The National Association of Credit Management (NACM), a leading resource for credit and financial management information, education, products and services designed to improve the management of business credit and accounts receivable announced the Credit Managers’ Index showed a return to form in some key factors, and jumped almost a full point from where it languished in October.

November’s 55.2 reading is still shy of the high points reached back in February and March (55.8 and 56.2, respectively), but is back to the levels seen in August and September. When the reading from October fell to 54.4, there was a sense that it may have been an anomaly, and not as dangerous as it would appear. Now that assessment looks more accurate.

The most important jump was in sales, which climbed from 57.4 to 60.4. It is always encouraging to see the data cresting past 60, and this marks the best sales month since August when the reading was at 62.

However, the best improvement in the favorable factors was in dollar collections, as it improved from 54.6 to 61.3. That is an impressive showing by any measure, and suggests that companies are seeing enough improvement in revenues to start catching up on their debt. There was also a full-point improvement in amount of credit extended, which signals there is more demand from reliable customers than in the past few months. This is a pattern that has been noted a few times in the past. As companies begin to get current on their credit, they are often motivated by the need to ask for more credit for expansion. First they catch up and then they ask for more credit and that appears to be happening again. The only favorable factor that weakened was new credit applications, which fell from 56.6 to 56.5.

There was slightly more volatility in the unfavorable categories, causing a decline in the overall unfavorable index. Every indicator except dollar amount beyond terms, which rose from 48 to 49.9, slipped. Rejections of credit applications fell from 52 to 51.1—not a major reduction, but a signal that there are still applicants coming with less than acceptable ratings. The decline in accounts placed for collection from 53 to 51.2 was a little steeper, but is consistent with the pace set for most of the year and suggests that many companies are still trying to get back into financial shape. Disputes and filings for bankruptcies fell only slightly, to 50.1 and 58.4, respectively, but dollar amount of customer deductions slipped just under the 50 mark to 49.7, suggesting negotiation is taking place between good customers and their creditors.

The news is essentially positive despite the evident weakness in the unfavorable factors. The trend with the positive categories has reversed for the moment, and seems to reflect some of the other good news of the overall economy. The improvement in the housing sector is starting to show up in both the manufacturing and service sub-sectors, and there is an evident reaction to a more upbeat consumer.

NACM supports more than 15,000 business credit and financial professionals worldwide with premier industry services, tools and information. NACM and its network of affiliated associations are the leading resource for credit and financial management information, education, products and services designed to improve the management of business credit and accounts receivable.

Read the full NACM November Credit Managers' Report.