NACM Credit & Collections Index. (Selected Topic).(National Association of Credit Management)

"NACM's Credit & Collection Index (CCI) for the latest month has continued to provide Fed Chairman Allen Greenspan with meaningful information to gauge what is happening in the economy.

At this point, the above statement is still wishful thinking. However, for the past nine months, NACM National has been running a survey with a targeted group of credit managers located across the country. The purpose is to collect data to measure the pulse of the economy. I take the survey data and convert the responses to an index similar to that published by the Institute of Supply Management (formerly known as National Association of Purchasing Managers). The results are shown below in the table.

Before I discuss the results, let me provide some background about the survey. The CCI number is based on survey data collected from credit managers in the last week of each month. Survey items fall into two categories: favorable factors and unfavorable factors. Each month, the credit manager indicates for each factor whether it is better, worse, or the same as a month ago. A copy of the survey form is shown at the end of this note. The credit manager doesn't calculate any numbers. Instead, respondents base their responses on how well they perceive their business is performing relative to the prior month. It takes about 10 minutes to complete the survey, given that the credit manager has a good understanding of the business.

Favorable survey items include:

1. Sales

2. New credit applications

3. Dollar collections