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From Credit Managers for Credit Managers

The Federation of European Credit Management Associations (FECMA) was founded in 1986 promotes the development of the profession of the credit manager around Europe. Among the strong network of institutes and associations, we encourage and promote research, study, knowledge, and the publication of that knowledge, relating to all aspects of credit management.

In that article, Danny Kaltenborn, the President of the Association for Credit Management Switzerland (ACMS) explains how his organization helps its members in the credit management profession.


What is credit management and how do I avoid bad debt losses?

The Association for Credit Management Switzerland (ACMS) aims to establish and professionalize credit management in Switzerland. Credit management is to become a natural part of Swiss companies.

Definition: Credit management as defined by the Generally Accepted Credit Management Principles (GACMP) refers to the systematic handling of accounts receivables in every company. Credit management involves credit risk management and debt collection.

Credit management of a bank or other financial institutions is mainly concerned with lending money. In order for the bank’s costs to be covered and profits to be made, the debtor pays bank and interest fees.


Non-banks generally do not lend money to their business partners, but sell products and services.


If these are paid at the point of sale, it is not a credit transaction. However, the usual business practice is to sell the products, issue an invoice and be paid based on the agreed payment terms. The time from goods or services receipt to payment receipt is a credit.

If a customer (debtor) becomes distressed or files for bankruptcy within this period, the rules of the game change and receiving the money becomes a lengthy process. Often, only a very small percentage of the original amount is recovered.

In other words,


it is important to understand the risk of one’s own customer portfolio in advance


and to assess which of the customers show a high probability of default.

Based on this, it should be evaluated whether a reserve should be entered so that the loss is anticipated now already. Alternatively, it should be discussed if the risk can be mitigated by instruments such as letters of credit, bank guarantees or parent guarantees.

Our market study found that


40% of all companies do not have a credit management process in place.


They do not know if their business partners are financially strong enough to pay their invoices.

In many countries, insolvency proceedings are suspended for a certain period because of the Covid19 situation. This is holding back a wave of insolvencies that will reach us sooner or later.

It is therefore imperative to act in good time and to screen the bad debt risk of one’s own customer portfolio.

Under the slogan from Credit Managers for Credit Managers, the ACMS develops various practical offers. It is the platform for national and international contacts and the place to build and expand networks in the credit management profession. In addition, the ACMS maintains relationships with credit management associations abroad through the Federation of Credit Management Association (FECMA).

Members of the association have access to this network, free access to events such as the Virtual RoundTable or Swiss Credit Management Forum.

The Generally Accepted Credit Management Principles (GACMP) are available to our members free of charge. Also, the association offers training with the receipt of the Certificate of Expertise in Credit Management.

The Association has published a book about Best Practice in Credit Risk Management. It includes standard policies, procedures and contracts, performance measures, credit scoring models and reporting tools, as well as important sources of information and definitions.


Danny Kaltenborn, ACMS President

Association of Credit Management Switzerland

Klausstrasse 43, 8008 Zürich,


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