Excellence Award 2016-2017

Congratulations to the 2016 Credit Management Excellence Award (CMEA) Winner, Mr. Steve MA. The award was presented by Mr. Ricky CHAN, Chairman of HKCCMA.

The purpose of the CMEA is to recognize the achievements of an individual in the credit management industry. The winner is chosen based on five criteria and subject to the approval from the Executive Committee of the HKCCMA. The criteria are:

1. Minimum 10 years or above credit management working experience
2. Solid credit and collection knowledge or distinction in the credit management industry
3. Significant contribution to credit management process in the credit management industry, e.g. credit scoring model
4. Enthusiasm in promoting the education of young credit and collection practitioners.
5. Pre-eminence in the practice of credit management

Below is the text of the speech as given by Mr. Steve MA, on accepting this prestigious award.

Good evening, ladies and gentlemen.

First of all, I like to express my sincere thanks to the executive committee of Hong Kong Credit and Collection Management Association 香港信贷及收账管理協會on granting me the Credit Management Excellence Award of the year.

It's amazing on getting the award message from Mr. Ricky Chan, Chairman of HKCCMA, especially I'm not even a member of the Association. This also demonstrated how objective the Association iswhen identifying capable awardee. Please accept my thanks again!

I perceived that this award normally granted to professional credit mangers hence I've communicated with Ricky that credit management is only part of my work scope as regional finance head. The committee responded with their full awareness on this and the award is offered on all-around evaluation of my role and careful application of credit control mind-set and tools to support business growth.

I joined Avnet for more than 20 years. As some of you might aware, Avnet is a global 500 company with leading position in electronics component distribution. Annual turnover at around US$27billion with more than 17,000 employees worldwide.

Frankly I know little about distributorship before I joined Avnet and the most frequent questions I received from my friends are:-

(i) What is distributorship?
(ii) Why your company running in such a big scale, and
(iii) Why your customer do not buy directly from the manufactures to save cost?

Cut it short, size does matters. We anchored our position in the supply chain and also stay profitable because we can operate in such big volume and get the best price from suppliers, resulted from consolidation of orders from thousands of customers. To achieve this, we need to be cash rich and can offer more favorable terms to our customers than suppliers.

We maintained more than ten thousand customers in the region and hundred millions US$ dollars receivables, inevitably it creates credit terms requirements and respective credit risk management needs to mitigate risk.

This is especially critical in components distributorship where margin percentage is low and we cannot afford any bad debts here.

Traditionally, credit control function in finance team is perceived as passive, rigid and risk avoidance and always in acute relationship with business team. Frequent tools in credit decision are credit agency report, credit insurance cover or even advise the customer place orders via logistics forwarders to diverse risk.

I tried to adopt something different since my first day in Avnet, and I lay 4 points in my credit control approach:
(i) Clearly define responsibility and authority. Determine final approver in business cycle;
(ii) Close and regular contact with business team;
(iii) Proximity to key customers;
(iv) Mind set and technical skill of credit team

Advice to my credit control team is to make friends with business guys but never fully trust them. Demonstrate your knowledge about the business and regular visit to critical customers would render you a better position when there's dispute. Since I'm also holding the finance position in the region, I also on and off organize some in-house training to different functions to emphasize the importance of low bad debt rate to the success of a Profit and Loss statement. This also helps to form consensus within the organization.

Last but not the least, Credit controller is not running a lonely battle but need a full collaboration with business people to protect the financial statement. This demands for different perception of credit people's image in business community, where HKCCMA have contributed greatly in this area and definitely would continue to drive more in future.

Thank you for your time and wish the Association grow into a more influencing society and strongly build professionalism of credit controllership in the region!