fore. While flexibility aided immediate liquidity concerns, it became apparent that businesses had to continually reassess terms in line with prevailing economic conditions.

 

2. Asian Financial Crisis, 1997: Regional Turmoil with Global Repercussions

Beginning with the collapse of the Thai baht, the Asian Financial Crisis quickly spread, wreaking havoc across several Asian economies. An overreliance on short-term foreign loans and speculative bubbles were notable culprits.

Businesses across Asia, feeling the crunch, leveraged trade credit to mitigate immediate financial strains. Western suppliers, initially insulated, soon felt the pinch as Asian businesses began delaying or defaulting on payments.

The crisis accentuated the significance of understanding regional risks. Firms that had diversified geographically fared better. Those with concentrated exposure had a rude awakening to the pitfalls of putting too many eggs in one regional basket. A painful lesson in globalisation.

 

3. Late 2000s - Global Financial Crisis: Tightening the Credit Noose

An amalgamation of poor risk assessment, unfettered lending, and an overheated housing market led to the cataclysmic 2008 financial meltdown. Banks faced solvency crises, leading to a systemic credit crunch.

With banks retreating, businesses increasingly turned to trade credit. Suppliers, wary of jeopardising existing relationships yet cognisant of the heightened risks, often extended terms cautiously. For many firms, trade credit became both a boon and a bane, aiding immediate liquidity but creating longer-term obligations.

This era underscored the importance of diversifying clientele and conducting rigorous financial health assessments. Establishing credit terms was no longer mere routine; it became an exercise in risk mitigation.

 

4. Eurozone Crisis, post-2008: Sovereign Debt and its Implications

Post the 2008 global financial debacle, the Eurozone found itself ensnared in a sovereign debt crisis. Countries like Greece, Portugal, and Ireland grappled with ballooning debt, triggering widespread economic consternation.

Within this fragmented European milieu, trade credit dynamics were intricate. Northern European suppliers, wary of southern European creditworthiness, became reticent, adjusting terms or seeking more substantial guarantees. Conversely, businesses in distressed economies leaned more heavily on trade credit, often their sole liquidity lifeline.

The Eurozone saga illuminated the necessity of tailoring trade credit strategies to regional nuances. A one-size-fits-all approach was found wanting, as understanding regional economic intricacies became paramount for credit professionals. We were schooled by globalised forces once again.

 

Strategies for Today's Trade Credit Professionals: Gleaning Wisdom from Historical Echoes

Navigating today's ever-shifting trade credit environment, one can't help but feel the weight of déjà vu, as historical economic ripples offer valuable foresight. Delving deep into these chapters of yesteryears, there are vital parallels and lessons to be gleaned.

Understanding the Dance of Flexibility and Vigilance

Today's world is more dynamic, informed, and arguably more complicated. The arsenal at a firm's disposal has grown exponentially, thanks in large part to the revolution of data analytics. With these tools, businesses can now glean real-time insights into their financial health and that of their partners. This visibility is not just about power; it’s about responsibility. In the past, the delayed repercussions of over-extending on trade credit were learned the hard way. Now, the onus is on firms to leverage these insights, not only to offer or withhold credit but to sculpt it—tailoring terms that fit the ever-evolving financial silhouette.

Our modern era also bears witness to an unprecedented level of global interconnectedness. A ripple in one part of the world can quickly become a tidal wave elsewhere. This web of financial interdependence further underscores the need for vigilance. As businesses navigate these global waters, the continuous monitoring and recalibration of trade credit terms act as both compass and anchor, guiding decisions and offering stability amidst the unpredictable currents of global finance. Today's agile businesses recognise that in a volatile market, adaptation is the name of the game. Equipped with modern insights, they can anticipate market tremors and adjust accordingly. This isn’t just about surviving; it's about thriving. Trade credit strategies, when approached with an informed blend of flexibility and vigilance, can align with both immediate operational needs and the longer-term vision of a firm.

The dance between flexibility and vigilance in trade credit is as timeless as it is intricate. The lessons from history are clear, and their echoes are heard in today's corridors of commerce. Flexibility offers the immediate solace businesses often seek, but it's the vigilance, informed by data and shaped by strategy, that ensures this solace doesn’t morph into tomorrow's setback.

Learning from the Credit Noose of 2008

Deep within the financial tumult of 2008, trust, once the bedrock of business relations, was shaken. But, it wasn't trust that was at fault—it was complacency. Astute credit managers realised that trust needs to be complemented with meticulous scrutiny. It wasn't enough to glance at a balance sheet; understanding the nuances of a client's financial health, and discerning potential stress signals became paramount. Every extension of credit transformed from a mere transaction to a well-informed decision.

Diversification, often a strategic afterthought in the heady days preceding the crash, ascended to prominence. Those suppliers narrowly tied to singular sectors, like the ill-fated real estate, felt the pinch keenly. The prescient ones, however, had cast their nets wide. They recognised that in an interconnected global economy, having clientele spanning various sectors was not just a growth strategy—it was an insurance against concentrated downturns.

And as payments began stuttering, sometimes being deferred, sometimes missing a beat entirely, liquidity emerged as the hero. Firms that had prudently managed their liquidity, who had built reserves not for a rainy day, but a torrential downpour, found themselves in enviable positions. It's a stark reminder that businesses often aren't undone by dwindling profits, but by dwindling cash flows.

Yet, perhaps the most defining transformation lay in the embrace of technology. The crisis, in all its bleakness, underscored the dire need for sharper tools, for predictive systems. The forward-looking credit professionals adapted, harnessing data analytics, which could offer early warnings—be it a hint of a client's impending distress or a sector's possible slump.

In revisiting 2008, the narrative isn't merely one of caution. For those who observed, adapted, and strategised, it's a testament to how challenges, as daunting as they might be, can be manoeuvred into opportunities. The essence for today's trade credit professional is clear: vigilance, adaptability, and an unceasing quest for knowledge are your allies. Armed with the wisdom of yesteryears and the tools of today, they stand well-prepared, not just to weather storms, but to harness them.

Navigating Regional Undercurrents

The Asian Financial Crisis, which began with the tremor of a currency devaluation, cascaded across economies with alarming swiftness. What was initially viewed by many Western businesses as a contained regional downturn soon displayed its global ramifications. Western firms, which previously saw Asian markets as just another revenue stream, confronted the realisation that financial disruptions in Bangkok or Jakarta could ripple across to boardrooms in London or New York.

In a similar vein, the Eurozone’s financial struggles weren't merely a tale of indebted nations. It was a saga that illustrated how closely knit the economies were. When Greece teetered on the brink, Germany, France, and even economies outside the EU felt the strain. It wasn't merely a story of sovereign debt; it was a lesson in how intertwined the fates of these nations were.

What stands out from both these chapters is the profound significance of appreciating regional dynamics in trade credit decisions. It isn’t sufficient to just see markets in aggregate, to deem them as 'Asian' or 'European'. Each market, with its unique blend of fiscal policies, cultural trade norms, and socio-political dynamics, demands attention. Successful firms during these crises were those that didn't just paint with broad brushes but were attuned to these finer strokes.

Yet, in this pursuit of regional detail, one cannot lose sight of the global canvas. In today's hyper-connected commercial landscape, where a decision in Beijing can influence boardrooms in Berlin, the ability to balance this microscopic view with the macroscopic is a skill of paramount importance.

In yesteryears, firms that intuitively understood this duality, that tapped into the depths of regional intricacies while never losing sight of the global tapestry, found themselves navigating financial upheavals with a steadier hand. In today's context, with trade crisscrossing the globe and digitalisation amplifying interconnectivity, this balance is not just a strategic advantage—it's an imperative. Those who master this dance between the granular and the grand are poised not just to survive, but to thrive, irrespective of where the next ripple emerges.

Embracing the Regulatory Labyrinth

Finally, high-interest periods of the past have had more than just immediate economic consequences; they have, in their wake, reshaped the regulatory framework within which businesses operate. This regulatory restructuring has typically been an attempt to address the root causes and exacerbating factors of the crisis, to fortify the system against similar future shocks.

For instance, the interest rate spikes of the late '70s and early '80s, while primarily aimed at taming inflation, had knock-on effects on businesses large and small. The challenges faced by these businesses weren’t just about navigating high borrowing costs but also about adjusting to the regulatory shifts that sought to stabilise economies and prevent financial overexposure. Flash forward to the credit crunch of 2008, and we find a similar story. Yes, the immediate cause was tied to subprime mortgages and dubious lending practices. Still, the aftermath saw a tightening of financial regulations, not just in banking but in all spheres of credit, including trade credit.

Today, as interest rates rise and economic climates shift, there’s more than just the immediate financial landscape that trade credit professionals must be attuned to. Regulations are fluid, often reactive, and understanding their trajectory can be as valuable as predicting market trends. It’s a dual challenge: operating within the framework of today while anticipating the regulatory responses of tomorrow.

In sum, the lessons from past high-interest periods go beyond the numbers. They’re a roadmap to understanding the intertwined trajectories of economic shocks and regulatory responses. For today's trade credit professionals, mastering this roadmap is crucial. It’s not just about navigating the present; it’s about charting the course for the future.

 

Charting the Future with Lessons from the Past

At a glance, the ebbs and flows of financial fortunes seem cyclical, but a closer examination reveals nuanced deviations each time. Stitching together the wisdom gleaned from yesteryears with the challenges presented by our contemporary landscape creates not just a guide, but a rich dashboard filled with insights and strategic markers.

Trade credit's evolution, driven by economic downturns and high-interest epochs, consistently underlines one principle: Proactive Adaptation. Whether navigating the tumult of the 70s, the 2008 crisis, the Asian Financial Crisis, or the Eurozone's challenges, there's a recurring pattern of businesses leaning on trade credit as a means of economic insulation. However, it's not the mere use of trade credit that determined success, but how it was wielded.

Proactive adaptation manifests in three primary ways:

  1. Strategic Diversification: Past crises have accentuated the risk of concentrated exposure. Whether it's regional over-reliance as seen during the Asian Financial Crisis or sector-specific dependencies evident during the 2008 meltdown, spreading risk has emerged as non-negotiable. Diversifying clientele and credit portfolios can safeguard businesses from isolated economic downturns. Regularly review and assess the diversification of your trade credit portfolio. Set thresholds for maximum exposure to any single industry or region and adjust credit terms or seek new business to maintain this balance. Organise at least quarterly risk-assessment meetings to ensure ongoing diversification efforts.
  2. Technological Integration: The digital era has armed trade credit professionals with tools that offer real-time insights into global financial health. Harnessing data analytics and forecasting instruments not only aids in making informed decisions but also provides an edge in preemptively recognizing emerging risks. Invest in data analytics tools tailored for trade credit. Train your team to utilise this technology, ensuring they can interpret and act on the insights generated. Consider establishing a digital dashboard that gives a live snapshot of the overall health of your credit portfolio.
  3. Regulatory Anticipation: Every major economic upheaval has been followed by a wave of regulations aimed at averting future crises. Trade credit professionals, rather than reactively adjusting, should anticipate and adapt to these regulatory shifts. This anticipation not only ensures compliance but could also lead to the identification of untapped market niches. Establish a dedicated team or individual responsible for monitoring and anticipating regulatory changes in trade credit. Regularly attend industry seminars and engage with policy influencers. When new regulations are anticipated, conduct impact assessments to determine how they might affect your business and what new niches or opportunities might emerge as a result.

 

In conclusion, navigating high-interest periods, such as the present, requires understanding historical patterns and translating these patterns into concrete actions. Credit professionals must actively diversify our portfolios, harness the power of technology for real-time insights, and stay ahead of the regulatory curve, ensuring we are not just reactive but leveraging circumstances for competitive advantage.


Cybersecurity Convergence: A CEO's Perspective on Market Stability in 2023

Cybersecurity 2023

The cybersecurity sector, in today's digital age, holds profound influence over a vast swathe of industries, and by extension, our own credit profession. This report, which rigorously examines the health and trajectory of the cybersecurity sector, is indispensable for credit professionals, in my view.

The Worldwide Risk Score (WRS) of 6.3 for the sector is telling. It encapsulates the challenges— from geopolitical upheavals like the War in Ukraine to the rapid technological advancements outpacing security solutions. But it also signifies the broader implications for the myriad businesses interwoven with, or dependent on, cybersecurity services.

