How To Protect Your Business From B2B Credit Fraud

by Sam Fensterstock, AG Adjustments

Sam Fensterstock of AG Adjustments explains how to protect your company from B2B fraudINTRODUCTION

We usually associate credit fraud with the impact it has on individuals in the form of identity theft or phishing scams and the personal financial problems it causes, but what about businesses? What is the incidence of B2B credit fraud and is it a major problem?

Yes, it is a major problem. According to credit reporting agency, Experian, B2B fraud costs US businesses “more than $50 billion annually” and most analysts believe that that number is too conservative. It is also assumed that the incidence of fraud will continue to increase as the use of various electronic payment methods continues to grow.


For an overview of the problem let’s take a look at some results from the Association of Financial Professionals (AFP) “Payments Fraud and Control Survey”, published in March 2015:

Some highlights from this survey are:

  • 62% of companies were subject to payments fraud in 2014.
  • The most-often targeted payment method by those committing fraud attacks are checks. Check fraud also accounts for the largest dollar amount of financial loss due to fraud.
  • The second most frequent targets of payments fraud are credit/debit cards.
  • 92% of survey respondents firmly believe EMV- enabled credit/debit cards will be effective in reducing point-of-sale (POS) fraud. EMV- Europay, MasterCard and Visa — is a global standard for cards equipped with computer chips and the technology used to authenticate chip-card transactions.
  • 61% of survey respondents believe that Chip-and-PIN validation will be most effective in preventing credit/debit card fraud.

Business fraud can devastate a company and as there are very few external protections it is up to the business to protect itself. A company must be aware of the various types of fraud that it may be subjected to and develop methods for protecting itself.


There are many different B2B fraud schemes. Here are a few of them:

  • Account Takeover: This is similar to the phishing and telephone scams that affect personal identities. Here credit card or account information is intercepted and later used to place orders or otherwise defraud a legitimate business. This particular type of fraud accounts for a large percentage of B2B fraud occurrences.
  • Business Identity Theft: Here a scammer opens business accounts under the name of a legitimate business. The applicant acts as the business owner (or a representative) and utilizes their contact information to apply for credit or open accounts.
  • Commercial Bust-out: The culprit opens several lines of credit with the intention of eventually abandoning them once the credit limits have been reached. This requires that a good credit history be fabricated so that limits can be increased and maxed out right before the perpetrator disappears. This type of fraud results in millions of dollars of losses every year.
  • Never Payment: Here a business or individual opens a new account, by materially misrepresenting itself. They will obtain the maximum credit possible, but never make a payment.
  • Shell Companies: These are companies that are set up solely for the purpose of committing fraud. The entity will not sell a product or provide a service. Many times they are used to launder money. They rarely have a physical location, and if they do, it may be a storefront or offshore.
  • Bleed-outs: This method of committing fraud is similar to a bust-out. However, it is committed from within by insiders. Employees commit this type of fraud over a long period of time. They bleed out assets, leaving the company unable to pay its bills.


Individuals and groups committing these types of frauds will often display many of the same characteristics. The following are some of the things you should look for:

  • Companies Without Long Histories: Typically, companies with longer track records are safer to do business with because they will have more credit history and references to check. The shorter the life of the company, the less you will have to work with.
  • Suspicious Changes in Ownership: A well-established company, with good credit, is taken over by a new group that tries to hide the change in ownership. This may signal a potential problem. It may be an indicator that members of the new owners are committing fraud.
  • Questionable Financial Statements: Mistakes or suspicious items on a company’s financial statements may be a harmless accounting error or signal a real problem. A detailed financial analysis is necessary before doing business with this company.
  • Fraudulent Credit References: False credit references on a credit application are a warning sign to forget about doing business with this applicant. Unless the applicant can prove it’s a clerical error and has other good references, doing business with this entity is an invitation to be scammed.
  • No Receivables: If a company’s financial statements do not list any receivables, assuming they are not a cash only business, they are probably a phony shell company that is not providing any goods or services to customers. Do not extend this company a line of credit.


