NACM and the Birth of Credit Management: Celebrating 127 Years

On June 23, 1896, the credit profession as we know it today was born. America's credit managers heard O.G. McMechen's call to create a national association for business credit management, resulting in the formation of the National Association of Credit Men, which would eventually grow to become the National Association of Credit Management (NACM).

It was McMechen's hope, and that of nearly 100 business leaders that gathered in Toledo, Ohio that Tuesday nearly 127 years ago, that by sharing information, the commercial credit profession in the United States could address the threat of widespread business credit fraud—most commonly perpetrated at the time through the secret sale of goods in bulk, and enhance the abilities of business credit managers nationwide through the sharing of their expertise. That expertise has only grown deeper over the last 127 years, benefiting the American business economy in ways that McMechen could never have predicted.

"The National Association of Credit Men promoted the controversial idea … that all business owners should make their financial standing and past business behaviors available for scrutiny," wrote Rowena Olegario in A Culture of Credit. "The NACM also sought to break down the distrust among credit men and to increase cooperation between them and the credit reporting firms. These two ideas—transparency for all businesses and cooperation among creditors—became synonymous in the NACM literature with modernity and progress."

In its early years, NACM focused primarily on developing credit reporting systems and establishing credit bureaus throughout the U.S. These efforts helped to standardize credit practices and reduce the risk of nonpayment for businesses across the country. During World War I, NACM played a crucial role in supporting the war effort by providing credit information and analysis to the U.S. government. Its members also helped to administer the War Trade Board, which regulated the export of goods during the war.

"Commercial credit is the creation of modern times," said Sen. Daniel Webster to Congress in March 1834 during a speech about the U.S. Bank Charter. "… Credit is the vital air of the system of modern commerce. … It has done more, a thousand times, to enrich nations, than all the mines of all the world. … Commerce cannot exist without credit. While credit is delicate, sensitive, easily wounded and more easily alarmed, it is also infinitely ramified, diversified, extending everywhere and touching everything."

B2B credit, commercial credit and trade credit are used interchangeably, but no matter the words used to describe the selling of goods, products or services to be paid for at a later date, the importance of this act cannot be overstated.

"Credit professionals became a fixture in American business," Olegario continued. "As they became more self-conscious of their role in the organization and society at a large, these individuals sought to place the art of credit assessment on a more 'scientific basis,' to complement the heavy reliance on 'personal intuition, impressions and the variations of personal feelings' that had characterized credit granting in the past."

Indeed, the credit profession is a balance of both science and art. Although credit managers worked to put credit granting on a more objective and scientific basis, character and human nature persist as an irreplaceable indication of credit worthiness.

In the years that followed, NACM continued to expand its focus beyond credit reporting and into other areas of credit management. It established education and training programs, developed industry standards and best practices, and began to advocate for policies that supported sound credit practices.

More than a century later, NACM is the leading voice of the credit industry. Its work is guided by a commitment to promoting sound business credit practices, advocating for the interests of its members and providing education, training and resources to help businesses manage credit risk and achieve financial success. "The work of NACM and its members, conducted on a thoroughly professional and critical basis, attests to the progress credit has made from its faltering beginnings during the days of our Founding Fathers," wrote Sol Barzman in Credit in Early America.

Credit is the anchor for businesses as they head through both rocky and smooth economic waters. As the guardians of commercial receivables, credit managers must always pursue knowledge. In turn, NACM also plays a critical role in shaping the credit industry and protecting the financial health of businesses across the U.S. NACM is a timeless tool for credit professionals at all stages in their careers.

Another important aspect of NACM's work is advocacy. The organization represents the interests of its members on a range of issues related to credit and finance, including bankruptcy reform, credit reporting regulations, and data security. By lobbying lawmakers and regulatory agencies, the NACM helps to ensure that the voice of the credit industry is heard and that policies are enacted that support sound business practices.

Perhaps most importantly, NACM serves as a hub for networking and collaboration among credit professionals. Through local and national events, online forums and other channels, members of NACM can connect with one another, share knowledge and ideas and build relationships that can benefit their businesses over the long term.

NACM is a vital resource for businesses of all sizes and industries that are seeking to manage credit risk, improve their financial performance, and stay ahead of the curve in a rapidly changing industry. Whether you are a credit professional yourself or simply interested in learning more about sound business credit practices, NACM is an organization that deserves your attention and support.

-Annacaroline Caruso, editor in chief
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