For credit professionals, this number is not merely a reflection of the cybersecurity industry's health itself, as important as that is for many of our colleagues, it also serves as a bellwether for broader market stability:

  • Supply Chain Implications: Many sectors, be it manufacturing, finance, healthcare, or retail, lean heavily on digital tools and platforms. Any disruption or vulnerability in cybersecurity provision has ripple effects. A cyberattack on a logistics provider, for instance, can disrupt a manufacturer's operations, affecting cash flows, payment schedules, and ultimately, the creditworthiness assessed by us.
  • Creditworthiness of Business Ecosystem: Beyond direct dependencies, the health of the cybersecurity sector impacts even those businesses that may seem unrelated at first glance. A robust cybersecurity sector instills confidence in enterprises to innovate and expand, ensuring future revenue streams. For credit managers, this means our risk evaluations must incorporate the robustness of an entity's cybersecurity measures, as they indirectly influence financial solvency and growth trajectories.
  • The Protective Role of Cybersecurity: Recent geopolitical events, like the War in Ukraine, and the transformative push towards remote work due to the pandemic, underscore the critical protective role cybersecurity firms play. As these entities defend against more sophisticated threats, their stability and innovation directly correlate with the safeguarding of global commerce and, by extension, credit structures.
  • Financial Implications for the Cybersecurity Sector: While the broader outlook for the cybersecurity sector is optimistic, driven by global digital transformation, there are inherent financial challenges. Tighter financial conditions and limited fund accessibility could hamper the development of novel cybersecurity solutions. This has potential implications for businesses relying on the cutting-edge protection these solutions offer, indirectly affecting credit assessments.

The intersection of credit management and cybersecurity is more pronounced than ever. This report not only offers invaluable insights into the challenges and prospects of the cybersecurity sector itself but, by extension, its implications for credit professionals and beyond. I urge readers to approach its findings with both discernment and foresight, anticipating the interconnected challenges and opportunities that lie ahead.

Lisa Baker-Reynolds
CEO, Baker Ing International

Access in-depth analyses, comprehensive data, and insights that can shape your strategic decisions. Download the full Cybersecurity 2023 report and arm yourself with the knowledge to navigate the intertwined future of cybersecurity and business.

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Credit Crunched: Unleash Your Supply Chain Superpower

The Crucial Role of Supply Chain Performance in Enhancing Credit Risk Management

In the world of credit management, financial analysis has traditionally been the cornerstone for evaluating a company's creditworthiness. However, as the global economic environment becomes increasingly interconnected and complex, a more nuanced approach is required. A firm's supply chain performance, often overlooked, can provide a wealth of insights and offer a more accurate prediction of its credit risk.

Supply chains are not just logistic mechanisms but living ecosystems intricately interconnected with a company's operational and financial performance. When analysed properly, they can reveal hidden vulnerabilities and provide an early warning system for potential credit risks. Non-financial performance indicators such as order accuracy, fill rates, and flexibility to market changes can reflect a company’s operational efficiency, directly impacting its ability to honour trade credit obligations.

On the other hand, financial health metrics, while undeniably important, can sometimes lag behind the real-time operational status of a company. They tend to be backward-looking, revealing issues only after they have occurred. A company's supply chain performance, on the other hand, offers more real-time and forward-looking indicators. Disruptions or inefficiencies in the supply chain can be precursors to financial distress, giving credit professionals an early warning and ample time to adjust their credit strategies.

By integrating supply chain performance into credit risk management, credit professionals can create a dynamic and more accurate credit risk model. This approach not only helps to identify risks at an early stage but also provides a deeper understanding of a firm's operations, leading to more informed credit decisions.

Beyond identifying potential risks, an understanding of supply chain performance can also help credit professionals assess the potential impact of any disruption on a company's ability to repay. For example, a disruption in a critical component of the supply chain, such a supplier moving production to another country, could potentially lead to production halts, affecting the company's cash flow and ultimately its ability to meet its credit obligations.

Furthermore, understanding the supply chain can offer insights into a company's resilience and agility, which are crucial in today's volatile market environment. A company with a strong, flexible supply chain is likely to be more resilient in the face of disruptions, reducing its credit risk.

The interconnection of global trade dynamics presents a reality where an organisation's credit risk is invariably tied to its supply chain performance. Hence, a holistic approach to credit risk management necessitates going beyond the financial health of a company and understanding its supply chain intricacies.

In recent years, the supply chain's relevance as a reliable credit risk indicator has gained increasing recognition. Key operational metrics such as delivery timeliness, product quality, and flexibility to market changes offer insights into a business's operational efficiency. They serve as real-time indicators of a company's operational health, which significantly impacts its ability to fulfill trade credit obligations. This multifaceted assessment approach enables credit professionals to identify potential problem areas, facilitating the implementation of targeted risk mitigation strategies and enabling prudent adjustments to credit terms.

 

Harnessing Data Envelopment Analysis (DEA) for Credit Risk Management

When examining credit risk management, it's essential to appreciate the vast potential that tools like Data Envelopment Analysis (DEA) bring to the table, particularly in the context of supply chain performance (one might also consider tools such as Stochastic Frontier Analysis or even Machine Learning). DEA provides a robust and powerful approach to evaluate the relative efficiency of units within a supply chain, acting as an excellent barometer for potential credit risks.

At its core, DEA is a non-parametric method in operational research and economics used to measure the efficiency of decision-making units (DMUs). In the context of a supply chain, these DMUs represent the various entities or links that contribute to the production and delivery of a product or service. These could be suppliers, manufacturing units, logistics providers, or retailers, among others. Each of these DMUs converts certain inputs (like raw materials, labor, or capital) into outputs (finished goods, services, or deliveries).

By evaluating the input and output variables of each DMU, DEA enables the calculation of relative efficiency scores. This score is essentially the ratio of the weighted sum of outputs to the weighted sum of inputs. A DMU is considered to be 'efficient' if it can't reduce its inputs without decreasing its output or increase its output without augmenting its inputs. Consequently, an 'inefficient' DMU is one where inputs can be reduced or outputs increased without any negative impact on the other.

These DEA-derived efficiency scores serve as a valuable proxy for credit risk. For example, a DMU (like a supplier or a manufacturing unit) with low efficiency may indicate operational or financial struggles. These struggles can potentially lead to difficulties in meeting obligations, including credit terms. Such a unit might present a higher credit risk than others with better efficiency scores. Therefore, these scores enable credit professionals to anticipate potential challenges related to each DMU's creditworthiness.

However, the application of DEA in credit risk management goes beyond identifying inefficient units that might represent higher credit risks. DEA also provides the opportunity for benchmarking, enabling businesses to compare the efficiency of various DMUs against the 'best-practice' or the most efficient units. This benchmarking process can help identify best practices and areas for improvement in less efficient units, fostering better operational health and reducing overall credit risk in the supply chain.

Furthermore, DEA allows credit managers to conduct what-if analysis. This analytical technique allows credit professionals to simulate the potential impacts of changes in various input and output variables on DEA efficiency scores. For instance, if a supplier is contemplating an investment in technology to streamline its production process, what-if analysis can help anticipate how this might improve their DEA score, and by extension, their perceived credit risk.

It's important to remember, however, that while DEA is a powerful tool, it is just one component of a comprehensive credit risk management strategy. It needs to be complemented by other quantitative and qualitative analyses, including financial health metrics, operational indicators, and an understanding of market and competitive dynamics. The real power of DEA comes from its integration into a larger framework that looks at credit risk from multiple angles.

 

Leveraging Analytical Hierarchy Process (AHP) for Enhanced Decision-Making

Similarly, the Analytical Hierarchy Process (AHP), a multicriteria decision-making tool uniquely suited to enhance the decision-making process in credit management (one could also consider Analytic Network Process, TOPSIS or VIKOR). In a business landscape where credit decisions can significantly influence financial outcomes, it is imperative to make such decisions with a comprehensive, systematic, and replicable approach that considers both quantitative and qualitative factors.

The AHP model introduces a structured approach to decision-making, effectively dealing with complex credit decisions that often involve multiple, often conflicting, criteria. By using a pairwise comparison process, AHP allows decision-makers to break down a complex problem into a series of simpler judgments. It provides a ratio scale that captures both the qualitative and quantitative aspects of decision-making, which can be effectively utilised in the evaluation of credit risk.

Incorporating supply chain analysis data into the AHP model can further enhance its utility. Given that supply chain performance can be an insightful predictor of a business entity's credit risk, the integration of these two dimensions – AHP decision-making and supply chain performance – can lead to more robust credit risk evaluations.

For instance, consider the process of adjusting credit terms for customers based on their supply chain performance. This exercise may involve multiple criteria such as the timeliness of deliveries, product quality, flexibility to market changes, and financial health metrics. The AHP methodology can be used to determine the relative importance of each of these factors, leading to a balanced and comprehensive credit decision.

By facilitating a structured comparison of these criteria, AHP offers a systematic way to prioritise them according to their relevance in the overall decision-making process. Consequently, this ensures the decisions made are data-driven, comprehensive, and transparent.

The utilisation of the AHP model leads to enhanced overall effectiveness of credit risk management. It ensures that the decision-making process is not arbitrarily influenced by subjective biases. Instead, each decision is rooted in a structured and systematic analysis that factors in all relevant information, leading to decisions that are defensible and easy to explain.

Moreover, the replicable nature of the AHP methodology means that it can be used consistently across various decision-making units, fostering a unified approach towards credit risk management. This consistency can be vital in creating a company-wide understanding and approach to credit risk, fostering a culture of proactive and informed decision-making.

The Analytical Hierarchy Process, coupled with a detailed understanding of supply chain performance, provides a robust framework for credit management. It allows trade credit professionals to navigate the intricacies of the decision-making process with a systematic, replicable, and data-driven approach. This methodology not only enhances current decision-making but also bolsters the organisation's capacity to proactively anticipate and manage potential credit risks, thereby enhancing financial stability and operational resilience in an increasingly uncertain economic environment

 

Assessing Financial Health and Operational Efficiency for Predictive Credit Risk Management

Considering these data and tools, it becomes clear that the cornerstone of astute predictive risk management lies in judiciously balancing the evaluation of financial health with an insightful understanding of operational efficiency. This necessitates a nuanced comprehension of the symbiotic relationship between financial health indicators, such as liquidity ratios and return on assets, and operational efficiency parameters, like order accuracy and fill rates.

Financial metrics offer a well-trodden path to gauging an entity's ability to service its debt. Beyond these traditional metrics, incorporating an analysis of operational efficiency offers a more nuanced understanding, A high order accuracy and fill rate can reflect operational excellence, leading to a lower credit risk profile. Conversely, inconsistencies in delivery timeliness or product quality may flag potential operational issues that could escalate into financial troubles and increased credit risk.

The incorporation of these metrics into a dynamic credit risk assessment model facilitates the transition from a reactive to a proactive risk management stance. Continuous monitoring across supply chain entities enables real-time identification of fluctuations in these metrics, signalling potential credit risks before they fully manifest. This can prompt timely adjustments of credit terms or heightened scrutiny, mitigating potential losses from credit defaults.

 

Understanding Power Dynamics and Bargaining Position in Supply Chain Credit Management

In an inherently complex ecosystem of supply chains, power dynamics and bargaining positions can be the wildcards that significantly impact credit risk profiles. A sophisticated approach to managing credit risk must, therefore, further incorporate an understanding of these dynamics to ensure nuanced, data-driven credit decisions.

The concept of market power, particularly in the context of exclusive partnerships, often plays a pivotal role in the distribution of credit risk. Entities holding considerable market power or exclusive partnerships can exert significant influence over their counterparts. Such entities may leverage their power to negotiate more lenient credit terms, potentially leading to an uneven distribution of credit risk within the supply chain. Evaluating these power dynamics can provide a more granular understanding of potential credit exposure.

The financial stability of a business within the supply chain directly impacts its bargaining position, further affecting credit risk distribution. An entity with robust financial health can negotiate favourable credit terms, potentially placing more risk on the credit-providing party. Conversely, less financially stable entities may face more stringent credit terms, assuming a higher proportion of risk. Thus, regular financial health checks of entities in the supply chain become vital to identify shifts in bargaining positions and subsequent adjustments to credit risk.

Strategic importance also holds sway in determining power dynamics within a supply chain. An entity producing a unique or critical component holds a stronger position than an easily replaceable counterpart, potentially leading to skewed credit risk. Therefore, assessing the strategic importance of each entity adds another layer of depth to the understanding of risk within the supply chain.

Furthermore, competitive dynamics within the market influence power structures and bargaining positions in the supply chain. A monopoly or oligopoly will significantly differ in its credit risk implications compared to a highly competitive market. Recognising and accounting for these dynamics contribute to a comprehensive understanding of credit risk exposure.

Understanding and acting upon the interplay of power dynamics, bargaining positions, financial health, and strategic importance can lead to a more proactive credit risk management approach. Integrating these factors with supply chain performance evaluations further enables credit managers to mitigate risks and enhance their financial stability in an increasingly volatile economic landscape.

 

Integrated Credit Risk Management and Supply Chain Performance Evaluation

Credit professionals must embrace this paradigm shift, prioritising integrated credit risk management and supply chain performance evaluation over traditional siloed practices. This shift is necessitated by the ever-evolving, complex, and interconnected nature of modern supply chains, which necessitate comprehensive and data-driven insights to navigate effectively.

