Learning the Art of Credit Management

Article from Credit Today.net

You don’t major in credit management in college. You major in accounting or business management or whatever, learning what you need to know about credit and collections once you’re on the job. Whatever their formal education backgrounds may be, your staffers face the same challenge, but there’s a lot you can do to help them.

Samantha was terrified. She’d just been transferred from her job as company telephone operator and receptionist to the credit department. The credit department! That’s where all those angry calls went.

But she needn’t have worried. She wouldn’t be taking any of those calls for awhile—not until she’d been through a thorough orientation with all of the departments related to the credit function (i.e. Accounts Receivable, Cash Application, Inside and Outside Sales, Purchasing, etc.). That orientation process was Credit Manager Jim Dunn’s method of preparing Samantha and all other credit staffers for handling anything customers had to say to them.

“When customers call Credit, what they want are answers,” notes Dunn, who is now finance manager at Graybar Electric Corp. (San Francisco). “No matter what they’re calling about, their level of anxiety drops when they know they’re being taken care of.

“So the credit staff has to be knowledgeable enough about all of the operations related to Credit either to be able to answer their questions on the spot or to know where to get the answers right away.

“If they need to get more information, I want them to tell the customer, ‘I’ll find out and call you back’, and I want them to call the customer back, not have someone else do it. I want them to stay in contact. I want them to have the mind set that every problem is an opportunity waiting to be addressed.

“Customers should learn to feel that when they call Credit, the staffer they’re talking to is their go-to person and their friend. When they have a problem, we should be the ones they think to call.”
It is this blending of an overview of all related operations with specific credit and collection skills that qualifies staffers to cope with all the problems and questions customers pose. And it’s this blending that transforms credit management from a business science to an art.

Just as college business courses stay within the boundaries of accounting or financial management or marketing, most departments in the real business world are boundary limited. Credit, confined to the roles of analyzing risk and demanding payment would be just as limited and ineffective. To make its greatest potential contribution to company profitability, Credit must gather all of these roles into a single contact accessible to any customer.

It is, after all, the customer who is aggravated about a payment question—and therefore who calls Credit rather than Customer Service—who the company is most at risk of losing if his question or complaint isn’t handled properly.

When it’s the credit staff making the phone calls—for collections—the same combination of detailed knowledge of operations and empathy for the particular customer’s situation and problem is just as crucial.

“We have a collection script with ‘what-if’ scenarios,” says Dunn, “but it’s their knowledge and experience that make them effective collectors. That gives them confidence, and a confident collector can collect twice as much.”

It’s in collection training that he emphasizes Credit’s role as a sales function. Along with the basics (e.g., “Don’t interrupt; let them talk”) he stresses capitalizing on the on-going relationships they’ve developed.

“These calls should be personal and business friendly,” he notes. “A customer going through some problems might be getting 15 or 20 collection calls a day. I tell my people that we have to make ourselves someone special to them.

“They know if they have a problem, they can call us. Now, we have a problem—collecting their account—and they should think about paying us. If they can’t pay all of their creditors, we should go to the top of the list of those they do pay.”

Dunn has been stressing training of credit staffers in all operations related to credit and collections since he first became a credit manager 15 years ago. He’d noticed that the least effective staffers were those lacking an overview of department interactions. They were the ones who were aggravating customers by routinely referring questions and complaints to someone else.

So he began his inter-department “immersion” program. A year later he asked staffers to take 10 minutes to tell him what was good and what was bad in his management approach.

“You went way over the top in training,” they told him. “but it really worked.”

He’s been expanding and perfecting his staff training procedures ever since. Recently, he added the Encyclopedia of Credit from CMA’s ANSERS to his department’s training routine. Each staffer has access to the Encyclopedia on the CMA Website, and he tells them, “When you have a question, look it up. Don’t ask me.”

“The funny thing is that, five years ago when I first heard about the Encyclopedia being developed I was skeptical,” he says. “I really didn’t think it would work. But now I’m sold on it.”

The Graybar credit staff also has the company credit manual to refer to. Dunn asks them to check both sources when questions arise.

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