‘Credit Management Roadmap to Improvement…’

1. European Conference Amsterdam 14th – 16th April 2013 ‘Credit Management Roadmap to Improvement…’ The Credit Management Journey ‘Building Credit Together’ One Team One Goal Nick King, MICM Group Credit Director

2. HEADS or TAILS HEADS or TAILS 2

3. Setting the Scene 3

4. Strong group brands 4

5. Business Overview – 4 Divisions with shared support BUSINESS DIVISIONS SUPPORT FUNCTIONS Plumbing & Heating General Merchants Specialist Merchants Retail Marketing Commercial / National Sales Supply Chain Finance HR IT Property 5

6. Renewable Energy SOLFEX energy systems is one of the UKs first and leading innovators and suppliers of solar energy systems. SOLFEXAcquired by TP Group in Jan 2013 Allow TP to offer our customers an integrated approach to energy efficient building 6

7. Key Figures • £5 billion t/o – 2012 • Excluding retail = £3.6 Billion • Total Staff = 25,000 • Total Branches – 2,000+ (over 19 brands) • 137,000 to 140,000 credit account Customers • Receivables Ledger of £ £300,500,000 • DSO y/e 2012 = 56.45 • Bad debt Provision - £5 million • 37,000 cheques per month total value of £85 million • 50,000 bacs payment per month value of £154 million 7

8. Organisation Bus Unit Managers Total Credit Services Staff = 253 8

9. From the Beginning • Started in October 2011 • Follow in the Steps of Predecessor • Integration of New Business • Difficult Market Conditions • Insurance Renewal (BSS Group) • Change of Mind set • Art of Delegation 9

10. Integration of BSS Group BUSINESS DIVISIONS SUPPORT FUNCTIONS Plumbing & Heating General Merchants Specialist Merchants Retail Marketing Commercial / National Sales Supply Chain Finance HR IT Property

11. BSS Integration • Staff structure • Insurance • Credit Limits • System and Process • “Them & US” Mentality 11

12. Perception

13. TP Group 13

14. Perception • Complacent • Lack of Investment • Low Engagement • Low to Medium Skill set • Not engaged with peers “credit industry” • Loyal • Knowledgeable about Industry • Low to medium attrition • Willingness to do well • Made best of a bad job 14

15. Perception Stale/ Fragmented Minimum control/review “Make do” Worked Understood and Accepted (with region) Integrated into system Does the job 15

16. Perception Outdated Complicated Manual Not understood/communicated Not flexible Reward not seen as beneficial Accepted Delivered the results 16

17. Perception Lack control Old technology Fragmented Poor reporting capability Lack of investment Does the job Integrated into business Has good collection capability Opportunity to invest 17

18. Mountain to Climb 18

19. Reality Check IF YOU ALWAYS DO WHAT YOU ALWAYS DID Then you will ALWAYS get what you always got

20. The Credit Management Journey‘Credit Management Roadmap to Improvement…’ Professional & Customer Focussed Credit Management Differentiators Customer Focus Credit Strategies Operational Excellence Consistent MI Professionalism Process & System Standardisation Enablers One Set of Rules Organisational Alignment Fragmented Credit Management 20

21. The Credit Management Journey‘Credit Management Roadmap to Improvement…’ Professional & Customer Focussed Credit Management Differentiators Customer Focus Credit Strategies Operational Excellence Enablers Consistent MI Professionalism Process & System Standardisation One Set of Rules • Single Organisation for Credit Management • Group integration • One Team mentality • Single Organisation Archetype • New Risk Department Organisational Alignment Fragmented Credit Management 21

22. The Credit Management Journey‘Credit Management Roadmap to Improvement…’ Professional & Customer Focussed Credit Management Differentiators Customer Focus Credit Strategies Operational Excellence Enablers Consistent MI Professionalism Process & System Standardisation One Set of Rules • One-Credit Learning Programme • Group Credit Management Learning & Development Programme. • Competency frameworks • Professional membership (ICM Group membership) • Career Ladder • Reward Programmes Organisational Alignment Fragmented Credit Management 22

