In finance, there is a natural tendency to simplify decision-making into formulas. Liquidity ratios, leverage levels, and profitability metrics often become the default basis for evaluating creditworthiness.
But for Miguel John Bill Tibay, that approach misses the point.
After years of working across automotive, LPG energy, oil and gas, mining, retail, and logistics, he reached a different conclusion: credit risk cannot be standardized.
“Each industry behaves differently. Each customer profile carries its own reality,” he says.
What works in one context can fail in another. And the more complex the environment, the more dangerous it becomes to rely on a single framework.
The Illusion of Consistency in Financial Ratios
Financial ratios create a sense of order. They allow analysts to compare companies, set thresholds, and make decisions quickly.
But Tibay argues that this consistency is often misleading.
Two companies may show similar liquidity ratios, yet operate under entirely different conditions. One may have predictable cash cycles. The other may depend on volatile demand or delayed collections.
A debt ratio that appears manageable in one industry may signal stress in another.
Ratios, in this sense, describe structure—but not behavior.
And in credit, behavior often matters more than structure.
Layer 1: Industry Context Defines Risk
Tibay’s experience at SGV & Co. exposed him to how risk behaves differently across sectors.
In LPG distribution, timing is critical. Delays in collections can immediately affect operations. In retail, risk is often tied to inventory turnover and shifting consumer demand. In oil and gas, external factors such as price volatility can rapidly change a company’s financial position.
These differences are not always visible in financial statements.
A 60-day receivable cycle may be acceptable in one industry—but disruptive in another.
Without understanding the operating context, ratios can give a false sense of security.
Layer 2: Customer Behavior Overrides Financial Strength
Beyond industry dynamics, Tibay highlights another factor that traditional analysis tends to overlook: behavior.
A financially strong customer who consistently delays payments can pose more risk than a weaker one with disciplined payment habits.
“Financial ratios matter—but so do behavior and consistency,” he explains.
Payment patterns, responsiveness, and historical conduct often provide better signals of risk than static financial data.
Because while financial statements show capacity to pay, behavior reflects willingness to pay.
Layer 3: External Pressures Change the Equation
Credit decisions are also shaped by factors outside the company.
Economic conditions, inflation, fuel costs, and supply chain disruptions can alter a borrower’s risk profile—even if their financials remain unchanged.
A business that appears stable during normal conditions may struggle under tighter liquidity or rising costs.
This is where static analysis breaks down.
Credit decisions must account for how external pressures can affect future performance—not just current metrics.
Layer 4: Internal Discipline Determines Outcomes
While external factors and customer behavior introduce uncertainty, Tibay emphasizes that internal systems ultimately determine how well risk is managed.
When he took on a leadership role at Island Gas Group, overseeing credit, finance, and audit functions across 21 branches, one priority stood out: consistency.
Without standardized processes, credit decisions become fragmented—varying by branch, influenced by relationships, or driven by short-term targets.
By implementing structured credit evaluation and collection systems, the organization gained clearer visibility over receivables and improved control over risk exposure.
But more importantly, it created discipline.
And in credit, discipline often matters more than precision.
Leadership: Structured, But Not Mechanical
Despite building structured systems, Tibay does not advocate for rigid decision-making.
“My leadership style is structured but human,” he says.
Policies define boundaries. Data supports decisions. But judgment remains essential.
A purely mechanical approach can overlook nuances. A purely flexible approach can weaken control.
Effective leadership sits between the two—ensuring consistency without ignoring context.
This balance is what allows organizations to manage risk without slowing down growth.
The Hardest Skill: Saying No
Among all the technical and analytical tools available, Tibay points to one skill that cannot be automated: the ability to say no.
In practice, this is where most pressure exists.
Sales teams push for approvals. Customers request flexibility. Growth targets create urgency.
But not all opportunities should be pursued.
“The courage to say no when needed—and the wisdom to support growth when risks are manageable,” he says.
Saying no protects the organization from avoidable losses. Saying yes, when justified, enables expansion.
The challenge lies in knowing the difference.
Building a More Defensible Framework
To strengthen his approach, Tibay pursued the Certified Credit Analyst (CCA®) designation—not to replace experience, but to structure it.
The program provided a more disciplined framework for evaluating risk, aligning financial analysis with governance, and communicating decisions clearly.
Because in complex environments, decisions are not judged solely by outcomes—but by how they were made.
A sound credit decision must be both accurate and defensible.
No Shortcuts in Credit
There is no universal formula that can fully capture credit risk.
Financial ratios remain useful tools—but they are only one layer of analysis.
Industry context, customer behavior, external conditions, and internal discipline all shape the final decision.
Ignoring any of these elements increases the likelihood of error.
For Tibay, this is why credit decisions can never be one-size-fits-all.
They require structure—but also judgment.
Consistency—but also flexibility.
And above all, discipline—the kind that holds even under pressure.
Because in credit, the cost of getting it wrong is rarely immediate—but almost always inevitable.
