Should You Join an Industry Credit Group?

Decisions, decisions. None may be more important for a credit manager than deciding if a potential customer should be extended credit. The wrong determination could lead to a delinquent account — and a disrupted cash flow. You need assistance – an industry credit group may be the answer.

Credit tools can give you some understanding of a company’s financial status, including its current payable to receivable ratio and a select few vendors to reference. An industry credit group provides a more comprehensive assessment with real-time data and personal insight from a fellow credit professional.

A Quick Overview

An industry credit group, also known as an industry trade group, is defined as a group of companies who agree to exchange financial information with one another for credit decisions. The companies must have commonality within a specific industry, and only credit professionals are permitted to participate. Groups meet periodically in person, or virtually, and can be local, regional, or national in range. Each is administered by organizations and individuals with a certified understanding of antitrust laws who ensure the legality of all activity.

Potential Benefits

As part of an industry credit group, your company would have access to a suite of credit management aids. With shared information members can:

• Compare real-time credit data to assess current creditworthiness
• Mitigate risk and save time in the process of vetting new customers
• View multiple, high-value credit references for potential or current customers
• Collaborate on contact and communication information for shared customers

Perhaps the most meaningful benefit to joining an industry credit group are the relationships that are developed. Even though these groups typically involve competing companies, the commonalities that participants share elicit a sense of camaraderie, with members anticipating the next meeting.

Membership Requirements

Aside from operating in a shared industry, credit group members must fulfill certain duties as agreed upon by each group. Some of these responsibilities may include:

• Paying membership dues
• Sharing accounts-receivable data or information
• Meeting a minimum participation requirement
• Adhering to antitrust laws as adopted by the group

Keep in mind that membership in an industry credit group is not an informational one-way street. If you are interested in joining one, research its requirements and be sure you are prepared to hold up your end of the arrangement.

What to Look For

First and foremost, make sure the credit group you’re researching involves companies whose participation provides relevant credit value. If you can determine that its members are actively engaged, all the better.

Study the structure and rules of both the group itself and any organization charged with managing it. When sharing data, what guarantees can they provide to ensure that your information will remain secure? Again, be certain any group obligations are a comfortable fit for your company, and equivalent to the benefit you receive.

The Takeaway

An industry credit group is a resource unlike any other at a credit manager’s disposal. By offering both exchanged information and shared personal knowledge, these groups can be a valuable asset for reducing risk in credit decisions. While it’s impossible to eliminate all such risk, industry credit groups help bring credit managers about as close as one can hope to be.

Is your business interested in joining or starting a credit group? The ICE Credit Exchange is an industry-leading resource for companies seeking to take advantage of this tool. To find a group suited for your company, contact an ICE representative at ICESupport@ICECreditExchange.com or by calling 800-527-1404. See if the unique exchange of information in an industry credit group is as beneficial for your business as it has been for others.

By Ed Bessenbacher
Ed is a freelance writer and former collector based in Chicago, Il.
Email: ebessenbacher@gmail.com