In an integrated approach, credit management aligns with the overall performance of the supply chain, thereby providing a richer and broader perspective of risk. This enables credit managers to go beyond merely assessing individual customer's creditworthiness, as crucial as that is, to consider the robustness of the entire supply chain network. This ensures credit decisions are reflective of the full spectrum of risk inherent within the supply chain and reduces potential blind spots in credit risk assessment.

Integration facilitates real-time monitoring and assessment of the entire supply chain, identifying potential vulnerabilities and credit risks in a timely manner. This allows credit managers to deploy appropriate risk mitigation strategies, adapt credit terms, or even restructure credit portfolios in response to shifts in supply chain performance.

This integration also promotes a more proactive approach to credit risk management. As a part of the supply chain's ongoing performance evaluation, credit risk assessments can actually preempt potential disruptions. This forward-looking stance enhances financial stability by anticipating and adjusting to shifts in credit risk, well before they crystallise into defaults or other financial setbacks.

Finally, insights gained from credit risk assessments can inform supply chain decisions, such as supplier selection, inventory management, and distribution strategy. Conversely, shifts in supply chain performance provide valuable data for refining credit risk models and updating credit policies. This dynamic interplay creates a virtuous cycle of continuous improvement and optimisation in both credit risk management and supply chain performance.

Ultimately, the integration of credit management and supply chain management promotes a holistic, strategic, and proactive approach to managing credit risk. It enables credit professionals to fully exploit the data-rich environment of the modern supply chain, deriving actionable insights to drive credit decisions, and enhancing financial stability in an increasingly complex and uncertain economic landscape.


Napoleon's Lessons for Credit Management

In the annals of history, few figures command as much respect for strategic acumen as Napoleon Bonaparte. A leader whose genius stretched beyond the battlefield, Napoleon orchestrated some of history's most notable military manoeuvres, leaving a legacy of strategic wisdom that transcends epochs and disciplines. In view of the new blockbuster movie of his life being released, the life and strategies of Napoleon Bonaparte spring to mind as a rich source of wisdom.

Renowned for his exceptional acumen, adaptability, and military genius, could Napoleon's strategies provide valuable lessons to those of us grappling with the complex terrain of B2B trade credit management?

Understanding the Terrain: The Importance of Accurate Intelligence

Napoleon Bonaparte, a master of logistics and detail, understood the critical importance of knowledge. The 'terrain' he assessed wasn't just the physical battlefield but included understanding his enemies' strengths, weaknesses, and plans. This depth of information enabled him to devise strategies that capitalised on his enemies' vulnerabilities and mitigated his own weaknesses. He famously used the central position strategy, dividing his larger enemies into smaller, more manageable groups, and dealing with them one by one.

Drawing parallels in credit, gathering accurate intelligence is crucial. This intelligence can be deep insights into various industries' health, geopolitical influences on trade, specific company health indicators, and even global macroeconomic trends. For instance, we are witnessing financial shifts like Goldman Sachs recalibrating their lending practices due to changing risk landscapes, global interest rate fluctuations influencing credit decisions, and buyout groups leveraging their portfolios to raise debt as dealmaking slows. Credit managers must meticulously track these changes to adapt their credit strategies accordingly, much like Napoleon would adjust his battle plans.

Flexibility in the Face of Change: A Key to Success

Napoleon's campaigns demonstrated his unparalleled ability to modify strategies on the fly. His battles were not won merely through brute force but through rapidly responding to changing circumstances and exploiting opportunities as they presented themselves. The Battle of Austerlitz serves as a perfect example, where he fooled his enemies into attacking, only to counterattack their weak flanks and secure victory.

Applying this principle means staying agile and adaptable. The rising tide of profit warnings from UK-listed companies or global interest rate hikes calls for an immediate recalibration of credit management strategies. Credit managers might need to reassess their risk exposures, consider alternative credit structures, or even revisit their hedging strategies to ensure their portfolios remain resilient against potential shocks.

Exploiting Opportunities: Finding Strength in Vulnerability

The military genius of Napoleon lay not just in his formidable offensive capabilities but also in his ability to turn his enemies' strengths into weaknesses. The Battle of Marengo showcased this talent, where he baited the Austrians into a premature attack, only to counter-punch with a fresh reserve army, resulting in a stunning victory.

For credit professionals, similar opportunities might arise amidst the global corporate landscape. Companies grappling with increased debt levels due to slower deal-making might be vulnerable, but they also present a unique opportunity for credit managers to renegotiate credit terms. These proactive steps not only help to manage credit risk but also cement long-term B2B relationships, reinforcing our position.

Preserving Strength: Ensuring Robust Financial Health

Napoleon knew that his army's strength was fundamental to his conquests. He was cautious to preserve it, strategically retreating when necessary, as seen in the Battle of Berezina, and striking with force when the opportunity arose. The preservation of financial health holds a similar strategic place in credit management. The key to surviving any financial shocks lies in maintaining a healthy and diversified credit portfolio, robust risk management practices, a strong liquidity position, and a healthy team with high-morale.

March Divided, Fight Concentrated: Balancing Risk with Focus

The Napoleonic principle of "March Divided, Fight Concentrated" emphasised the importance of diversifying the risk while maintaining a concentrated force to strike. It meant spreading his forces during the march to minimise the risk of a concentrated attack, but uniting them swiftly for a battle. In credit terms, this can be viewed as the need to diversify credit risks across sectors and geographies but maintaining focus and resource allocation for key accounts and potential risk areas. By doing so, credit managers can efficiently balance their portfolios, minimising concentration risks and optimising returns.

 

We can come to appreciate that the lessons of the past continue to carry profound relevance. Napoleon Bonaparte, whose strategic insights were grounded in the gritty reality of battlefields, offers a prism through which we can re-evaluate our approach to credit management. His principles of gaining thorough intelligence, adapting swiftly to changes, exploiting vulnerabilities for opportunities, preserving strength, and balancing risk with focus - all offer enduring wisdom.

Yet, to operate effectively in the current economic terrain, these historical insights must be integrated with contemporary knowledge and tools. As our economy becomes increasingly global and interconnected, the importance of embracing modern technologies for data collection, risk assessment, and decision-making processes cannot be understated. Advanced data analytics, AI, machine learning, and predictive modelling have become the modern-day equivalents of a general's scouts, providing detailed intelligence and enabling us to devise effective strategies.

Similarly, the comprehensive understanding of current global economic trends, industry-specific challenges, and regulatory changes is paramount in forming a complete and nuanced view of the credit risk landscape. The application of cutting-edge financial instruments, risk hedging strategies, and innovative credit solutions are crucial components of a modern credit manager's toolkit.

 

In conclusion, the convergence of historical wisdom and modern techniques offers a potent strategy for navigating the complexities of today's B2B credit environment. By integrating the time-tested strategies of great figures like Napoleon with the sophisticated tools and insights of the present era, credit professionals are better equipped to manage uncertainties and seize opportunities. This balanced approach, which marries the lessons of the past with the innovations of the present, enables us to not only weather the storm of financial uncertainties but also to emerge stronger, more resilient, and ready for the battles of tomorrow.

 

P.S.

Busy professionals dealing with the intricacies of global risk now have a powerful ally - the Global Outlook Risk Monitor. This streamlined, summary dashboard is custom-built for executives seeking a swift yet insightful briefing on the state of receivables risk across varied sectors. Whether your interest lies in Fashion and Apparel or within Cybersecurity or Healthcare, we have your needs covered.

This quarter's report reveals that the Global Worldwide Risk Score (WRS) stands at a moderate level of 5.5 out of 10, marking a recovery in the first half of the year. The Risk Monitor sheds light on sector-specific WRS and provides insights into changes that may influence your credit decisions.

Yet, the Risk Monitor is merely a glimpse into a broader picture. For those seeking a more in-depth understanding, we recommend downloading the full reports from our website:. Delve into detailed analyses, discern sector trends, and arm yourself with the knowledge needed to strategically manage your high-value, sensitive accounts receivable.

Stay informed, stay ahead, and leverage the power of knowledge in this fast-paced business world with our Risk Monitor.

 


How to Thrive in the New Era of Credit Management

Drivers of Change

A revolution is underway. The catalysts? A trio of potent forces: technological innovation, the nature of global commerce, and the ever-shifting sands of regulatory landscapes. Each of these elements is compelling credit professionals to adapt, evolve, and redefine their roles.

Firstly, let's consider the impact of technology. The digital age has ushered in a new era of data analysis and automation, transforming the traditional modus operandi of credit professionals. The rise of sophisticated software systems has automated a plethora of tasks that were once the remit of credit professionals. These systems can evaluate a client's creditworthiness, monitor credit limits, track payments, and even automate the process of pursuing overdue payments. They also offer real-time data analysis, arming credit professionals with the latest information to make informed decisions.

However, the technological revolution is not merely about automation. It's about empowering credit professionals with the tools to make superior decisions. The advent of big data and advanced analytics means credit professionals can now access and analyse vast amounts of data to identify trends, spot risks, and make informed decisions. This marks a significant departure from the traditional approach to credit management, which often relied on intuition and personal relationships.

Next, we turn to the intricate web of global trade. As businesses expand their global footprint, they grapple with a myriad of regulations and practices that vary wildly from one country to another. This complexity is a significant challenge for credit professionals, who must navigate these landscapes and understand the implications of these regulations for their businesses. However, understanding regulations in different countries is just the tip of the iceberg. Credit professionals must also grasp the broader trends and dynamics shaping global trade. The rise of emerging markets, the shift towards digital commerce, and the increasing importance of sustainability are all trends with significant implications for credit management. To stay ahead of the curve, credit professionals must understand these trends and adapt their strategies accordingly.

Finally, we arrive at the changing regulatory landscapes, particularly in relation to data protection and privacy. A surge in regulations related to data protection and privacy has been observed in recent years. These regulations, which involve the collection, storage, and use of personal data, have significant implications for credit management. For credit professionals, this means staying abreast of these regulations and ensuring their practices are compliant is essential. It is no mean feat, given that these regulations can vary widely from one jurisdiction to another and are often subject to change.

Credit management is in the throes of a significant transformation, driven by technological advancements, the increasing complexity of global trade, and changing regulatory landscapes. These changes are pushing credit professionals to adapt and evolve, requiring us to develop new skills and competencies. While this can be challenging, it also presents an opportunity to enhance our value and play a more strategic role in our organisations.

 

Potential Impact on Credit Professionals

The digital metamorphosis sweeping across the credit management landscape presents a paradox of sorts for credit professionals. While automation promises to streamline operations and reduce manual tasks, it simultaneously demands a new arsenal of skills. Credit professionals are now expected to master digital tools, interpret complex data, and make strategic decisions based on real-time insights.

The reverberations of these changes on credit professionals are far from trivial. Automation, for instance, can liberate credit professionals from the shackles of administrative tasks, enabling them to channel their energies towards strategic decision-making. This shift in focus from the mundane to the strategic can enhance the value of credit professionals within our organisations, positioning us as key players in strategic decision-making processes.

However, this silver lining has a cloud. The need to acquire new skills and adapt to rapidly evolving technologies can be a daunting prospect. The learning curve can be steep, and the pace of change is relentless. Traditional skills that served us well in the past may no longer suffice in the digital age. Instead, we must become proficient in using advanced software systems, interpreting vast amounts of data, and making decisions based on real-time insights.

Those among us who can successfully navigate this transformation, who can adapt and upskill, will find themselves well-positioned to thrive. They will be the ones who can harness the power of technology to make better decisions, manage risks more effectively, and contribute to the strategic objectives of their organisations.

In essence, the key to success in this new landscape lies in embracing the change, acquiring the necessary skills, and leveraging the power of technology to enhance decision-making and strategic planning. The future belongs to those who can turn the challenges of the digital age into opportunities for growth and advancement.

 

Transition from Traditional to Digital Roles

The digital revolution is not merely a change; it's a metamorphosis that is redefining the role of credit professionals. As the digital landscape evolves, so too does the nature of our work. The administrative tasks that once consumed our time are increasingly being automated, and in their place, a new set of responsibilities is emerging.

In this new paradigm, credit professionals are becoming strategic partners in our organisations. Our role is evolving from one of oversight and control to one of insight and foresight. We are no longer just gatekeepers of credit; we are becoming guides, helping our organisations navigate the complex landscape of global trade.

Moreover, the digital age is expanding the scope of credit professionals' work. We are now expected to keep abreast of the latest digital tools and technologies, understand their implications, and leverage them to enhance our work. This could involve using advanced software systems to automate tasks, using data analytics platforms to analyse data, or using digital communication tools to collaborate with colleagues and clients.

We are transforming from administrators to strategists. It's a challenging transition, requiring us to acquire new skills and adapt to new ways of working. But it's also an exciting opportunity, offering the chance to play a more strategic role in our organisations and enhance our value.

