Credit Managers Still “Risk Off”. In other Words, Warning Lights are Blinking!
Credit managers play a pivotal role in safeguarding businesses from credit risk, payment delays, and outright defaults. Their job is to balance opportunity with prudence, ensuring that sales growth does not come at the cost of financial instability.
Recently, however, a strong shift in sentiment has emerged. At a recent credit managers’ conference, the prevailing mood was summed up in one phrase: “Risk Off.” In other words, credit professionals today are deeply risk-averse, more focused on protecting the balance sheet than on stretching credit to chase marginal business.
This posture reflects the uncertain climate: higher interest rates, global supply chain frictions, and persistent defaults across vulnerable industries. For businesses, it means tighter credit terms, closer monitoring of counterparties, and less tolerance for late payments.
Our friend Chris Kuehl, of ARMADA CORPORATE INTELLIGENCE, spoke recently at another credit managers conference in the USA. He reported:
Surveying the room (about 100 in attendance), only 2 saw economic/credit conditions better than they were a year ago, only 30% of this particular room saw conditions the same and more than 70% were seeing conditions worse off.
Now this was just a quick “show of the hands” anecdotal survey, but in speaking with many of them in the room, they remain conservative in their approach to the rest of the year. They remain a bit scared and will run conditions tight.
Credit managers are some of the most important gatekeepers in the economy. They have tremendous control on sales (they all remain in their positions to keep sales flowing and to actually help activate sales – while keeping risk “reasonable” at the same time). Across multiple industries and several hundred credit managers now, we hear and see a lot of “risk-off” positioning.
The administration, Federal Reserve, and others in key financial positions around the country will need to match policy with market messaging in order to shift this sentiment. Economic data improving will help some, but they need strong voices with credibility to get them back into the risk-taking business.
About: Dr. Chris Kuehl serves as Armada’s Chief Economist working with a wide variety of private clients and professional associations over the last 21 years. He serves as the Chief Economist for several national business associations. He is also the Economic Analyst for the Fabricators and Manufacturers Association and writes their bi-weekly publication, Fabrinomics, which details the impact of economic trends on manufacturers. Chris is one of the chief editors for the Armada Flagship Brief, which hits several thousand business executives three times a week.
Chris was a board member of BIIA and spoke at BIIA’s conferences.