Creditors Employ New Credit Policy Strategies in 2011
January 9, 2012
Based on the information generated by our Children's Industry Credit Manager's Network, 2011 saw a slight increase in the number of member-generated Alerts (Up 3%.) Based on 2010's decline of 3%, this should be viewed as a sign of the industry's continuing struggles.While the overall year-over-year increase in Alerts should be taken as a cautionary sign, there was one Alert category that showed a significant and noteworthy change. The number of alerts submitted for "Credit Hold" increased by 88%. This shows that creditors belonging to the Credit Collective have appropriately revised their credit and collection policies and have stopped shipping to late-paying retailers until past due invoices have been paid. We encourage all creditors to adopt this highly effective policy. 2011 References Summary
- Total Credit Alerts Submitted: 2,420
- Total Credit References Created: 57,540
- [Green (Positive) References: 56%]
- [Yellow (Cautionary/Neutral) References: 21%]
- [Red (Negative) References: 22%]
December CrediShields As far as month-to-month goes, December saw a welcome decline in member-generated alerts about retailers (Down 18%.) It should be pointed out, however, that creditors were mostly focused on shipping out holiday orders. The categories with the largest changes in December were for "Written Off" (Down 52%) and "Sent to Pre-Collections" (Up 7%.)
December also saw a decline in the number of new credit references sought by members of the network (Down 32%.) While the declining alerts is a positive indicator, declining credit applications is negative. However, as in November, much of the decline should be attributed to creditors having already approved terms for holiday customers. Of the references created and/or viewed in November 55% were positive, 23% were cautionary and 22% were negative.
Not surprisingly, as in November, December saw a decline in the number of new sales leads generated for members of the network (Down 48%.) Given the impressive growth in new sales leads generated in 2011, this decline was expected. We anticipate strong growth in this category beginning in 2012.
Because of the continued escalation in credit alerts and what we view as a high volume of negative references, we hold our recommendion that Children's Manufacturers continue to maintain a "CONSERVATIVE" credit and collections policy throughout 1st quarter 2012. *CrediShields data is a compilation of all data generated by the Children's Manufacturers Credit Network administrated by The Credit Collective, LLC. All data is updated dynamically and is a true reflection of the financial state of the industry. Manufacturers and retailers alike can look at the data and make sound business decisions, based on the number of alerts, references and sales leads. Contact info
The Credit Collective, LLC
Evergreen, CO
303-670-5111
ron@creditcollective.com
www.creditcollective.com
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