 

Identifying Key Skills

Credit professionals must evolve our skill sets to align with the functionalities of advanced systems. The following skills are ones we concentrate on:

Data Management Skills: The ability to manage vast amounts of data is crucial. Credit professionals must understand how to collect, update, and organise data from various sources. This requires proficiency in data management principles and the ability to use APIs and other tools to extract data from financial databases, news outlets, industry reports, and regulatory filings. This skill is vital for leveraging Data Aggregation, which collects and organises relevant data from multiple sources.

Risk Assessment Skills: This demands a deep understanding of risk assessment principles and algorithms. Credit professionals must be adept at incorporating a multitude of factors into risk assessments, including internal disputes, geostrategic shifts, supply chain diversification efforts, and changes in regulatory frameworks. This skill is crucial for assessing the creditworthiness of clients and making informed decisions about the level of credit that can be safely extended.

Scenario Analysis Skills: Scenario Analysis enables users to run different scenarios to understand potential impacts on a company's creditworthiness. To leverage this effectively, credit professionals need strong analytical skills and a deep understanding of the factors that can impact credit risk. This skill is vital for simulating how an escalation of a dispute or a significant change in regulations would impact a company's credit risk.

Data Visualisation and Reporting Skills: This is the ability to present all information in an easy-to-understand format. To leverage this effectively, credit professionals must be proficient in data visualisation and reporting. We need to be able to present information in an easy-to-understand format, create graphical representations of risk scores, and generate detailed reports. This skill is crucial for highlighting significant changes in risk profiles and alerting users when pre-defined risk thresholds are breached.

Decision-Making Skills: To leverage this effectively, we need to be able to make informed recommendations based on the credit risk assessment, quickly. This skill is vital for making strategic decisions that protect the financial health of the company.

Machine Learning and Continuous Improvement Skills: This uses machine learning algorithms to continuously improve the risk assessment algorithm. To leverage this module effectively, credit professionals need to understand the basics of machine learning algorithms and continuous improvement principles. We need to be able to incorporate feedback and learn from past predictions and actual outcomes to continuously improve bespoke risk assessment algorithm. This skill is crucial for staying up-to-date with the latest trends and technologies.

 

Approaches to Upskilling

Upskilling your team is not merely a desirable goal; it's an imperative. The path to achieving this involves a multi-pronged approach, blending formal training programs, online courses, mentorship, self-learning, and a commitment to continuous learning.

Consider investing in formal training programs that focus on the key skills required in the age of AI. These programs, tailored to the specific needs of your team, can be delivered in-house or by external providers. The key is to ensure these programs are grounded in practicality, incorporating exercises and examples that mirror real-world scenarios. This ensures the skills learned are not merely theoretical but can be readily applied in the workplace.

Online courses offer another avenue for skill development. The beauty of these courses lies in their flexibility. They can be completed at a pace that suits the individual, allowing them to balance learning with their day-to-day responsibilities. These courses should span a wide range of topics, from data management and risk assessment to machine learning and continuous improvement.

Mentorship is another powerful tool in your upskilling arsenal. Pairing less experienced team members with seasoned professionals can provide them with invaluable guidance and support. Mentors can share their experiences, provide insights into best practices, and offer advice on how to navigate the challenges of the digital landscape. This one-on-one learning experience can be a powerful catalyst for skill development.

Self-learning is another crucial component of the upskilling journey. Learning is not confined to the classroom or the training session. It's an ongoing process that involves staying abreast of the latest trends and technologies. Encourage your team to take responsibility for their own learning. This could involve reading industry reports, attending webinars, or participating in online forums and discussions.

Finally, remember that learning in the digital age is not a destination; it's a journey. The commercial landscape is in a state of constant flux, and your team needs to be committed to continuous learning which involves regularly updating their skills and knowledge to keep pace with changes in technology and industry practices.

 

Final Thoughts and Recommendations

The march towards digital credit management is inexorable. The digital age, and further, the age of AI, with its myriad of challenges and opportunities, is upon us, and standing still is not an option. Businesses, training providers, and credit professionals must join forces to navigate this transition effectively. The keys to success in this new era are embracing continuous learning, investing in upskilling, and staying abreast of industry trends.

As the role of credit professionals evolves, new skills and competencies are required. Businesses and training providers must recognise this and invest in training programs and courses that equip credit professionals with the skills they need to thrive in the digital age. This could involve training in areas such as data analysis, risk assessment, digital tools, and strategic decision-making.

Staying updated with industry trends is also key; keeping abreast of the latest research, attending industry events, and participating in professional networks. By staying informed, credit professionals can anticipate changes and adapt their strategies accordingly.

In summary, the digital/AI age presents a paradox for credit professionals. On one hand, it presents challenges, as the traditional ways of working are disrupted and new skills are required. On the other hand, it offers opportunities for those who are willing to adapt and evolve. Those who can successfully navigate this transition, who can embrace continuous learning, invest in upskilling, and stay informed about industry trends, will be well-positioned to thrive.

This is a collective endeavour, requiring the concerted efforts of businesses, training providers, and credit professionals. Each has a role to play in ensuring a successful transition to the digital/AI age. By working together, we can turn the challenges of the change into opportunities for growth and advancement.


Poland Spotlight

How to Approach Poland

The process of credit assessment has traditionally been built on a solid foundation of financial account analysis. A credit professional would scrutinize balance sheets, income statements, and cash flow statements of companies to gauge their financial health and determine their creditworthiness; such assessments delving into profitability ratios, liquidity ratios, efficiency ratios, and solvency ratios to get a comprehensive view of a company's ability to meet its financial obligations. This assessment is crucial as it provides a snapshot of a company's financial standing, its resources, and its ability to continue operations without defaulting on its commitments.

In a stable economic environment, these financial statements can provide a relatively reliable insight into a company's operational and financial status. However, in volatile markets or during periods of economic downturn, the reliance solely on such historical data can be somewhat misleading. Furthermore, these financial statements, as reliable as they may be, are often lagging indicators of a company's financial health. They provide an image of the company's past performance, which may not be an accurate representation of their current or future potential, especially if there have been significant changes in the market or the company's operations.

Specifically, in the context of Poland, where the majority of businesses operate as sole proprietorships, the problem is exacerbated. These entities are not obliged to publish full accounts, leading to a scarcity of information for credit assessment. Therefore, relying solely on the traditional methods of financial accounts assessment can prove insufficient and ineffective in these cases. The rapidly changing market conditions, along with the specific challenges posed by the Polish market structure, necessitate a re-evaluation of the credit assessment strategies. It underscores the need for credit professionals to adapt and include other performance indicators in their credit assessment toolkit.

Challenges in Poland

The unique business structure in Poland presents a distinct set of challenges for credit professionals, primarily because a large portion of businesses operate as sole proprietorships. These entities, unlike corporations, aren't legally obliged to publish full financial accounts, including balance sheets, income statements, or cash flow statements. As a result, credit professionals often face a significant obstacle in assessing the financial health and creditworthiness of these businesses, an issue known as information asymmetry.

Information asymmetry, in this case, refers to the imbalance where a business seeking credit has more information about its financial health and prospects than the credit professional attempting to assess its creditworthiness. This lack of financial transparency makes it difficult to accurately evaluate a company's ability to meet its financial obligations, potentially leading to inaccurate credit assessments. Consequently, such opacity can foster an environment conducive to higher credit risk, as credit professionals find it challenging to make well-informed credit decisions.

The lack of full accounts from sole proprietorships in Poland compounds the difficulties arising from a strategy reliant primarily on historical financial data. The limited financial information that is available is often being outdated or not adequately representing the company's current financial state or future potential.

Therefore, in the context of Poland, the traditional method of credit assessment based on financial account analysis becomes notably insufficient. The resultant information asymmetry and assessment difficulties necessitate the incorporation of additional parameters into the credit assessment process.

New Directions in Credit Assessment

Considering the limitations of relying on financial accounts for credit assessments, there's an emerging need to look beyond these traditional metrics. One such metric that can provide more accurate and timely insights into a company's financial health is its payment performance.

Payment performance is essentially a measure of a company's ability to meet its debt obligations on time. A strong payment performance indicates a business is financially stable and can consistently meet its commitments, reflecting positively on its creditworthiness. Conversely, a downturn in payment performance, characterised by late payments or default, can be a red flag indicating financial distress.

In Poland, where information asymmetry is a challenge, payment performance becomes even more useful. This metric can serve as a useful tool for credit professionals to gauge the financial health of businesses in real-time.

Monitoring payment performance allows for timely identification of potential financial troubles that might not yet be reflected in a company's financial accounts. In contrast to financial statements, which are often lagging indicators of a company's financial health, payment performance can offer more immediate insights.

Therefore, in the light of the unique challenges posed by the Polish market, credit professionals should consider pivoting from traditional credit assessment strategies and place more emphasis on tracking payment performance. This shift in focus will enable them to identify signs of financial distress promptly, allowing for quicker response and potentially reducing credit risk.

An increased focus on the Polish market involves the development and use of more nuanced and region-specific risk assessment tools and methodologies. These might also include industry-specific risk scoring models, local market trend analyses, and regularly updated databases of company payment records. As these tools often require specialist knowledge and skills, there's a clear need for increased investment in specialist expertise.

It's important to note that a shift in focus to payment performance doesn't imply an abandonment of traditional credit assessment tools, however. Instead, it suggests an expansion of the credit assessment toolkit with greater emphasis on real-time indicators of creditworthiness. In the Polish market, these real-time indicators can provide invaluable insights that help offset the information asymmetry issues inherent with prevalence of sole proprietorships.

Addressing Deteriorating Performance

Identifying red flags in the financial performance of customers is crucial in any market, and the Polish market is no exception. However, the uniqueness of this market structure brings its own set of challenges and specific indicators that credit professionals should be aware of.

A key sign of potential financial difficulties is consistent delay in payments. In Poland, this can be particularly challenging to navigate, as late payments could simply be symptomatic of the wider market norms or, could be serious indication of cash flow issues. Understanding the difference is critical. In Poland, there's a prevailing culture of late payments, often justified as a cash flow management technique. This trend is primarily due to the long payment terms common in various industries, which often extend beyond 30 days and, in some cases, reach up to 60 or 90 days. Businesses may often delay payments to the last possible moment as a way to maintain cash on hand.

However, frequent delays beyond these norms, especially if they reach past 90 days, can be a red flag for financial difficulties. A significantly high rate of delayed payments, paired with other concerning behaviours such as sudden requests for credit term extensions or repeated disputes over invoices, should be treated as potential signs of distress.

The challenge for businesses operating in Poland, then, is to differentiate between late payments as a common market practice and late payments as an indicator of deteriorating financial health. Consequently, it is crucial to have a firm understanding of industry-specific norms and to keep a close eye on any deviations from these norms that could indicate financial distress.

Requests for flexibility are a warning sign. Given the relative flexibility that Polish sole proprietorships have in managing their financial affairs, such requests may signify deeper issues. If a Polish company seeks extended payment terms or a conversion of short-term obligations into long-term ones, credit professionals should be alert to potential risks.

Similarly, customers suddenly seeking payment plans may also indicate financial instability. This is particularly relevant in Poland, where changes to tax legislation or other fiscal policies can disproportionately affect sole proprietorships' liquidity. Sole proprietorships in Poland, as in other parts of the world, are often smaller businesses managed by a single individual or family. This structure means they might lack the financial buffers of larger corporations and are thus more susceptible to changes in financial conditions, whether from changes in market dynamics or fiscal policy. If the government increases taxes or alters tax regulations, sole proprietorships may see a significant portion of their earnings redirected towards these increased tax obligations, thereby reducing their available cash for operations. Moreover, sole proprietorships might not have access to the same level of financial advice and tax planning resources as larger corporations. This factor could make it more challenging for them to anticipate and strategically plan for these changes, thus amplifying the impact on their liquidity.

Given these considerations, any sudden requests from sole proprietorships for payment plans or other changes in their usual payment behaviour should be closely evaluated for potential underlying financial instability.

Changes in buying patterns can also serve as red flags. A sudden increase or decrease in orders might be a reaction to market fluctuations, or it could signal strategic shifts and cash flow issues.

Finally, an increasing reliance on trade credit, including frequently maxing out credit lines or consistently opening and closing credit accounts, may indicate financial distress. The lack of financial transparency with Polish sole proprietorships amplifies the significance of this red flag.

These indicators necessitate proactive monitoring and early intervention. By identifying and addressing these red flags, credit professionals can assess the situation, initiate dialogue, and if necessary, make strategic decisions to protect their interests while supporting their customers.

Active dialogue between credit departments and their customers is vitally important. By initiating conversation early, credit professionals can better understand the reasons behind any changes in payment behaviour and assess their legitimacy, helping to mitigate potential risks.

