OIL EXECUTIVE SCORES WITH CREDIT AGENCY

After twelve years in credit management, Michaela Hilton has relinquished her post as National Credit Manager of CPL Petroleum to jump into the credit information industry with specialists Graydon UK. Here, Michaela explains why she strongly believes her credit management experience and knowledge of the fuel distribution industry will help her new employer provide a superior risk management service to her former colleagues in the sector.

Having been in the fuel oil distribution business for some years, I know only too well its a volatile industry with low margins and high exposure to credit risk. The sector is split into 2 main types of businesses: - bulk distribution and fuel cards. Before dealing with a new customer it is paramount that a credit check is carried out. Those customers that require fuel cards, and retail sites that require petrol, are very often sole traders and partnerships, both of which are very difficult to collect credit and financial information on. Yes, you can request a bank reference or take up trade references given by the new applicant, but how reliable are these? Every credit manager in the fuel trade wants an impartial investigation carried out on the business to minimise his risk and ensure that any adverse information is obtained. The trouble is, this is more easily said than done, and Im speaking from personal experience!

So where could we find the answer to our credit checking prayers? Well, perhaps surprisingly, the outskirts of Manchester provided a good starting point. Located in Sale, The John Reynolds Group is the fuel distributor sectors leading credit insurance broker. Part of the service it delivers involves receiving probable loss notifications from its clients which are then passed on to the relevant insurance underwriting companies like Coface, Gerling NCM and Euler Hermes (formerly Trade Indemnity). This type of up to the minute trade payment data is extremely useful to insurers, but just think how useful it could be to industry players too? After reporting CPLs overdue accounts and returned payments in this way for some time, I knew only too well how this information could benefit others in the trade.

This is where Graydon stepped in to the picture. Graydon, a specialist credit information agency, one of the UKs top five, and The John Reynolds Group joined forces in September 2002 and set up the Petroleum Distributors Intelligence Unit (known as the PDIU). Graydon has successfully run an intelligence unit for the telecommunications and computer distribution sectors for the last ten years, and is now using that wealth of experience to build the same for the petroleum supply sector.

Heres how it works:

Each member reports centrally on a fortnightly basis on unsatisfied payments (eg RD and RDPR cheques, failed direct debits), collection or legal actions commenced, 'gone aways and any other critical events. This information is then stored on Graydons central database and a consolidated list is sent out to each member. All reporting is done anonymously and members confidentiality is maintained at all times. PDIU members also benefit from daily credit alert warnings on fraud, winding up petitions, meeting of creditors, trade references etc. Over time, of course, all this trade information is also building up in the Graydon database, thereby improving the content and quality of credit reports obtainable from Graydons Internet based Creditline Service. I personally believe that this new service is invaluable for the sector as no one can afford to take a bad debt in these testing times.

The reporting is simple and is clearly set out so each member knows what is required of them and by what date. In short, the PDIU is a well-organised and controlled credit circle, and much more besides. It has been set up specifically for the petroleum industry - for the major names down to the smaller independents. Graydon is also aware that employing specialists from within the petroleum sector to run the PDIU is a vital ingredient in the mix. Enter stage left..........Michaela Hilton! To run a successful intelligence unit for any trade sector, youve got to know how the industry ticks, who the key drivers and the rogues are....and how to identify the scams and the frauds !

Credit forums will also be taking place, the first being in July 2003, where members will get together to discuss industry and credit matters and issues, invite external experts and speakers to the meeting, set benchmarks, build personal networks etc.

I feel the benefits to the sector will be vast and as more members join the PDIU, it will become increasingly more difficult for those customers who do the rounds" seeking credit to leave a trail of unpaid bills with unsuspecting suppliers in the future.

The message for credit and financial managers in the fuel distribution sector is very clear. The weapons are now available to protect one of your companys most valuable assets - trade debtors.

Michaela Hilton is the National Business Development Manager (PDIU) at Graydon UK

ABOUT GRAYDON UK LTD.
Graydon UK is one of the leading database information providers specialising in credit risk management. The company helps clients reduce the uncertainty of doing business by providing a complete, differentiated and high-quality package of credit risk management services.

Graydon is a founder member of the Eurogate Network, a pan-European alliance of information providers that offer a wealth of real-time management information on the current financial standing of companies throughout Europe.

The Graydon group is owned by Gerling NCM, Coface and Euler Hermes, three of Europe's leading credit insurance organisations. With its network of branch offices, partnerships and alliances, Graydon today services the world of commerce from more than 130 offices worldwide. For additional information, visit Graydon on the Web at www.graydon.co.uk

ABOUT JOHN REYNOLDS
The John Reynolds Group, one of the oldest independent Insurance Brokers in the UK, having been established in 1912, is today recognised as the UK market leader for arranging credit insurance on behalf of UK fuel oil distributors, oil companies, fuel card agents and oil traders. The group trades three specialist divisions offering credit & political risk insurance, general commercial insurance and personal lines. www.john-reynolds.co.uk