In today’s metrics-driven business world, just as sales managers are accountable for their monthly quotas, credit departments need to have goals. Credit managers should select goals for the credit department that are simple to measure and report, as well as easy to gather consistently and frequently. Goals should focus on quality rather than on quantity, and on performance, not on effort alone. The scorecards used to measure the performance of individuals within the department should be auditable.
The scorecard used to measure the credit department as a whole needs to be published regularly. It needs to be accurate, transparent, and repeatable. Even with goals and metrics and scorecards in place, the credit department must continue to focus on aligning its activities to the company’s priorities to demonstrate its ongoing value to the business.
Credit managers, do you publish your goals as well as your results? Should you? As always, I welcome your feedback.
Michael Dennis is the author of the Encyclopedia of Credit (www.encyclopediaofcredit.com), a free, fast, internet resource for credit and collection professionals. He is a consultant, and the author of “Credit and Collection Forms and Procedures Manual” as well as a frequent instructor at CMA-sponsored educational events. He can be contacted at 949-584-9685.