It is particularly relevant in the context of Poland's business market, where understanding the unique circumstances and challenges of each customer is crucial. Direct communication can become an essential tool for accessing insights into their financial health. Moreover, the dialogue can shed light on context behind requests for flexibility or extended terms. Such requests, for instance, may stem from seasonal cash flow variations, changes in the local market, tax policy adjustments, or deeper financial issues. Understanding this context can help credit professionals distinguish between temporary cash flow issues and systemic financial instability.

Proactive communication allows credit departments to gauge the viability of a business. By engaging in discussions around their customers' future plans, market predictions, and overall business sentiment, credit professionals can get a better sense of the sustainability of their business models and financial stability. Such dialogue also helps foster stronger business relationships. This is especially important in the Polish market, where business culture values relationship-building. Regular communication not only builds trust, but it also signals to customers that credit departments are willing to support them through challenges while also ensuring their own interests are protected.

Establishing Supportive Agreements

Credit professionals face a delicate balance in supporting Polish businesses that are encountering temporary difficulties. Striking the right balance to maintain customer relationships and help these businesses navigate challenging times whilst also safeguarding the business’s own interests.

One approach involves restructuring the repayment plans, offering more flexibility without compromising one’s interests. This may include extended payment terms or instalment plans that consider the debtor's cash flow situation. Here, a third-party receivables management service could be invaluable. We help mediate between credit departments and customers, working out a mutually beneficial arrangement that both maintains customer relationships and ensures payment.

Another strategy is related to inventory and supply management. Credit professionals may negotiate consignment arrangements where the business does not pay for goods until they are sold. This approach can assist businesses with limited capital to continue operations, while credit departments retain some control over their inventory.

Credit insurance is another tool that can be especially useful in Poland's business context. It protects the credit department from the risk of non-payment, offering more security when providing support to businesses facing temporary difficulties.

Lastly, one may consider collaborating with local financial institutions and leveraging government support schemes designed to aid businesses in temporary distress. For instance, state-backed loan guarantee schemes have been established in Poland to support small and medium enterprises (SMEs) during tough economic times.

Astute management of these risks, a contextual understanding of the Polish market, and the utilisation of financial tools, including the services of a third-party receivables management, can enable credit professionals to provide support while safeguarding their interests. By doing so, we not only contribute to the survival and recovery of businesses but also foster stronger, more resilient business relationships in the long term.

Conclusion

In a complex credit environment like Poland, where sole proprietorships with limited financial transparency are predominant, a specially crafted strategy is vital for all market participants, not just those directly dealing with such businesses. Traditional credit assessment methods may be insufficient in this setting, given the market's inherent opacity. The prevalent business structure indirectly shapes the market’s dynamics, creating ripple effects that can impact all players, even those not directly dealing with these proprietorships. Thus, for any entity within this market, flexibility, anticipation, and strategic adaptation are less luxuries and more necessities for survival, and this holds true irrespective of whether their operations involve direct interactions with sole proprietorships.

Embracing real-time monitoring, fostering open dialogue with clients, and capitalizing on innovative tools such as third-party receivables management services become essential. But beyond risk mitigation and interest protection, these strategies offer an opportunity to redefine the role of credit departments in the business ecosystem.

In actively deciphering the idiosyncrasies of the Polish market, credit departments not only secure their own interests but also contribute to the stability and growth of the businesses they serve. This proactive, participatory approach allows them to transform potential challenges into avenues for collaborative growth, crafting a resilient and prosperous narrative within Poland's vibrant economic tapestry.

P.S.

Don't let market complexity hinder your decision-making process. Stay ahead with our latest resource, the "Poland Spotlight 2023" report. Authored by Chris Snelson, CFO at Baker Ing, this in-depth analysis explores unique economic aspects of Poland's market, including key economic areas for focus such as supply chain & demand problems, inflation, the Russia-Ukraine situation, government stability, currency trends, payment behaviours, and insolvency rates.

This strategic forecast is a must-have for every credit professional looking to navigate the intricate Polish market successfully. It not only provides a detailed market history and future forecasts but also translates high-level economic analysis into actionable insights for credit professionals.

Expand your credit assessment toolkit, mitigate risk and drive success with the comprehensive "Poland Spotlight 2023". Visit Global Outlook to download your copy now, and be equipped with invaluable insights into one of Europe's most dynamic markets.


Unleashing the Power of Green Informed Dynamic Assessment

Introduction

The global economic landscape is in a state of constant flux, experiencing significant shifts influenced by geopolitical tensions, technological advancements, sustainability drives, and changing fiscal policies. These factors have created a complex environment for credit professionals to navigate. A comprehensive and forward-looking framework is needed, incorporating innovative and dynamic risk assessment models.

One approach might be a Green Informed Dynamic Assessment (GIDA) to provide a framework which encapsulates these diverse factors.

The GIDA approach addresses several key factors that have reshaped the credit risk landscape. First, the escalating focus on sustainability and environmental, social, and governance (ESG) factors is transforming the way creditworthiness is evaluated. Businesses that fail to align with sustainable practices may face increased risks, while those embracing sustainability initiatives may be rewarded with enhanced credit profiles. The GIDA approach recognises this shift and provides credit professionals with the tools to integrate ESG factors into credit risk assessment models, enabling a more holistic evaluation of creditworthiness.

Furthermore, the rapid pace of technological advancements and market disruptions calls for a credit risk management approach that can keep up with the speed of change. The GIDA approach emphasises the importance of rapid assessment, leveraging advanced data analysis techniques, artificial intelligence, and predictive analytics to enable credit professionals to make timely and accurate risk assessments. By utilising these tools, credit professionals can gain valuable insights into emerging risks, trends, and potential credit disruptions, allowing for proactive risk mitigation strategies.

Finally, the GIDA approach emphasises the need for fluid adaptation. Static and rigid credit management strategies are no longer sufficient in today's dynamic business environment. The GIDA approach encourages credit professionals to continuously review and adjust credit policies, incorporating changes in fiscal policies, market conditions, and emerging risks. This flexibility enables credit professionals to respond effectively to evolving circumstances, mitigating potential credit risks and capitalizing on emerging opportunities.

 

The Principles of GIDA

GIDA is built upon three fundamental principles: Fluid Adaptation, Rapid Assessment, and Sustainable Growth.

Fluid Adaptation calls for a nimble and flexible approach to credit management. Given the volatility of today's economic environment, credit professionals must be prepared to adjust strategies as new information emerges and situations evolve. This might involve revisiting credit policies in response to changing fiscal policies or shifts in a client's strategic direction towards sustainability.

To implement Fluid Adaptation:

  1. Credit policies should be reviewed regularly, adapting them based on the latest fiscal and market trends. This could involve quarterly or bi-annual, or even real-time assessments utilising dynamic credit limit adjustment tools.
  2. Encourage a fluid-thinking culture within teams, fostering quick-thinking and swift decision-making abilities. This may involve regular team brainstorming sessions and workshops, focusing on developing adaptive strategies.

Rapid Assessment emphasises the need for quick and effective evaluation of macroeconomic trends, sectoral transformations, and specific company dynamics. Credit professionals should be proficient in interpreting shifts in fiscal policies, sustainability efforts, technological advancements, and market conditions, and accurately gauge their potential impact on credit risk profiles.

To implement Rapid Assessment:

  1. Use AI-driven tools like Baker Ing's Advanced Credit Scoring or a similar service/software for real-time and efficient data analysis.
  2. Leverage predictive analytics to anticipate potential credit risks. Consider using machine learning algorithms with historical data to predict future trends. Please contact Baker Ing to learn more about this.

Sustainable Growth encapsulates the idea that fiscal health and environmental sustainability are not mutually exclusive but are, in fact, interlinked. Credit professionals need to recognise and evaluate how a company's commitment to sustainable practices and its compatibility with green transitions could potentially influence its financial stability and credit standing.

To implement Sustainable Growth:

  1. Integrate Environmental, Social, and Governance (ESG) factors into credit scoring models. Consider using Sustainalytics or other ESG Risk Ratings providers to assess a company's ESG risks.
  2. Keep track of green initiatives, assessing their potential impact on a company's creditworthiness. Tools like Trucost ESG Analysis can help evaluate environmental performance.

Implementing GIDA requires a multifaceted approach. Credit professionals must integrate GIDA principles into their existing credit management strategies, recognising the interconnectedness of factors such as fiscal policies, sustainability efforts, technological advancements, and market conditions. This integration involves adjusting credit scoring models to incorporate ESG factors, adopting advanced analytics tools for rapid data analysis, and establishing continuous monitoring systems to stay informed about evolving trends.

Putting the GIDA approach into action requires careful planning and execution:

  1. Start by adjusting the credit risk strategy, incorporating the principles of GIDA into your existing credit scoring models.
  2. Integrate AI and machine learning tools for rapid data processing and analysis. Collaborate with your IT team or consider third-party vendors for these tools' integration.
  3. Create a system to monitor the rapidly changing fiscal policies, sustainability efforts, technological advancements, and market conditions. Consider subscribing to relevant industry news, reports, and databases that provide up-to-date information.
  4. Develop a continuous learning program for your team, ensuring they are updated with the latest trends in credit risk management. You may use online learning platforms, webinars, or in-house training sessions to enhance team knowledge.

 

The Future of GIDA

As businesses and economies become increasingly intertwined, the relevance of a GIDA approach in credit management is set to increase. With the world grappling with economic uncertainties and the urgent need for a green transition, credit professionals equipped with a holistic and dynamic approach to credit assessment will be a valuable asset.

Furthermore, the evolution of technology, particularly in data analytics, AI, and machine learning, could further refine and enhance the GIDA approach. As these technologies become more sophisticated, they could provide more accurate, real-time insights into credit risk, making the GIDA approach even more effective.

 

Conclusion

The need for a GIDA approach is underscored by the ever-increasing complexity of the global economy. As businesses operate in an interconnected and interdependent world, credit professionals must possess a comprehensive understanding of various factors that influence credit risk. The GIDA approach equips credit professionals with the knowledge and tools to navigate this complexity effectively, enabling them to make informed decisions that support sustainable growth and mitigate credit risks.

Such a framework can represent a paradigm shift in credit management, reflective of our evolving understanding of the economic landscape. By marrying fiscal prudence with environmental and technological considerations, GIDA provides a comprehensive, forward-looking approach to credit management that is acutely attuned to the complexities of the modern world.

The value of GIDA extends beyond its practical application in credit assessment. It also embodies the broader role of credit professionals as proactive contributors to sustainable growth and fiscal responsibility in a rapidly changing global economy. Therefore, understanding and implementing GIDA, or a similar approach, isn't just a strategic choice; it can be a professional advantage and a point of personal pride.


Revolutionising Receivables: Introducing Baker Ing's Complimentary Data Cleaning and Enhancement Service

Receivables are the cornerstone of your business. It's not just about numbers, but about the stories they tell and the outcomes they shape. That's why we're delighted to introduce our innovative Data Cleaning and Enhancement Service.

Developed in collaboration with a roster of leading global data providers, this service offers an instrument to empower your business; harnessing reliable, accurate, and enhanced data to drive decision-making and risk management.

We're offering this complimentary service because we believe in sharing the tools for success. But more importantly, we're offering it because we believe in our clients' businesses; in your story, and in your future as a credit professional.

This service will be rolled out to Platinum client accounts initially, ensuring it delivers the highest impact and effectiveness. But rest assured, this is just the first act. We are committed to delivering our services across the spectrum, helping businesses of all scales to thrive. Stay tuned.

Contact your account manager today, or reach out to Christina Onofrei right here on LinkedIn.

Your success is our success.

Find out more here: Credit Data Cleaning

#BakerIng #DataCleaning #DataEnhancement #ReceivablesManagement #Innovation #Partnership #B2B


The Evolution of Credit in the Face of Financial Disruption

The Fragility of Traditional Pillars

Traditional financial institutions have been the backbone of global finance for centuries. They have provided the necessary capital for businesses to grow and thrive. However, in recent years, these institutions have shown signs of fragility.

Economic downturns have put immense pressure on these institutions. When the economy is in a downturn, businesses tend to perform poorly. This leads to a higher likelihood of defaults on loans, which can significantly impact the financial health of banks. The recent economic crises have led to significant losses for many banks, leading to a tightening of credit.

In addition to economic downturns, regulatory pressures have also increased. Governments around the world have implemented stricter rules to prevent financial crises. These regulations often require banks to hold more capital and maintain higher liquidity ratios. While these regulations are designed to make the financial system more stable, they also put additional pressure on banks, especially those that are already struggling.

Moreover, competition from fintech companies is another factor contributing to the instability of traditional banks. These companies, leveraging technology to provide financial services, offer a more convenient and often cheaper alternative to traditional banking services. This has led to a loss of customers for traditional banks, further exacerbating their instability.

For credit professionals, this instability means that they can no longer rely on traditional banks for credit or as a proxy for such. We need to be vigilant, constantly monitoring the health of these institutions. We also need to develop robust risk assessment strategies that can adapt to these changing circumstances. This includes having contingency plans in place in case of a credit crunch.

