Survey shows businesses cutting back on credit staff
Businesses are cutting back on recruiting accounts staff, even though theirrole in keeping the cash flowing is more vital than ever.
Indeed many of those currently in employment fear for their jobs asbusinesses rein in their recruitment plans and look to make further savings,even though it could cost them dearly in the long run.
The warning comes from Philip King, Chief Executive of the Institute ofCredit Management (ICM) which carried out the survey of its 8,500 Members working across all sectors of the economy.
King believes that when times are tough, and cashflow is under pressure,this is the time to invest in new staff, rather than cut them:
“Our experience over many years shows that businesses who invest inprofessional credit managers do better than those who don’t,” he says. “Butdespite this accepted truth, there are still those that do not value theircredit department in the way that they should, and see it as a cost ratherthan a benefit.”
In the figures published today, 16% of credit managers questioned said thattheir departments had been hit by redundancies, most commonly as a result of restructuring (41%), the loss of business (27%), or downsizing (18%). Jobs being axed ranged from senior financial partners to junior accounts clerks.
Of those businesses that were recruiting, the primary reason was to replacestaff that had already left (52%) – a fact that appears to bear out MrKing’s concerns:
“Businesses are not expanding their teams except in a handful of cases,” hesays, “and the only recruitment activity we are really seeing is to replacethose that have already left – and in some cases left the industry. There isalso evidence that businesses are replacing senior credit managers with more junior staff under the false pretext of saving money.”
When questioned as to why companies are not recruiting, nearly a third ofMembers (31%) said that there was a ‘recruitment freeze’ in place and 14%that there had been budget cuts. Of the firms that were looking to recruit,60% of jobs being advertised were permanent, 17% temporary, and 23% ofbusinesses were looking for a mixture of both.
Mr King recites one story of a cash-rich business that decided not totemporarily replace a credit manager who left on maternity, in order to savemoney. Within months the cash had dried up, and they were having to ask the bank for a loan to pay the staff:
“They thought they could get by,” he says, “but when there is no-one thereto focus on the job, cash can very quickly dry up and an otherwise healthybusiness can fail.”
Members were surveyed from within a variety of different sectors, includingaerospace, automotive, building and construction, catering, distribution,financial services, leisure, manufacturing, telecommunications and travel.