Fairly recently, and for the first time in a long time, I was invited to attend the annual sales meeting. My boss described is as a great networking opportunity, and she was right. Having breakfast, lunch and dinner with salespeople and sales managers is a great way to demonstrate that people working in credit and collections are not one-dimensional robots who are looking for reasons to say No. Some of the feedback that I received was that the overall perception was that the credit decision-making process was:
- Rules based
- Risk averse and
- Focused on finding excuses to say No rather than on reasons to say Yes.
During the three days I attended the sales meeting, I had time to address these misperceptions direct and formally, as well as informally. For example, I explained that one way we were evaluated was based on turnaround time. This necessitated fast decision making and a simple rather than complicated approval process.
I actually had fun addressing the suggestion that we were so risk averse that we were looking for reasons to say no. I started with statistics about what percent of total orders ended up on credit hold. The answer was far less than one percent. My response to the comment that we looked for reasons to say No was to point out that there was almost always a reason I could point to if I chose to do so with any applicant if I really needed an excuse. The simplest explanation was this: My role is to manage credit risk – not to eliminate credit risk because doing so would limit our growth, our sales and our profits. I also tried to humanize the credit decision making process by pointing out that saying Yes always made my life easier, so saying No was something I tried to avoid whenever possible. Finally, I pointed out that I would almost certainly be replaced if senior management thought my decisions were incorrect and too conservative so the fact that I was still working suggested that management considered my decisions to be the right blend of risk and reward.
My role, your role and our role is to not get into a tug of war with the sales department or the applicant. Our role is to find the right balance between risk and reward. That’s my opinion anyway. What’s yours?
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.