From Roy Stout, CMA Chairman of the Board
As I prepare to move forward with my planning for the year 2007, I wonder what direction our economic fortunes will take us this year. It seems as though each article I have read has a different outlook or a similar outlook with a different twist. Several CFO and other credit professionals that I have spoken with on this subject provide a similar pattern of opinions. Each person seems to have a slightly different take on what the year 2007 has in store for us. But my best guess at this point is, as the attorneys say, “well it depends”.
After digesting all the material that I have read and the opinions (solicited or unsolicited) that I have received, I would have to say that at least most authorities predict the changes will be moderate in nature. Some people feel that we will experience a slight but important downturn in the economy. But more people think that the economic growth will continue but at a much slower rate than in the past few years.
My personal observations and projections (I hope nobody holds me to this) are that sales and revenues, much to my surprise, will continue to grow at a strong and steady pace. There will be many more new customers with significant requests for increased availability of credit. But I also feel more small businesses and financially challenged businesses will experience dramatic setbacks or complete failure. I feel that the number of new Bankruptcies will rise notably in 2007. This, unfortunately, will be followed by an increased rise in bad debt losses. These predictions will put an increased amount of pressure upon all of us to be at the top of our game.
In the early fall, I read several articles which stated that most CFO’s were budgeting for increased staffing in accounting personnel and specifically in credit and collection positions. This would seem to be consistent with some of the ideas mentioned above. But I noticed that as the end of the year approached, those same CFO’s reported that they had reduced their original projections for hiring in 2007. Although they still planned increases in credit and collection staffing, it would be on a much smaller scale than originally predicted. I also recently read that hiring of mid to upper level managers in the credit and collections field would be flat or possibly down slightly. I am not sure I know what this information is trying to tell us.
I am also very aware that the predictions continue to be that the traditional credit manager’s role is dramatically changing. I think the prognosticators are right on the money with this prediction. “Even when you are on the right track, going the right direction, if you are not moving forward, you will get run over.” Education and training will be more critical than ever. Don’t get left behind. Make sure you keep us at CMA informed of your needs. We will do everything in our power to help you keep on the forefront of changes in our profession.
I can’t help but think that the recent mid-term elections will be a factor in the economic conditions of 2007. I think the election results have already been somewhat factored into the economic forecasting. Unless something totally unexpected happens, I think a lot of the effect of the elections may have been already absorbed and they may not be a very big factor.
The biggest factor for the nation’s and the world’s economy has to be the Iraq war. Unfortunately, the war is also the biggest wild card. I can’t imagine what the future hold for everyone in that part of the world or what effect it will continue to have worldwide. With Saddam Hussein execution this past weekend, I have to believe it is going to be a whole different ball game.
I just know that I hope the very best outcome for all of the men and women who are in harm’s way as they serve their country in Iraq. I have the same high hopes and best wishes for all the Iraq citizens who are working so hard to have a normal, peaceful life in a very troubled area. As I celebrated the New Year this past weekend, I couldn’t help thinking wouldn’t it be wonderful if 2007 was the year that we finally achieve worldwide peace.
Until our paths cross once again in this New Year, have a prosperous and emotionally rewarding 2007.