The Emergence of a Democratised Financial Ecosystem

As traditional financial institutions become more unstable, alternative funding sources are emerging as a viable alternative. These include peer-to-peer lending, crowdfunding, and other non-traditional funding sources. These platforms leverage technology to connect borrowers and lenders directly, eliminating the need for a traditional financial intermediary. This democratises the financial ecosystem, as it allows businesses that may not have qualified for a traditional bank loan to obtain the necessary capital.

These alternative funding sources are gaining popularity due to several factors. First, they often provide easier access to capital. Traditional banks usually have stringent requirements for loan approval. In contrast, alternative funding sources often have less stringent requirements, making it easier for businesses, especially small and medium-sized enterprises, to obtain the necessary funding.

Second, transactions on these platforms are often faster than traditional banks. The application process is usually simpler and more streamlined, and the use of technology allows for quicker processing times. This can be a significant advantage for businesses that need quick access to capital.

However, while these platforms provide new opportunities, they also introduce new risks and uncertainties. They are often less regulated than traditional financial institutions, which can lead to increased risk for lenders. Furthermore, the interest rates on these platforms can be volatile, making it difficult for businesses to plan for the future.

For credit professionals, this shift towards a democratised financial ecosystem necessitates a recalibration of risk assessment models. They need to account for these new variables and develop a deeper understanding of these alternative sources and their risk profiles. This includes understanding the nuances of these new platforms and how they operate.

The Metamorphosis into a Worldly Strategist

In this new age, credit professionals must evolve from number-crunchers into global strategists. We must understand not just the financial health of our clients, but also the broader economic landscape. We must be able to navigate the complexities of alternative funding sources and adapt strategies accordingly. This metamorphosis requires a deep understanding of global trends, a keen eye for detail, and the ability to think strategically. It requires professionals to be agile, ready to adjust their sails as the winds of change blow. It also requires them to be resilient, able to weather the storms that may come their way, and visionary, able to see beyond the horizon and chart a course for the future.

This transformation is not just about acquiring new skills but also about adopting a new mindset. It's about understanding that the world of credit is no longer just about numbers and balance sheets. It's about understanding the global currents that shape the financial landscape and being able to navigate these currents effectively.

Conclusion

The landscape of credit is rapidly changing, shaped by the fragility of traditional financial pillars and the emergence of a democratised financial ecosystem. In this landscape, credit professionals must evolve, beyond financial experts. The role of the credit professional now extends to the innovation lab and global trendspotting. It's a role that demands a deep understanding of the world, a keen eye for detail, and the ability to think strategically. It's a role that's both challenging and exciting, fraught with risks and ripe with opportunities.

As we enter this new financial paradigm together, we invite you to share your insights, experiences, and strategies. How has your organisation adapted to these challenges? What opportunities have you seized? How are you navigating the shift?

Join the conversation and let’s chart the course for the future of B2B trade credit together.

Trade credit dynamics move quickly. Stay ahead with Baker Ing - visit https://lnkd.in/eGtpFDJS for in-depth insights and analyses.


The Renaissance of Travel & Tourism

As the world rolls out the proverbial red carpet once more, the Travel & Tourism sector finds itself amidst a renaissance. The echoes of a global pandemic and economic tremors are fading away, and a fresh canvas awaits the industry. 2022 saw the sector begin to navigate the choppy waters, spurred on by an insatiable yearning of the global populace to take to the skies and seas once again​.

Yet, the tapestry of travel is not being rewoven in the same manner. The needle and thread are guided by new hands, and the patterns that emerge are as complex as they are intriguing. One cannot deny the trials faced by the sector: a staggering $4.5 trillion in GDP lost and 62 million jobs vanished. But the adage that every cloud has a silver lining rings particularly true here.

For starters, the démodé designs of yesteryears have evolved into a richer tapestry, as the new era of travel is being shaped by a myriad of factors. Travel restrictions, vaccination rates, health security, shifting market dynamics, consumer preferences and the ever-pressing need for adaptation are all working in concert. The Travel & Tourism Development Index (TTDI) by the World Economic Forum casts a spotlight on the importance of sustainability, resilience, and inclusion in the sector’s rejuvenation.

One particular strain of thread stands out: the advent of "bleisure" travel. A portmanteau of business and leisure, bleisure has seen a surge as flexible working conditions afford the modern knowledge worker the liberty to merge work and wanderlust. There's a symphony in the making, where the traditional Monday to Friday constraints bow out to a more harmonious blend of work and exploration​.

On the other side of the spectrum, we must also turn our gaze to the virtual horizon. "Virtual travel" is a burgeoning market, propelled by the leaps in digital technology and, ironically, the pandemic. While initially perceived as a mere simulacrum of the real experience, it is fast becoming an essential thread in the tapestry. The confluence of the virtual and the tangible is poised to bring a certain synergy to the industry.

Of course, no modern tapestry is complete without the green thread of sustainability. The conscientious traveller of today is acutely aware of the footprints left behind. The industry must now grapple with integrating decarbonisation into its value proposition. This necessitates collaboration across the industry, for it is not just a challenge but also an opportunity to redefine what travel should embody for generations to come​.

As an international B2B receivables management company specialising in high-value and highly-sensitive accounts, it is crucial we appreciate the multifaceted nature of this evolving tapestry. The Travel & Tourism sector's financial ebbs and flows, intricately woven with global economic, social, and political threads, demands dexterity in risk management.

It is imperative to remember that in this renaissance, as colours bleed into each other and patterns emerge, the tapestry is yet on the loom. There will be knots and frays, but there will also be moments of clarity where every thread is in its place.

P.S. Unravel the Threads with Our Latest Report

It is said that knowledge is the thread that binds the tapestry of understanding. Our latest report, on this sector, is an invaluable guide through the labyrinthine world of Travel & Tourism. It takes an incisive look at the emerging trends, challenges, and opportunities in the sector.

What sets this report apart is its meticulous attention to detail. It not only delves into the global macro trends but also casts a discerning eye on the economic undercurrents that are shaping the industry.

In this sea of change, our report is a compass that can help you navigate with confidence and foresight. It is an indispensable resource for industry professionals, policymakers, and stakeholders who are looking to weave their threads into the new tapestry of the Travel & Tourism sector.

Don’t let this opportunity pass you by. The report is available now for download. Equip yourself with the knowledge that empowers.

Download the Report

 


📣 Baker Ing Bulletin, 22nd June 2023

Here are our top five stories impacting the world of credit this week.

1️⃣ Interest Rate Hikes Continue: The Bank of England Strikes Again 🇬🇧💰

The Bank of England continues its trend of hiking interest rates, with today likely marking the 13th consecutive increase. For credit professionals, this signals a tightening credit environment. Increased rates mean higher borrowing costs, potentially exacerbating default risks for individuals and businesses. Lenders need to revisit their risk assessment models to reflect these macroeconomic changes.

2️⃣ UK Mortgage Rate Soars: A Decade High of 6% 📈🏡

The two-year UK mortgage rate has risen above 6% for the first time since 2008, signifying a trend towards stricter lending practices. This development can impact the overall creditworthiness of mortgage borrowers, as higher rates might result in a larger number of defaults. Credit professionals should recalibrate their models to account for potential credit rating downgrades, especially within the housing sector.

3️⃣ China's Grip on UK's EV Future: A Cause for Concern? 🇬🇧🇨🇳🔋

The UK's deal with China's Envision for battery production might increase economic interdependence. However, reliance on a foreign supplier poses credit risks if that supplier faces financial instability. Credit professionals dealing with the auto and EV industries should closely monitor Envision's financial health and assess the potential ripple effects on their clients.

4️⃣ No Government Life Raft for UK Households 🇬🇧🏦

As mortgage rates soar, the UK government's decision not to offer direct support to households exposes financial institutions to a heightened risk of loan defaults. Credit professionals must brace for potential downgrades in consumer credit scores and prepare for a potential rise in bad debt provisions.

5️⃣ Open Floodgates for COVID Insurance Claims? ⚖️🦠

A recent High Court ruling might trigger a new wave of COVID-19 insurance claims. This increases the financial liabilities for insurance companies and impacts their creditworthiness. Credit professionals should keep a close eye on the insurance sector's response to this ruling, as increased liabilities could affect their ability to meet financial obligations.

Guided by The Past: A Stoic Philosophy for the Modern Credit Professional

There are moments in life, particularly amidst unprecedented challenges, that nudge us to seek wisdom beyond the superficial layers of our realities. The current financial landscape, filled with unexpected twists and turns, is one such moment that demands more than just technical know-how from credit professionals. It encourages us to delve into the philosophies of the past, anchoring our approach in timeless wisdom.

History is replete with leaders who have successfully navigated periods of extreme volatility. Winston Churchill's resilience during World War II, Abraham Lincoln's unwavering leadership during the U.S. Civil War, and Mahatma Gandhi's steady hand leading India to independence, all highlight the power of personal philosophies in facing uncertainty.

However, one leader's philosophy stands out for its relevance to our present situation – Marcus Aurelius, the Roman Emperor. His reign was marked by constant conflict, economic hardships, and a devastating plague. Yet, guided by Stoicism, he remained composed and effective. His wisdom offers us a philosophical lifeline amidst our current financial storms.

Stoicism, at its core, champions acceptance of reality, focusing on what we can control, building internal resilience, fostering continuous learning, and practicing virtue. As credit professionals, this philosophy can guide us through today's complex landscape.

Acceptance of reality, a crucial stoic tenet, means recognising the fluidity of our industries, without falling prey to fear or frustration. We must see the fluctuations in interest rates, potential for high default rates, and geopolitical risks as aspects of our profession, not hurdles. This clarity enhances our decision-making capabilities, allowing us to respond rather than react.

Then there's the emphasis on controlling what we can. We may not hold sway over global interest rates or legal frameworks, but we can shape our strategies, risk assessments, and relationships with clients and stakeholders. By focusing our energies on these elements, we can effectively navigate the unpredictable waves of change.

Aurelius often spoke of internal resilience, not merely as a mechanism to survive adversity but to find tranquillity within it. As credit professionals, this resilience allows us to remain composed and effective, ensuring our decisions are not clouded by emotional turmoil.

Further, Aurelius was a lifelong learner, a quality that has become indispensable in our rapidly evolving economic and technological landscape. Keeping abreast of new trends, regulations, and technologies ensures we are well-prepared to tackle future challenges.

Finally, Aurelius upheld virtue and integrity above all else. As credit professionals, conducting ourselves with transparency, ethicality, and fairness is not only our professional duty but crucial to building trust and sustainable success.

These unprecedented times, while challenging, offer us a unique opportunity. They propel us to look beyond the day-to-day firefighting, to seek guidance from leaders who have stood where we stand, in the face of uncertainty. Like Aurelius, we too can use this tumultuous period to make an indelible impact, shaping our industry for the better, setting a high bar for future credit professionals, and proving that even in comparative chaos, there's a philosophy that can steer us to tranquillity and effectiveness.

As always, we value your input – feel free to share with us your thoughts and the stories that are keeping you engaged.

Stay ahead of the rapidly changing trade credit dynamics with Baker Ing - visit https://lnkd.in/eGtpFDJS for in-depth insights and analyses.

#creditmanagement #globaltrends #riskmanagement #finance #news #economy #UK #inflation #interestrates #mortgages #EVs #insurance #CovidClaims


📣 Baker Ing Bulletin, 15th June 2023

In a world of economic fluctuation and emergent trends, staying abreast of new developments is not just recommended – it's critical. In today's briefing, we delve into the top five stories from the world of trade credit, and attempt to piece together a comprehensive understanding of the evolving landscape. As always, we value your input – so feel free to share with us your thoughts and the stories that are keeping you engaged.

1️⃣ Hong Kong's Crypto Wave: HSBC and Standard Chartered in the Spotlight 🏦💱

The Hong Kong regulator's push for HSBC and Standard Chartered to onboard crypto clients aims to spur the digital assets industry. For companies dealing with these banks, or those operating within the crypto space, the rise in digital asset acceptance may increase credit risk exposure, due to the volatile nature of cryptocurrencies.

2️⃣ China's Economic Shift: Navigating a Changing Landscape 🇨🇳📉

The unexpected slowdown in China's economy could impact the liquidity and solvency of Chinese companies, thereby affecting their creditworthiness. For credit professionals, this signals the need for a reassessment of credit policies concerning Chinese counterparts, particularly in sectors most affected by the slowdown.

3️⃣ Green Governance in the UK: The Climate Risk Disclosure Framework Emerges 🇬🇧🌍

The UK government's requirement for larger businesses to disclose climate-related financial information by 2023 will force transparency in exposure to climate risks. This additional data may affect credit assessments, particularly for companies in high-emission industries or those lacking robust mitigation strategies.

