Don’t touch my pizza

Petrol crisis, gas crisis… carbon dioxide, chicken, tomato sauce, milkshakes, beer… the headlines have been rich the last few weeks with stories about labour shortages and supply chain issues.

Outside there shortages themselves, the headlines also reveal a couple of interesting observations.

  1. Just how quickly we resort to panic buying – individualism rules, our bias to to look after number one, of family unit, rather than playing as a team across society
  2. The headlines in some way clearly define what we really care about – we are not that interesting in ‘just in time’ – interconnected supply chains and resourcing, but impact my sneaky friday night take out (okay or Tuesday lunchtime), I am going to be upset and pay attention.

It has now been a year since the last wave of panic buying, the great toilet roll crisis of 2020 (yes going to the toilet is clearly something else we all care deeply about too, who would have thought!). In the intervening time we seem to have learned little, despite arguably the pandemic bringing some communities closer together for a while.

Faced with shortages, however, to keep the show on the road, not to mention the car and getting the kids to school, stocking up makes still makes sense. It is still our psychological default, nothing has changed.

Everything is linked

Last week I mentioned inflation, specifically wage inflation, which is a related specter that is also beginning to raise its head again.

Just as in our personal level, at the individual business level, keep the show on the road, paying more just makes sense. However, if we all do it, inflation will kick in, and if we panic hyperinflation is a real danger.

In some ways, how could we not expect impacts from the pandemic? You cannot shut down the global economy, pretty much for a year, sit people at home, change the way they work and not expect change.

However combining these impacts, lurid headlines, amplified by social media, overlaid on our own cultural bias on self-reliance, it is a heady mix. I fear we are at a critical time.

Balloon inflation

This brings me back to work and the question for this week. If we do see significant inflation, what will the impact be on the collections industry and what should we do, today, to mitigate impacts?

As those who bought a house in the 1970s, with a mortgage for £10,000, found if inflation can erode debt. The value of £1 in 1970 was more than it is in 2020. Yes, interest rates were high at the time, but if they drop again in the future, and you still have a job, then paying off a debt can become easier.

Critically this does rely on borrowers having a job and wage increases to keep pace with inflation.

For those without a job, stretched incomes or in an industry where wages are static, the outlook is troubling. The ability to pay decreases, arrears will increase together with defaults.

Then we come to the time value of money. With inflation, the effective value of money will erode faster. Simply waiting to collect or receive funds will actually reduce the value of what is received (in purchasing power terms).

Debt purchasers, with long investment horizons could be particularly hit, in terms of valuations, and collecting early is going to be key. Maximise cash flow, keep the money working for you.

Utility defaults

This brings me neatly to the topic of the recent wave of collapse in the UK utility provider market. Another two suppliers are out of business this week.

This is, of course, distressing for their customers, and particularly a companies employees, who are now in a position to have to find new roles as the customers get consolidated into larger providers.

With wholesale supply prices high and fewer providers in the market, prices will ultimately need to go up (…more inflationary pressue). However in the short term cash flow again is critical to stay afloat.

For those on the precipice of insolvency it may be too late. However for those still with a little time the importance of a robust accounts receivable and collections process cannot be overstated.

Cash and extra cashflow is sitting right there, on the balance sheet, that can make a real difference to people’s lives (including helping customers get out of debt)…

Something to ponder more on Monday. In the meantime have a good weekend everyone.

Posted in Opinion | Leave a comment

All Change

Crikey, so many people I spoke with this week were either changing jobs or new people who were leaving and struggling to recruit for open positions.

And, this was not just in the UK but across other markets, it seemed.

What is going on? Questions have been racing through my mind.

  • Has a year working from home been too much for us. We cannot stand it anymore and need a change to get back to the office? Or
  • Are people now being asked to return to the office, but they secreting like the remote working, so no thank you and time to change role?
  • Have we had just had enough? We are now getting bored with what is the same in the same room at home, and…. JUST NEED A CHANGE OF SCENE… rather urgently in fact?
  • Or is this the same change that would have happened normally over the last 18months, but now crunched in to September and October? Probably to be honest.

Whatever the answer, but it is really happening and causing issues with filling roles. With the laws of supply and demand if this continues this will undoubtedly have knock on impact to salaries. Great news for candidates, but for the rest of us this will also have a knock on effect on prices too.. is this the start of the inflationary cycle, the one we all expected, I wonder?

A little bird told me

My other experiment this week was live tweeting during the Credit Connect Technology Think Tank conference. The conference itself was interesting, with as normal plenty of good discussion and new ideas.