Validate All Information

The easiest and most important step in B2B fraud prevention is to verify the information provided by companies that want to do business with you.

This means you need a credit application (see our blog on credit applications). All the information provided needs to be thoroughly reviewed and verified. Make sure everything on the application is accurate, and ask questions if it is not. Any material errors are a reason not to do business.

Additionally, if your business is contacted by a bank, credit card company, or government agency, don’t provide any sensitive information before verifying the legitimacy of their request.

Utilize External Credit Sources

A business can pull a credit report on another business to ensure that they are dealing with a credit worthy company. Unlike personal credit, which is protected by the Fair Credit Reporting Act (FCRA), anyone can pull a business’s credit report at any time without permission.

Utilize Fraud Detection Tools

Utilizing a fraud detection tool like Experian’s National Fraud Database allows you to compare credit applications and other information to current fraud records stored in a national database. If the applicant is in this database you want to be very careful about doing business with them. COD may be your only option.

Ongoing Transaction Review

Review your banking and credit accounts on a regular basis. Not doing so can leave you and your business a victim of fraud. Initially, transactions tied to fraud or illegitimate charges may not be large enough to indicate a problem, but by monitoring your accounts on a regular basis, you’ll be able to spot fraudulent transactions before real damage has been done.

Staff Education

Make sure you educate your employees on the various types of fraud and how to prevent it. You will sleep a lot better knowing your staff has the ability to protect your business against scammers and con artists.


B2B credit fraud is becoming more and more of a problem. Important business, financial and personal data are increasingly being compromised. Preventing and defending against B2B credit fraud is a challenge for companies. But you can limit your exposure and minimize losses due to such activity. Being aware of the problem is an outright necessity and implementing the protective measures described above will help reduce most of the risk of B2B credit fraud.

For over 40 years, AGA has been the most respected commercial collection agency in the nation. We assist corporations with improving cash flow, while preserving a positive image with customers. We accomplish this by employing the best and brightest talent in the industry, with low turnover and unparalleled tenure.

A Member Success Story

CMA has many member success stories of information companies gained within credit group meetings that they didn't learn anyplace else.

At CMA, we often hear member success stories about how credit group membership can save your company THOUSANDS of dollars by providing critical information that helps you avoid extending too much credit on high-risk accounts. Here’s a real example of how CMA helped a multi-national company avoid a costly disruption when a long-standing critical supplier filed for bankruptcy.

The member regularly attends credit group meetings, and at a recent meeting, he was surprised to learn that one of his company’s critical suppliers had recently filed for bankruptcy. He was surprised by the news because his company subscribes to various monitoring services that should have alerted him and his department to the bankruptcy filing. When he contacted his procurement department, he was further surprised to learn that the department responsible for the relationship with the supplier was not even aware of the bankruptcy filing. The member had sufficient time take the necessary steps to source the critical supplies from a different supplier so that production was not interrupted. Supply chain disruptions potentially can cause more damage to a company’s business model and reputation than the failure of customers to pay their bills, so this was a big deal.

Once the member had mitigated the risks of the potential supply chain disruption for his company, he contacted his supervisor, the Director of Corporate Credit, and let him know that the critical piece of information came from a discussion at a CMA credit group meeting. He gave CMA credit for providing the information that potentially saved his company millions of dollars in lost production time and goods.

We hear these stories all the time at credit group meetings. The real value of regular participation in credit groups is the money and time you save in getting the critical information you need in order to get out in front of situations that could cause significant losses to your company. The member whose story is highlighted above feels confident that the time and money his company spends to have him participate in credit groups is well worth the investment.

We encourage you to call CMA to make sure you’re maximizing the value of your membership and utilizing all of the tools that are available to you.

Difficult People: 3 Things You Must Know!

