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Why it's important to have a third-party monitor your industry credit group - The Pitfalls
By Suzzanne Stanford, CCE CEW

I recently saw this inquiry:

We don't have an official credit group for our industry but a handful of us share "credit inquiry" type info about customers on a regular basis. One of the members has suggested we hold a quarterly telephone meeting to discuss issues to help with "common collection problems and industry trends". We would be our own moderators. I'm not sure how this can be accomplished without getting into "collusion." issues. Before I respond to them I would like your thoughts on the matter.

My immediate response was:

it is very important to have a permanent record of what information was asked and what information was shared.

To protect your company and your own personal backside if your group was accused of collusion. Meeting anywhere without an official third-party monitor puts you in a position to be named in a potential lawsuit.

Imagine two or three of you meeting for lunch and being seen, or you casually talk together on the phone. And watch out what you say in those emails. There are black and white guidelines as to what can or cannot be said. Having served for eight years as a Corporate Credit Manager and ten years as an NACM group monitor - you probably would NOT believe some of the things that happened in industry credit group meetings! The information we used to share - - when we didn't know any better, would scare the hair off your head.

Even when I monitored meetings - - there were surprises sometimes within and sometimes outside of the meeting. The situations had to be handled quickly and with finesse in order to cool down the group's mutual customer[s]. Not all credit professionals know what they can say, and sadly a few do not care :-( After all . . . they all know each other, don't they?)

Imagine a colleague visiting your mutual customer and mentioning that they know your company isn't going to extend credit to them either. Whew, have I seen a lot of scary things. A lawsuit is so easy to file. Perhaps your customer doesn't file a lawsuit but contacts your company's senior management with their alleged grievance. If this happens, guess who gets blamed and could potentially lose their job.

My recommendation:

"Cover your Backside and Protect your Company" Establish an industry credit group, but have a third-party monitor it, whether it be an attorney or an organization who specializes in credit groups. You'll gain the tools necessary to perform with more success than by simply exchanging credit inquiry type information. Under a protected atmosphere you'll gain more extensive credit information, discuss industry trends and new techniques, and can even do salary surveys - - (just don't tell your boss about this one.) Some NACM affiliates will monitor your group over the phone so that you can avoid the meeting expense if that is an issue.

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