4️⃣ HSBC's French Banking Unit: The Sale that Keeps Us Guessing 🏦⏳

The drawn-out sale of HSBC's French banking unit to Cerberus could create uncertainties in the credit terms for clients dealing with either entity. For example, if Cerberus seeks to restructure the unit or streamline operations, this could affect the creditworthiness of the banking unit or impact its current client relationships.

5️⃣ VW Group on the Tightrope: Cost Cutting Measures in Motion 🚘💰

VW Group's aggressive cost-cutting measures, a response to falling market share in China and rising EV transition costs, could hint at internal financial strain. Creditors in the auto industry should be aware, as this may increase credit risk, particularly if cost cuts lead to layoffs, reductions in R&D, or compromises in product quality.

The Dynamic Equilibrium of Trade Credit Risk Management:

These disparate stories underscore the fact that the landscape of trade credit risk is continually shifting due to the complex interplay of regulatory changes, macroeconomic performance, and corporate strategic decisions. As such, the role of credit professionals is to navigate these waters and maintain balance in the ever-changing landscape.

  • Regulatory changes introduce new variables, necessitating constant adaptation.
  • Macroeconomic performance provides the backdrop, altering the context in which risk assessments are made.
  • And corporate strategies generate ripples that demand a continual reevaluation of credit risk.

We think this emphasises the importance of proactive vigilance, adaptability, and a holistic understanding of the credit landscape. It also underlines the need for advanced tools and technologies that can assist in sophisticated risk modelling and decision-making.

With daily developments reshaping our understanding of credit risk management from a static, one-dimensional discipline into a dynamic, multi-dimensional practice, the challenge for credit professionals is to effectively navigate the complexities of this rapidly changing commercial environment.

We hope you find these updates insightful, and as always, we're here to support you in navigating these changing currents. Stay tuned for more insights and analysis from the world of credit. And, of course, we would love to hear what's on your mind.

For more insightful analysis and commentary for credit professionals, don't hesitate to visit Global Outlook.


Join the International Freight & Logistics Risk Forum

We're excited to introduce you to the International Freight and Logistics Risk Forum (IFLRF), the premier risk forum committed to building resilience and promoting innovation in the global freight and logistics industry. Providing a stage for a diverse array of industry segments, the IFLRF is all set to be the most comprehensive credit and finance forum in freight and logistics.

For an industry that's the linchpin of global trade and a catalyst for economic growth, such a focused platform has been long overdue. The IFLRF brings together stakeholders from across the sector—transporters, warehouse operators, insurers, financial institutions, technology firms, and more—to discuss, debate, and devise strategies that ensure not only survival but sustainable growth in an environment fraught with uncertainties.

Moreover, the IFLRF isn't just about mitigating risks. It’s about seeing risks as opportunities to innovate and create value. It’s about learning to navigate the complex trade winds of the industry with knowledge, collaboration, and foresight.

As a new platform, the IFLRF is teeming with opportunities for early adopters. By stepping into the uncharted waters of risk management, you can be among the trailblazers shaping the industry discourse, establishing best practices, and driving innovation within the freight and logistics sector. We invite you to not just follow industry trends but to be instrumental in setting them.

So, mark your calendars for our inaugural event on 19th September, from 10 am to 1 pm. We're hosting this pivotal gathering at Dun & Bradstreet HQ, The Point, 37 North Wharf Road, London, W2 1AF.

This is your chance to meet the industry's leading voices, to share your insights and experiences, and to explore potential collaborations that can create a lasting impact on the freight and logistics industry.

For more information about the event and ticket inquiries, please reach out to Christina at christina@bakering.global.

 

 

 

 


📣 Baker Ing Bulletin, 14th June 2023

With economic winds shifting and new trends emerging, it's essential to keep ourselves informed and prepared. Today, we're sharing a brief update on key developments impacting our world of credit. Remember, your thoughts matter to us. What are the stories keeping you on your toes as a credit professional?  

Today's insights:

1️⃣ Russian Government Introduces Hefty Tax on Wealthy Businessmen: This has potential implications for associated companies within the metal and fertilizer industries, in particular. As credit professionals, the scenario calls for a reassessment of credit risk and potential modification of credit terms for any such clients in these sectors.

2️⃣ Potential Shipping Levy Looms in France and beyond: The prospect of an emissions levy on shipping could escalate operating costs for the shipping industry and sectors reliant on it. This could lead to increased credit risk for these businesses, stressing the importance of staying updated and adjusting credit assessments accordingly. This is an important development for credit professionals dealing with companies in the shipping industry or those heavily dependent on it.

3️⃣ EU funding China’s Huawei in sensitive AI and 6G research despite curbs: While this may hint at opportunities for Huawei, it also speaks volumes of the EU's strategic intent in the global tech race. Credit policies for companies in the Huawei supply chain, as well as this sector generally, will be very sensitive to such geopolitical developments.

4️⃣ Microsoft-Activision Acquisition Roadblock: The hiccup in Microsoft's quest to acquire Activision Blizzard presents an intriguing subplot in the ongoing saga of big tech. It's a stark reminder of the potential for financial uncertainties that can cascade through companies, suppliers, and partners alike. This highlights the importance for credit professionals to keep a finger on the pulse of mergers and acquisitions, understanding the stakes of the game in terms of credit risk.

5️⃣ Infineon considers moving more production capacity to US: Significant operational changes by a company, like moving production to another country, can disrupt its supply chain and impact its financial health and credit risk. As Germany's largest semiconductor manufacturer, this company's activities can ripple through a plethora of other connected industries, too. Potential disruption to existing supply chains may lead to a reevaluation of credit risk amongst the network of businesses associated with Infineon.  

 

Dynamic Complexity

1️⃣ Macro-Economic Policies: The introduction of wealth tax in Russia demonstrates how macro-economic policies directly influence the financial stability of businesses, thereby affecting their credit risk.

2️⃣ Socio-Environmental Factors: The prospect of an emissions levy on shipping in France signifies how socio-environmental policies can directly affect industry operating costs, and consequently credit risk.

3️⃣ Geopolitical Decisions: The funding of Huawei by the EU despite curbs indicates that geopolitical decisions can trigger industry shifts and influence the creditworthiness of companies involved.

4️⃣ Market Consolidations: The roadblock in Microsoft's acquisition of Activision Blizzard illustrates how market consolidations can introduce financial uncertainties, impacting the credit risk of not only the companies involved, but also their partners and suppliers.

5️⃣ Business Strategy Decisions: Infineon's consideration of moving more production capacity to the US shows how strategic business decisions can disrupt supply chains and create ripples of financial instability affecting credit risk across industries.  

 

We see these events confirm our perspective on credit professionals as navigators within a complex, interconnected system of dynamic variables. Our challenge is to maintain equilibrium within this system and preemptively manage risks.

This is achieved not only through reactive measures in response to events as they occur, but, more importantly, through proactive measures that predict, prepare for, and ideally prevent credit risk based on a holistic understanding of the ever-evolving macro and micro landscape. This includes maintaining comprehensive, timely knowledge and insights, fostering adaptability, and leveraging advanced tools and technologies to aid in sophisticated risk modelling and decision-making.

Daily developments are underscoring the evolution of credit risk management from a traditionally static, one-dimensional discipline into a dynamic, multi-dimensional practice. It accounts for the complexity and interconnectedness of various factors – economic, social, geopolitical, industrial, and strategic – in shaping the landscape of credit risk.

Our ultimate aim is to help credit professionals navigate these complexities and effectively manage risk in a rapidly changing world.

As always, we're here to support you in navigating these changing currents.

Stay tuned for further updates and don't forget to let us know what's on your mind.

For more insight and analysis for credit professionals, visit Global Outlook.


📣 Baker Ing Bulletin, 13th June 2023

With economic winds shifting and new trends emerging, it's essential to keep ourselves informed and prepared. Today, we're sharing a brief update on key developments impacting our world of credit.

Remember, your thoughts matter to us. What are the stories keeping you on your toes as a credit professional?

Today's insights:

1️⃣ US Junk Loan Defaults Spike: With junk loan defaults reaching new highs and interest rates on the rise, the credit market is under pressure. It's a wake-up call to reassess the creditworthiness of clients, particularly those heavily dependent on borrowing.

2️⃣ US Inflation Cools Down: With inflation at its lowest since early 2021, the economic relief could translate into healthier business prospects and potentially more reliable payments. Could this also mean improved payment performance across our client portfolios?

3️⃣ Europe's Nearshoring Boom: Europe's demand for factory space has surged by 29%, due to the increasing trend towards 'nearshoring'. With supply chains adjusting rapidly, new risks and opportunities in extending trade credit might arise. Time for a reassessment of our credit terms!

4️⃣ Bunzl's Supply Chain Shift: The move to source more outside of China by Bunzl is reflective of a larger shift towards supply chain diversification. If your clients are closely linked to Chinese supply chains, this could impact their cash flows and ability to meet payment obligations.

5️⃣ Nasdaq's Major Acquisition: Nasdaq's acquisition of fintech firm Adenza for a whopping $10.5bn could lead to shifts in credit conditions, payment practices, and financial stability in fintech and exchange-oriented businesses. The ripples of such a massive deal could be felt across related industries.

6️⃣ Foreign Investment Decline in Chinese Tech: The dip in foreign investment in Chinese tech companies could potentially tighten their liquidity, translating into increased credit risk. If your transactions involve these firms, be prepared for potential credit challenges.

 

Navigating the Shifting Credit Landscape with Adaptive Credit Resilience

In this evolving landscape, we propose "Adaptive Credit Resilience" as a way forward. It is based on the principle that our credit strategy needs to be both adaptable and resilient, capable of responding effectively to complex and volatile economic environments.

We believe credit management should be dynamic and forward-looking, tailored to the unique circumstances of each debtor. The core principles of Adaptive Credit Resilience include:

  • Systemic Understanding: Understand the broader context of each client, including macroeconomic factors and industry trends that can affect their creditworthiness.

  • Predictive Analytics: Use data and advanced analytics to predict potential credit risks before they materialize.

  • Adaptive Decision-making: Adapt credit decisions quickly in response to new information or changing conditions.

  • Risk Diversification: Spread credit across diverse sectors and geographies to reduce exposure to shocks in any one area.

  • Resilience Building: Prioritise clients who can withstand economic fluctuations, demonstrated by strong cash flows, diversified supply chains, and sound business models.

In these tumultuous times, Adaptive Credit Resilience is the cornerstone of a strategy designed to stay ahead of risks and seize opportunities. It's about adapting to change, managing risk, and building resilience into your credit portfolio.

As always, we're here to support you in navigating these changing currents. Stay tuned for further updates and don't forget to let us know what's on your mind.

For more insight and analysis for credit professionals, visit Global Outlook.


Your Essential Dashboard for Success

Navigating the complex and often unpredictable landscape of global risk is no simple task. In the rapidly evolving world of credit, professionals need accurate, up-to-date insights to make informed strategic decisions, particularly when it comes to managing high-value, sensitive accounts receivable. Understanding this pressing need, we have launched "Risk Monitor: Your Quarterly Risk Snapshot".

Our Risk Monitor is not just another report. It's a precisely curated, user-friendly dashboard designed for busy credit professionals, who need essential risk insights, fast.

Every quarter, our Risk Monitor takes you on a guided tour of the current state of receivables risk across various sectors. From Fashion & Apparel to Telecommunications and Healthcare, we've got you covered. Our latest edition, for instance, reveals that the Global Worldwide Risk Score (WRS) currently stands at a moderate level of 5.5 out of 10, showcasing recovery in the first half of the year.

The dashboard paints a comprehensive picture of the global risk climate, breaking down the complex data into easily digestible insights, helping you make sense of how sector-specific WRS changes might impact your business decisions. These snapshots equip you with the necessary information to anticipate risks, act faster, and ensure your business's sustainable growth.

However, while our Risk Monitor provides a high-level view of global risk trends, it is only the tip of the iceberg. For professionals seeking a more in-depth understanding, our full reports are a treasure trove of detailed analyses, sector trends, and critical knowledge. These exhaustive studies empower you with the tools you need to strategically manage your high-value and sensitive accounts receivable in an increasingly interconnected and volatile global economy.

Staying abreast of global risk is crucial to your business's financial health. Risk Monitor is designed to make that task easier and more efficient.

Download the latest edition of the Risk Monitor now, and for those seeking a deep dive into risk analysis, our full reports are readily available here. Stay informed, stay ahead, and redefine the way you navigate risk with Baker Ing.

https://bakering.global/global-outlook

Stay tuned to our blog for more insights and updates on global risk management. Your success is our goal, and we're here to help you achieve it.

#RiskMonitor #B2B #ReceivablesManagement #RiskManagement #GlobalRisk #IndustryInsights #BakerIng


Unmasking the New Luxe: A Tale of Resilience, Adaptability and Evolution

In the expansive world of luxury goods, an exhilarating narrative is unfolding. It's not just about diamond-encrusted watches or haute couture anymore – it's about the new definition of luxury, the shifts and turns it’s taking, and how these changes are shaking up the sector.