“The person who constantly angers you or frustrates you…controls you.” Colleen Kettenhofen

Do you know any difficult people? Have you ever worked or lived with a difficult person? Are YOU a difficult person?! It’s amazing how many participants in my leadership training will come up to me at the end of a program on, “Dealing with Difficult People,” or “Dealing with Difficult Employees,” and confide to me, “Colleen, I think sometimes I’m a difficult person and just realized it today!” Well, we can all be difficult people from time to time. But what do you do with the person who is chronically difficult? A key component to life balance is learning to deal with difficult people. There will always be difficult people. Here are three important points to remember.

  • 1) All behavior has a positive intention – even with difficult people.
  • 2) Low self-esteem is often at the root cause of why people are difficult.
  • 3) You can’t always please everybody.

1) All behavior has a positive intention. Take for example the gossip. When someone comes into your office gossiping about everyone else, who are they trying to make look better? Themselves. That is their positive intention. As a matter of fact, while you are reading this article, what do you think the difficult people/gossips are doing in your office? Gossiping about YOU! I’m just kidding. Sort of.

I don’t think gossips realize that when they gossip to you about everyone else, you are probably thinking, “I wonder what they say about ME when I’m not around?” Remember, they have a positive intention. Strange as it may sound, they are trying to make themselves look better.

What about whiners and complainers? If someone comes to you complaining and whining about how much work they have to do, or how overloaded they are, what are they looking for? They’re looking for empathy, sympathy. Or, these difficult people are looking for you to do the work for them. That’s their positive intention. Now, we all have times when we’re overloaded and feeling overwhelmed. But I’m talking about the real whiners and complainers. Those you might label “emotional vampires” because they just suck the life out of you.

What about snipers? Believe it or not, even these difficult people have a positive intention. They are the difficult people who throw little digs your way in the hopes of rattling your cage and ruffling your feathers. What’s their positive intention? To make themselves look better. And, they think that by cutting you down, especially in front of others, that they’ll look better. For example, in an open work area, a sniper might walk by and within earshot of others say to you, “Well, there goes Shelly, on her 100th personal phone call of the day!” AND, you weren’t even on a personal phone call!

These snipers are the same difficult people who after cutting you down and insulting you, will say, “Oh, you just have no sense of humor.” They’re trying to put it all back on you. Really though it’s about them and their own insecurities. Which brings me to the second main point in dealing with difficult people.

2) Low self-esteem. A lot has been written and talked about regarding self-esteem and self-confidence. It almost seems ridiculous quite frankly. For example, every child on a team winning a trophy even though they were on the LOSING team. All in the name of “self-esteem.” And yet, a lot of difficult people do suffer from low self-esteem. Not always, but often.

Only one out of every three American adults has high self-esteem, and we’re a pretty positive culture. But, only one out of three adults really has high self-esteem. Some of you may be thinking, “Well, I know it’s definitely not me!” That’s okay. It’s something you can work on. The point is, that with difficult people it’s not necessarily about you. You aren’t the problem. It’s about THEM. They’re the difficult person. (More later on making sure we’re not the difficult person!)

Low self-esteem often has its roots in childhood. It coulde be that the “difficult person” was teased by fellow classmates in school. This can result in one having a low opinion of themselves. You all know kids can be cruel. Sometimes it’s something a teacher or a parent said. Or being compared to Super Parent or a superstar sibling. Any number of things can cause low self-esteem. You don’t always know what’s going on with someone else and why they’re behaving the way they do.

Sometimes you can do all the right things and nothing works because they’re a difficult person who doesn’t want to change. Or, they haven’t been held accountable for needing to change. So remember, focus on the part you can control – you.

3) You’re not always going to please everyone. You won’t always please everybody so get rid of the notion that you will. We can’t always worry about what “everyone” else thinks of us.

Dr. Daniel Amen has what he calls the 18-40-60 rule. The 18-40-60 rule is: When you’re 18 years old, you worry about what everyone is thinking of you. When you’re 40, you don’t care anymore what everyone thinks of you. And when you’re 60, you realize nobody’s been thinking about you at all! How true is that?! The older we get we realize “everybody” isn’t thinking about us.