23. Perception 23

24. The Credit Management Journey‘Credit Management Roadmap to Improvement…’ Professional & Customer Focussed Credit Management • People Differentiators Mentor Credit Academy Reward & Recognition Career Ladder/Succession Planning Professionalism Right Person, Right Job Enablers Credit Management Learning & Development Programme Organizational Structure Current Status 24

25. The Credit Management Journey‘Credit Management Roadmap to Improvement…’ Professional & Customer Focussed Credit Management • People Differentiators Mentor Credit Academy Reward & Recognition Enablers Career Ladder/Succession Planning Professionalism Right Person, Right Job Credit Management Learning & Development Programme • Job v Correct Talent • Individual Assessment Programme • Myers Briggs Process Introduction • Management Attitude, Desire Job Review • Aligned Recruitment Process • Key Point Talent Attraction Rules • Job Evaluation/capability – Grid Programme • Support and mini mentor Programme • Recurring Review Process and realignment Organisational Alignment Current Status 25

26. The Credit Management Journey‘Credit Management Roadmap to Improvement…’ Professional & Customer Focussed Credit Management • Process Differentiators Online Trading/Management One Platform Proactivness Enablers Reporting KRA’s Risk Process Manual • Single Manuel that fits the Business • 1 single Group Updated Manual • Sign of by Executive Team • Awareness, roll out to Whole Business • Review Team and Time Frame Credit Manual Current Status 26

27. The Credit Management Journey‘Credit Management Roadmap to Improvement…’ Professional & Customer Focussed Credit Management • Performance • Measurement Differentiators Linked KRA’s Pulls and Push of Tolerance Reward & Recognition Enablers Personal KRA’s (Development Plans) Tolerance Levels Influence/Non Influence Time Lines • Single Measurement to Drive Performance • Review of current KPI’s • Align to Business • Drive continued Performance • Automated, Easy, Delivery Measurable KRA’s Current Status 27

28. The Credit Management Journey‘Credit Management Roadmap to Improvement…’ Professional & Customer Focussed Credit Management • IT Differentiators APPS Multichannel Customer on-line Enablers Development External One Platform System/s • Correct External Systems • Review all current external systems (do they add value) • Are their better alternatives than current offering? • What will happen if we changed ERP system? • Are we missing something? (right tools) • Review External v Internal (cost, support, development) • (* Include NEXUM and sales ledger and risk) Equipment Current Status 28

29. The Credit Management Journey‘Credit Management Roadmap to Improvement…’ Professional & Customer Focussed Credit Management Differentiators Customer Focus Credit Strategies Operational Excellence Consistent MI Professionalism Process & System Standardisation Start Point One Set of Rules Enablers Organisational Alignment Fragmented Credit Management 29

30. The Credit Management Journey‘Credit Management Roadmap to Improvement…’ Achieving Quality in Credit Management ‘Building Credit Together’

31. Our Journey So Far... • June 2012 – QiCM Project Team Founded • Criteria Discussed and Evaluated • Task Groups formed for Accreditation Areas • August 2012 – Stakeholder Group founded • Development Process • Pilots and Prototypes • Ongoing Execution and Further Development 31

32. Credit Policy and Compliance • A New Credit Policy • Standardised throughout the function • Clarification • Revised Procedures Manual • Interlinked with the Credit Policy • Accessible to all Colleagues • Upload to iConnect • Credit Control Bulls-eye 32

33. The Bulls Eye WHAT WE STAND FOR A leading Credit Management Function constantly striving to better itself. We provide an honest and reliable Credit Management Function with our customers and other Functions in mind at all times. HOW WILL THE CREDIT MANAGEMENT FUNCTION MAKE OUR CUSTOMERS FEEL? HOW DO WE WANT OUR CUSTOMERS AND COLLEAGUES TO THINK? They Will Help Me Valued They Help Prevent Bad Debts • SERVICE • Our staff are helpful, friendly and knowledgeable • We provide an efficient and reliable service • COMMITMENT • We will develop relationships with our customers and branches Credit Management Function Supported They Take Pride In Their Performance Satisfied • PERSONAL TOUCH • We will treat each situation on its own merits • We are people dealing with people They Provide Quality Service Confident WHAT OUR CUSTOMERS WANT Friendly Helpful Professional Reliable Understanding PERSONALITY