Our latest "RiskPulse: Luxury Goods Sector 2023" report unravels the intricacies of this ever-changing landscape. 

Despite an economic roller coaster and a moderate Worldwide Risk Score (WRS) of 4.6 out of 10, the sector remains resilient. Luxury, it seems, has a tenacity that cannot be easily undermined.

Fueling this resilience is the sector’s growing appeal in emerging markets. Asia is blooming as a luxury hotspot, with its affluent middle class showing an insatiable appetite for the finer things in life. Yet, it's not just Asia that’s transforming the luxury map; the Middle East too is stepping up, staking its claim in the luxury narrative.

But as we navigate this brave new world of luxury, it’s not just about who’s buying, but also what they're buying into. Consumers are demanding more than just exquisitely crafted products; they want their purchases to embody sustainability and ethical sourcing. These values are no longer a choice but a necessity for brands that wish to thrive in the contemporary luxury ecosystem.

And let’s not forget the digital frontier. As e-commerce platforms bring luxury to doorsteps, brands are faced with the challenge of replicating the exclusive in-store experience in the virtual space. It’s a thrilling era of innovation as luxury explores new ways of enchanting its customers.

The Luxury Goods 2023 report is an invitation to dive deep into this fascinating world. It’s a must-read for those wishing to stay ahead of the curve, understand the sector’s shifts and turns, and glean insights into the future of luxury. Your journey into the heart of luxury starts here.

 


Fashion & Apparel 2023

In today's rapidly changing world, understanding the risks and opportunities in the Fashion and Apparel (F&A) sector is crucial for businesses to stay ahead. At Baker Ing, we are committed to providing in-depth analysis and insights to help your business thrive. We're excited to announce the release of our comprehensive 38-page report, which offers a detailed overview of the F&A industry and its challenges.

The report, available for download at https://bakering.global/product/report-fashion-apparel-2023/, reveals a moderate Worldwide Risk Score (WRS) of 4.5 out of 10 for the F&A sector. Supply chain complexity emerges as the primary risk factor, as global value chains are increasingly vulnerable due to logistical challenges and political tensions.

However, there is a silver lining. The F&A sector is poised for post-COVID expansion, driven by the burgeoning Asia Pacific market. As businesses adapt to the evolving landscape, they must address several critical areas:

  • Invest in supply chain management and AI technologies: A robust supply chain strategy and cutting-edge technologies will enable businesses to overcome challenges and capitalize on opportunities.
  • Respond to environmental and ethical demands: Consumers are more aware than ever of the environmental and ethical implications of their purchasing decisions. Companies must adapt to meet these expectations by incorporating sustainable practices and transparent policies.
  • Embrace e-commerce and digitalization: The pandemic has accelerated the shift towards e-commerce and digital solutions. Businesses must embrace these trends to remain competitive in the rapidly evolving F&A industry.

This comprehensive report provides valuable insights and guidance for businesses navigating the complex landscape of the Fashion and Apparel sector. Download the full 38-page report today at https://bakering.global/product/report-fashion-apparel-2023/ and equip your business with the knowledge and insights needed to succeed.

Don't miss out on this essential resource for understanding the F&A industry. Download your copy now and stay informed about the risks and opportunities that lie ahead.

#FashionIndustry #ApparelIndustry #RiskReport #SupplyChain #Digitalization #ECommerce #AI #Sustainability #BakerIngReports


Open Banking Integration

Determined to keep pushing boundaries, we're always looking for ways to improve the debt recovery process for both our clients and debtors. That's why we are excited to announce our latest feature - Open Banking Integration.

With Open Banking Integration, we can leverage a debtor's real financial data to create optimised repayment plans that are tailored to their actual financial situation. This enables us to improve debt recovery outcomes and the efficiency of debt collection strategies.

To learn more about how Open Banking Integration can enhance your debt collection capabilities, check out the intro video, contact your account manager, or please contact us.

 


International Team Conference: Embracing Remote Work for Better Receivables Management

Baker Ing, is known for shaking up the receivables management sector, and one of the ways the company has distinguished itself is through our innovative approach to leveraging remote work for exceptional service delivery.

Recently, the company organised our bi-annual team conference, this time in Malta, bringing together its global workforce for an invaluable opportunity to connect, collaborate, and exchange insights. We would like to share key learnings from this event and delve more into how we continue to deliver exceptional results for our clients in this way.

 

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In recent years, the global trend towards remote work has been steadily gaining momentum, significantly accelerated by the COVID-19 pandemic. While remote work solutions present both advantages and challenges, companies like Baker Ing have strategically harnessed the benefits since inception, prior to the necessity brought about by the pandemic – being designed from day one to deliver outstanding services in this way.

 

The Remote Structure of Baker Ing

At the core of Baker Ing's innovative approach to receivables management is this remote work model, which leverages technology to enable seamless global collaboration. The company has successfully created a network of professionals from diverse backgrounds and locations, united by their commitment to providing top-notch services to clients. This remote work model is supported by an array of digital tools and platforms, which facilitate communication, project management, and file sharing.

One of the key advantages of remote work is access to this diverse pool of talent. By removing geographical constraints, the company can recruit highly skilled professionals from across the globe, resulting in a workforce enriched by a multitude of perspectives, experiences, and expertise. This diversity not only fosters innovation but also enables the company to better understand and address the unique needs of our clients, who are spread across different continents and industries.

Remote work also offers flexibility, both for the employees and the company. This flexibility enables us to adapt more quickly to changing market conditions and client needs, thereby maintaining an edge in the dynamic landscape of receivables management. Our global network of professionals allows for faster response times as we allocate resources more efficiently and assign tasks to team members in different time zones, ensuring that work progresses around the clock. This rapid response to client needs is crucial in a fast-paced commercial environment, where timely action can make a significant difference in recovery rates and client satisfaction.

The diverse team at Baker Ing is also well-equipped to develop tailored solutions for clients, addressing their specific requirements and challenges. The company's remote communications infrastructure facilitates the exchange of ideas and best practices among team members from different backgrounds and regions, fostering innovation and creativity in designing client-specific strategies for their receivables.

Finally, working in this way enhances communication with our clients. The company utilises a range of digital tools and platforms to ensure our clients are well-informed and involved in the decision-making process. These tools enable clients to communicate with the Baker Ing team in real-time, receive regular updates on their projects, and access important documents and data at their convenience.

In summary, Baker Ing's remote work model is at the core of our commercial model and serves as a competitive advantage. By harnessing technology to enable global collaboration, the company has access to a diverse pool of talent, can offer cost-efficient solutions, and a scalable, flexible service. These benefits translate into faster response times, tailored solutions, and enhanced communication for clients, ensuring exceptional service delivery.

 

 

The Malta Conference

Recognising the importance of face-to-face interactions, especially for remote teams, Baker Ing recently organised our bi-annual international team conference, this time in Malta. The event brought together the company's remote workforce, providing an invaluable opportunity for team members to connect, share knowledge, and foster collaboration. The objectives of the conference were threefold: building connections among team members, enhancing knowledge sharing, and promoting collaboration across the organisation.

We conducted workshops designed to further enhance the skillset of Baker Ing's credit professionals. These workshops covered a range of topics relevant to the receivables management industry, such as new technologies, legal and regulatory updates, negotiation techniques, and cross-cultural communication. The workshops provided an interactive learning environment for participants, allowing them to exchange experiences, discuss challenges, and explore solutions together.

In addition to workshops, the conference featured discussions and presentations by industry experts and Baker Ing team members. These sessions addressed various aspects of receivables management, from best practices and case studies to emerging trends and innovations. By facilitating an open dialogue on these topics, we encouraged team members to learn from one another, share their insights, and develop a deeper understanding of the industry landscape.

The conference also included several team-building activities, designed to strengthen interpersonal relationships among team members and cultivate a sense of camaraderie. Such experiences are essential for remote teams, as they help to build a strong foundation for effective collaboration, even when team members are geographically dispersed.

A key theme that emerged during the conference was the importance of face-to-face interactions for remote teams. While digital tools and platforms are invaluable for enabling communication and collaboration among remote team members, they cannot entirely replace the benefits of in-person encounters. Face-to-face interactions facilitate deeper connections, promote trust, and create a sense of belonging within the team, ultimately contributing to a more engaged and productive workforce.

The Malta conference served as a reminder that by investing in such events, Baker Ing demonstrates our commitment to creating a supportive and collaborative work environment, where team members can thrive both professionally and personally. This emphasis on nurturing a connected, engaged workforce ultimately translates into superior service delivery for our clients, as a well-functioning team is better equipped to tackle their complex challenges.

 

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Best Practices for Managing a Remote Team

Drawing from insights and lessons gleaned, we would like to share some best practices for managing a remote team. These practices are essential for companies whose remote work structure relies on effective communication, collaboration, and employee engagement to ensure success in receivables management.

  1. Effective communication and collaboration strategies: To maintain productivity and efficiency, remote teams must develop a robust communication system. Regular check-ins, either individually or in groups, help keep team members aligned and informed about ongoing projects and tasks. Video conferencing is a powerful tool for remote collaboration, as it allows for real-time discussions and enables participants to read non-verbal cues, fostering a more authentic connection. Additionally, utilising project management tools, such as Teams, Trello, Asana, or Basecamp, can help teams organise and track tasks, deadlines, and resources, ensuring that projects remain on schedule and all team members are held accountable.
  2. Fostering a strong company culture and employee engagement: A positive company culture is essential for remote teams, as it instils a sense of belonging and purpose among team members. Companies should focus on defining and communicating their core values and mission, ensuring that remote employees feel connected to the organisation's broader goals. Regular team meetings, virtual social events, and opportunities for professional development can help maintain employee engagement and create a sense of camaraderie, even when team members are geographically dispersed.
  3. Work-life balance and mental well-being: Remote work can blur the lines between professional and personal life, making it crucial for both employees and managers to prioritise work-life balance. Encouraging employees to establish a dedicated workspace, set boundaries between work and personal time, and schedule regular breaks can help prevent burnout and maintain mental well-being. Managers should also promote a culture of trust and empathy, regularly checking in with team members to discuss any challenges they may be facing and offering support where needed.

Managing a remote team effectively requires a combination of clear communication, collaboration strategies, a strong company culture, and a focus on employee well-being. By applying the insights and lessons learned, we ensure that remote workers remain engaged, productive, and committed to delivering exceptional service. With the right strategies and tools in place, remote teams can thrive in today's rapidly evolving business landscape, unlocking new opportunities for growth and success.

 

How Baker Ing's Remote Structure Translates into Better Service for Clients

In an increasingly globalised and interconnected world, Baker Ing's remote structure provides a distinct advantage for clients seeking customised and efficient receivables management services. By harnessing the power of technology and leveraging the benefits of remote work, we offer a unique value proposition with particular emphasis on the importance of linguistic skills and cultural understanding.

The remote structure allows the company to tap into a global talent pool, ensuring that clients receive the best possible expertise tailored to their specific needs. By eliminating the constraints of a traditional office environment, Baker Ing provides round-the-clock support, with team members in various time zones working collaboratively to deliver efficient and timely solutions. Furthermore, the company's ability to access and leverage specialised expertise from remote professionals, including those with the required linguistic skills and cultural understanding, enables the creation of bespoke strategies that cater to individual client requirements.

In addition, having such a diverse team, comprising members from different backgrounds, cultures, and areas of expertise, fosters innovation and creativity within the organisation. Research has shown that diverse teams are more likely to generate novel ideas, challenge established norms, and identify potential blind spots. At Baker Ing, this diversity of thought is invaluable when devising customised receivables management solutions, as it allows for a more comprehensive understanding of the unique challenges faced by each client.

Moreover, our diverse team facilitates better communication with clients from various cultural and linguistic backgrounds, further enhancing the overall service experience. Linguistic skills and cultural understanding are crucial in facilitating prompt payments. By having team members who possess the necessary language capabilities and cultural knowledge, Baker Ing navigates complex communication barriers, negotiates more effectively, and ultimately improves the likelihood of securing timely payments from debtors. We are able to develop tailored strategies that take into account the specific cultural nuances and legal frameworks of each jurisdiction, with in-country professionals fully immersed in such developments.

We recognise the importance of investing in our employee's professional growth and development, as well as promoting a culture of continuous improvement. This commitment ensures that our team remain up-to-date with the latest industry trends, technological advancements, and best practices in receivables management. By equipping our remote workforce with the necessary skills, knowledge, and resources – including linguistic and cultural expertise – we maintain consistently high standards of service delivery.

 

Conclusion

Baker Ing's remote work structure offers significant advantages for clients seeking exceptional receivables management services, particularly in the international context. By leveraging the benefits of remote work, a diverse team with varied linguistic skills and cultural understanding, and a strong commitment to employee development and continuous improvement, Baker Ing is positioned to meet the unique challenges and opportunities of the globalised business landscape.