I reported to the VP of Sales at one company for three months during a search for a new CFO. I scheduled daily meetings with the VP Sales to discuss decisions pending. During the first week, he listened patiently as I described the pros and cons of extending credit. We discussed options and alternatives. About 90% of orders were approved for immediate release.
- Who is the customer or applicant?
- How much is pending?
- How much does the account owe now?
- How far past due is the A/R balance at this time.
During the second week, more than 95% of orders pending were approved.
By the end of the third week, I would appear at the door of office of the VP of Sales and hold up the credit files for review. He would smile, make the sign of the cross in the air, and then wave me away with the back of his hand. All orders were released without review, debate or discussion.
I have no idea if my experience is typical or atypical for a situation in which the credit department reported to Sales. My suspicion is that my experience was close to the norm. I think the same would apply if the Sales VP had override authority on credit decisions.
If I had the chance to do it over again, I would document my concerns in an email to the VP Sales and ask for his written approval to release the orders pending, but I admit it was fun reporting to Sales. Why? Because I had no stress about credit decisions that were so close it was almost a coin toss.
At the time, I also believed that since executive management knew the fox was in charge of the hen house that they were prepared for any problems this created. My philosophy became: “If you can’t fight ‘em, join ‘em.”
What would you have done differently? I welcome your comments!
Michael Dennis’ Covering Credit Commentary. Michael’s website is www.coveringcredit.com.
The opinions presented are those of the author. The opinions and recommendations do not necessarily reflect the views of CMA, or their Officers and Directors. Readers are encouraged to evaluate any suggestions or recommendations made, and accept and adopt only those concepts that make sense to them.