Many companies have faced the question of whether to centralize or decentralize the credit function. It is a complicated decision.
Here are my thoughts:
- The trends is overwhelmingly toward centralization.
- Centralization has the advantage of helping to create an environment in which consistent credit decisions can be made.
- Centralization enables rapid exchange of information among members of the credit and collection team.
- Centralization often results in job loss among credit professionals, and
- Improvements in software hardware make centralization of the credit function easier and more effective every day.
Some companies are now considering or have opted for regionalized credit and collection operations to ensure that the credit team is more closely aligned with customers and with their sales department.
Michael is a consultant, and the author of “Credit and Collection Forms and Procedures Manual”