34. Personal and Professional Development • Increased 1-2-1’s • Enhanced Performance Reviews • Dedicated Competency Frameworks • New Reward Schemes and Incentives • Improved Training and Development • Bespoke Induction Process 34

35. Example Competency Frameworks Credit Management Credit Management – Competency Framework

36. Example Competency Frameworks Credit Management ‘Building Credit Together’

37. Example Competency Frameworks Credit Management

38. Customer Service • Customer Service Policy Introduced • Accessible as part of the Credit Policy and Procedures Manual • Customer Surveys and Questionnaires • Utilisation of Hold Music • Out of Hours Management • Message Service • Additional options for Out of Hours Payments 38

39. Performance Measurement • Collation of Paper Reports • Adaptation of the KRA Screen to report on the Credit Management Function • Enable Management to Review and Improve team and Individual Performances • Time Saved accessing reports • A good starting point for Further Enhancement • Currently awaiting a project date from IT • Assessing other viable options for Uniformed Reporting 39

40. Performance Measurement KPI’s • Required to have financial reporting tool showing up-to-date figures • And Key Performance Indicators. • Recognised Key areas that required reporting on 40

41. Roadmap Personal and Professional Development Credit Policy Customer Services Performance Measurement 12 Months and Beyond Review and Modify Policy Review Policy and Benchmarks Training and Development Focus 9 Months Credit Management Road shows Credit Management Conference Feedback on Dashboards and development to Live Screens 6 Months Feedback on Functional Audits All Staff to have Completed A 1-2-1 Benchmarking from Questionnaires Expand, Educate and Incorporate Targets 3 Months Compliance Process 1-2-1 and Performance Reviews Initiated Future Customer Service Objectives Set Receiving a Timescale from IT.

42. Corporate Membership Programme FELLOW MICM/MICM(Grad) ASSOCIATE AICM AFFILIATE LEARNER AFFILIATE / CORPORATE AFFILIATE Member Essential Skills Training Specialist Training Conferences Masterclasses Management Training QICM Best Practice Corporate Affiliate Briefings ICM Branch events Regional Roadshows 42

43. Recommended TrainingEssential Optional Assessment: Level 2 CERTIFICATE Recommended for credit management generalists, those working in operational roles or new to credit Essential Skills • TWO knowledge units: • Credit Management • Business Environment or • ‘Cash Collections’ plus THREE skills units • Front Office: • Telephone Collections • Negotiation and Influencing • Customer Relations • Back Office: • Introduction to Credit Risk • Debt Recovery • Business Communications • & Personal Skills 43

44. Recommended TrainingSpecialist Optional Assessment: Level 3 DIPLOMA AICM Specialist Recommended for credit management specialists, managers, supervisors and team leaders ‘Credit Management’ plus ONE of the following paths • Collections Path: • Developing Credit Management Skills • Team Leadership • Collections Management • Legal Path: • Business Law • Handling Small Claims • Insolvency and Bankruptcy • ICM Law Conference • Credit Risk Path: • Credit Risk Analysis • Advanced Credit Risk • Financial Analysis 44

45. Other Initiatives The Morning Board 45

46. The Event... M4M • M4M (March For Millions) • Average April Cash Collection = £260M • Ambitious Aim to Increase of £140M • A Minimum of 10 Day DSO Reduction • Business Wide Advertising Strategy £400M £350M £300M £260M 46

47. The End Game Where am I trying to Get to?

48. End Result • Travis Perkins Credit Academy • High Engagement • Qualifications • Centre of Excellence • Training centre for Customers We Lead We add value 48

49. Challenges “Nothing is stronger than habit.” (Ovid). “They always say time changes things, but you actually have to change them yourself.” (A. Warhol). “Nobody can go back and start a new beginning, but anyone can start today and make a new ending” (Maria Robinson) 49

50. When it goes wrong. 50