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Shell Chemicals Roadmap for value-added Credit Management
Jacques Vincken
Global Credit Manager, Shell Chemicals© Shell Chemicals Europe B.V
2
Quick Temperature checkWho has a Credit policy?
Do you have Management Information and KPI’s to track performance?
What is the number of Credit Staff in your organisation: who has more than 30? more than 20? Less than 10?
How many ERP systems do you work with? (>10; >3; who has 1?)
Is Credit perceived in your organisation as a back office function? Or a “Front office” partner with Sales?
Rate your Credit performance: thumbs up? Thumbs down?
© Shell Chemicals Europe B.V
3
Agenda
Where can Credit add value?
Our experience: where we started
What does the journey look like?
Steps to value-added Credit Management
Where can Credit add value?
Our experience: where we started
What does the journey look like?
Steps to value-added Credit Management
© Shell Chemicals Europe B.V
4
Where Credit Can Add Value
Reduce Trade Debt Overdues
Structurally Reduce Customer Credit Terms
Improve quality of the customer portfolio
Mitigate Customer/Counterparty Risk
Manage the Cost of Credit Management Operations
Advise business on Risk versus Reward opportunities
Help the business to Grow !!!
Reduce Trade Debt Overdues
Structurally Reduce Customer Credit Terms
Improve quality of the customer portfolio
Mitigate Customer/Counterparty Risk
Manage the Cost of Credit Management Operations
Advise business on Risk versus Reward opportunities
Help the business to Grow !!!
© Shell Chemicals Europe B.V
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Where we started
Local & fragmented processes
Decentralized approach
Multiple ERP systems
Internal focus
Relatively isolated from Business
No Credit target in Sales staff goals or performance appraisals
Silo’d Credit Organisation
© Shell Chemicals Europe B.V
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Downstream Credit Journey‘Credit Management Roadmap to Improvement…’
Organisational Alignment
Customer Focus
Consistent MI
Professionalism
One Set of Rules
Process & System Standardisation
Credit Strategies
Operational ExcellenceEnablers
Professional &Customer FocussedCredit Management
FragmentedCredit Management
Differentiators
The journey to Value-added Credit Management
© Shell Chemicals Europe B.V
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1. Ownership of OVERDUE KPI targets2. Global system & standard processes3. Focused Credit & Business Actions4. Integrated Credit, Sales & Contracts
process5. Reliable, consistent, detailed MI and
targets
6. Reporting matches Business Structure7. Close co-operation with Customer
Service Centres8. Active pre-chasing & debt monitoring9. ‘Cost of Credit’ Reporting10. Training in Credit Process & Policies
(incl. Sales, CSC and Legal)
First step - build the foundations‘Top 10 actions with results…’
2 0 0 2 2 0 0 3 2 0 0 4 2 0 0 5 2 0 0 6 2 0 0 7
Day
s Sa
les
Out
stan
ding
.
C o n tra c tu a l D S O T re n d lin e - C o n tra c tu a l D S O
DSO reduced by 30%
2 0 0 1 2 0 0 2 2 0 0 3 2 0 0 4 2 0 0 5 2 0 0 6 2 0 0 7M o n th
Perc
ent O
verd
ue
.
% O verd u e
Overdue reduced by 80%
© Shell Chemicals Europe B.V
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Changing Environment
Technology & Regulatory
developments
OrganisationalChanges
New Entrants
Financial Markets: Credit
Crisis
Competitive pressure
Industry Consolidation -concentration
Business Strategy & growth priorities
Sector-specific Cyclicality
Changing geographic Trade flows
Technology & Regulatory
developments
New Banking /Payment systems
Emerging Markets growth
Financial Instruments
for Risk Transfer
Global economic downturn
© Shell Chemicals Europe B.V
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Starting point is the Credit Portfolio
Portfolio analysis drives focus on highest value areas:
Concentrations of risk
Growth opportunities
Portfolio analysis by Business Unit
67%
28%
1%2%1%1%
Business 1
Business 2
Business 3
Business 4
Business 5
Business 6
© Shell Chemicals Europe B.V
Credit Exposure by Business
Expo
sure
in $
Business 4
Business 11
Business 9Business 3
Business 8
Business 2Business 1
10
Sales teams
Credit & Finance teams
Senior Leaders
More regular interaction
Implementation - a joint responsibility across functions!
© Shell Chemicals Europe B.V
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Roadmap to value-added Credit Management
People – Develop competences of your staff and recruit to build the right skills profile
Trade Receivables – Take critical steps to get the basics right
Credit portfolio understanding, and knowledge of wider business objectives and external dynamics
Partnership with rest of the organisation to implement strategy – not just a Credit responsibility
Mindset: Move from risk avoidance to “risk versus reward” approach
© Shell Chemicals Europe B.V
