In my opinion, the credit management position is often overlooked and undervalued (and since I was a credit manager in the past, I speak from experience). After thinking about the many areas that a credit manager is involved with on a daily basis, I believe a good credit manager can directly impact the company’s bottom line. This is why I believe your company’s CFO should make a point to have regular meetings with the credit manager.
These are a few areas to help make my point:
- Quote to Cash: A good credit manager will help create visibility and reports to identify potential forecasting problems.
- Compliance: The credit manager often has unique information about the suitability of a prospective customer that may impact the bottom line of the company.
- Contract process: An experienced credit manager can help identify Terms & Conditions language, verify true corporate structure of the customer and their related entities, and they can help create profitable financing options that are often overlooked especially with repeat customers.
- Shipping: By partnering with the Shipping department, the credit manager can make sure the credit policy is effectively being followed, cash deposits have been collected, and change orders have been properly identified prior to shipping. Without the credit manager’s insight, possible serious disputes, invoicing problems, and audit issues may appear downstream that may impact cash flow or revenue recognition.
- Receiving-returned merchandise issues may also over-inflate A/R if credits are not processed in a timely manner.
- Collections: The credit manager has a major role in the rhythm of the Cash Cycle. They are the drummer in the band; they help manage A/R to Finance relationships; they manage collections, disputes, and workout agreements with customers on a daily basis; all while being customer-centric to make sure the customer is satisfied and will be a repeat customer.
- Miscellaneous: a seasoned credit manager can help identify best practice resources and quality assurance issues in many areas since they are required to see the BIG picture of the company’s sales objectives.
As the person at your company in charge of assigning credit, do you regularly meet with the CFO? If so, are those meetings useful? I’d love to get your feedback. Thanks for reading!
Patrick Spargur, CICP, is a business development executive with Credit Management Association. He can be reached at 800-841-5793 or by email at firstname.lastname@example.org.