As is usual at events these days, the social hastags were up to use at the start. Normally there is not much activity and I wondered if it was possible to get some dynamic conversations going on the side?…. not much success I am afraid…

It seems collections industry people are just not twitter people, and although there was a better response on LinkedIn, it was still not that dynamic. Instagram, Pinterest, SnapChat, TikTok are clearly still a long way off!

This is of course in stark contrast to the (particularly younger) customer base, who, together with Facebook, seem to live on these social media platforms. (certainly in my house).

Are we missing a trick here?

This is of course a potential opportunity to connect, build brand relevance and have conversations with these segments. It probably really is and if you want to understand, be relevant and hire from what is a growing segment of society we are going to have to learn how use this medium.

What’s next then?

Of course, even social media itself is getting old. Many conversations have already carved off into private WhatsApp groups. A bit like a private club, these are great if you are included, but not much help if you are not.

So what is next best for a work application? I am experimenting with Discord. Yes this was primarily for gamers, but you can also think of it as an Open Source version of Slack and anyone, not just those in a limited set of companies, can join. This could be an interesting location for more interactive, yet public, discussion. I will let you know how it goes… you can join the channel here if you are interested too.

This week has undoutbedly been a long week and the tweeting also much harder work than I expected.

So it is time for a rest, maybe some TV, even a book(!), instead of social media tonight… that would be novel.

Have a good weekend everyone.

…. if you want to follow my twitterings, I am @chris_w_tweet.

Posted in Opinion | Leave a comment

Do you cut the grass at work?

This week I came across a video for the book, “The 4 hour workweek“.

Now, may I be the first to suggest this is not suggesting that working 4 hours a week is on the cards, or even possible for us mere mortals. Let’s face it for many folks, 40 is normal and sometimes more I suspect.
However, the video did tweak an interesting idea, the concept of relative value.

To explain I am going to illustrate with something close to home. Should I cut the grass in front of my house, or pay to have someone do it for me?

Of course, I normally mow the lawn myself. This is usually on a free afternoon, at the weekend, with the grass normally at ankle height!
It is a bit of a chore and not that much fun. It is just something that needs to be done (albeit halfway through an audiobook, which is a plus).

But back on campus

However, now let’s assume we are not at home during a lazy weekend, but at work on a Tuesday in a busy week and the lawn outside the building needs mowing. Would you do it? Nope, most of us would likely outsource it.

Cutting the grass at work, requires investment and maintenance of machinery, training to operate and some skill to make it look good.
Also, then if invest in all of this, it would soak up valuable work time. Time which could be being used to earn revenue and help customers elsewhere.
I could be actually losing money, by trying to save money.

Most of us do not work on campuses anymore, nor do we run gardening companies, but how different is this example from many other tasks we do at work. For example, running an operation or call centre, decision science, collections strategies, business intelligence, finance, HR or even credit risk, each of these tasks can be outsourced

Why would I even do it?

Of course it feels good to have a large team around you, develop your own software and be in control of all elements of strategy. It is a bit of a comfort blanket, the idea of self-sufficiency making one feel somehow safer.

However, unless we are running a sheep farm in rural Patagonia, the reality is we are already pretty interconnected these days. Most businesses run on this interconnected interaction between people and systems, whether you are inside the company or not. Unfortunately, any sense of self-sufficiency is largely an illusion I fear.

By considering outsourcing of processes or process elements, it can free up time to focus on other revenue-generating areas, in your core area of expertise.
If you get this judgment of relative value correct this can result in more revenue, cash flow, as funds to invest in greater customer satisfaction/return.

When not to do it?

Of course, let’s not be naive too. If the process you are looking to outsource, is also your strategic advantage and USP, then maybe outsourcing this to another company, is really not such a great idea. (as arguably Dell discovered outsourcing computer part production to ASUS in Taiwan, who then ate their lunch, becoming a competitor).

The other reason for caution is if actually are sitting around doing not much, then the sunk costs of doing some of these tasks (off the side of a desk) falls to zero. Sometimes we just need to get one with it, and who knows if you get good at it, maybe you can do it for other people… a new product line.

Get time back, maximising your relative advantage

However, if you have processes or sub-processes that are shrinking in size or no longer offer a strategic advantage, or processes and technology which has become commodified, then this is well worth considering.

Fundamentally this comes down to, what am I good at, and where I am not can I get time back or an increase in relative value by outsourcing to someone else.

Certainly something worth thinking about Monday…. but for now it is still the weekend, so in the zero sunk cost zone, which means I still have to cut the grass… sigh.

Have a good week everyone.

Posted in Opinion | Leave a comment