Also, don’t be a person who tends to dwell. For example, have you ever been in a situation where a week after your encounter with the difficult person you’re still stewing about them, thinking about them, and dissecting what was said? Remember, the person who constantly angers you…controls you.

Keep a pad of paper along with a pen in your car. Anytime you’re afraid you’re going to say something you’d regret, especially if you’re a manager or supervisor, go out to your car during a break. I realize many of you are so busy you don’t even know what a break is anymore! Seriously, though, write down everything you’d like to say, that you never could say. When you arrive home, tear it up, or burn it. Throw it away.

Be careful, too, of the words you use. Avoid absolutes. For example, don’t say, “You always” and “You never.” It will only put that difficult person further on the defensive. I once role played with a gentleman in one of my leadership trainings, and I said “John, you never do the work. You’re always expecting everyone around here to do your work!” He looked at me, pointed and said, “You sound like my wife!” Everyone roared with laughter.

Even major corporations have to be careful that their slogans get translated properly into foreign languages. For example, it’s been said that Pepsi’s “Come alive with the Pepsi generation,” translated into “Pepsi brings your ancestors back from the grave” in Chinese. Frank Perdue’s chicken slogan, “It takes a strong man to make a tender chicken,” was translated into Spanish as, “It takes an aroused man to make a chicken affectionate!”

In conducting leadership training, especially when discussing dealing with difficult people or difficult employees, I sometimes have my participants take the following pledge.

“On my honor, I promise, when dealing with a difficult person, that I will bite my tongue and count to 10. Because if I don’t, I may say something that I will LIVE to regret!”

Colleen Kettenhofen is a speaker, workplace expert, & co-author of “The Masters of Success,” as featured on the Today Show, along with Ken Blanchard and Jack Canfield. For more free articles and e-newsletter, or to order the book visit Topics: leadership, management, difficult people, public speaking. Colleen is available for keynotes, breakout sessions and seminars. (971)212-2412.

What are the benefits of contributing your company’s full A/R to CMA?

Contributing your company's data to CMA is easier than you think
It’s easier than you think


Are you looking for an additional incentive to get your slower-paying customers to pay faster? Here’s one more: by submitting your accounts receivable data to Credit Management Association, you can positively (or negatively) affect your customer’s payment history, as the information is aggregated safely and securely with other CMA members on anscers and Ansonia Credit Data.

In your busy workplace, credit requests are constantly coming in, and it takes time to do the research to fill them out. By submitting your A/R to CMA electronically, your credit department operations will be more efficient and you will benefit from the collective results of other like companies.

Within your vertical market, the more information you submit, the more information reported, the more complete the credit reporting. In turn, those contributors will be better equipped to make business decisions based on extending trade credit. But to give you further incentive to submit your full A/R (other than providing an additional collections tool and saving time), here are some additional benefits.

  • Data submission is done over a safe and secure server, so you can be sure that your data doesn’t get into the wrong hands.
  • Thousands of companies like yours nationally contribute data to the database, accounting for more than 12 million lines of trade data, creating a greater likelihood you’ll find information about the companies you’re looking for.
  • Your actions can help reduce fraud in your vertical market.
  • Your actions support the CMA Credit Community.
  • Data contributors receive 10 free CMA Credit Reports annually.

We appreciate your support, as CMA aims to provide the most complete data to help guide your business decisions.

What are you waiting for? Call CMA’s Member Relations Department at 951-672-0581 and begin contributing now!

Why Financial Institutions Need an Analytics Sandbox

Experian is a CMA credit reporting partner.

The appetite for businesses incorporating big data is growing significantly as the data universe continues to expand at an astronomical rate. In fact, according to a recent Accenture study, 79% of enterprise executives agree that companies that do not embrace big data will lose their competitive position and could face extinction. Especially for financial institutions who capture and consume an incredible amount of data, the challenge becomes how to make sense of it. How can banks, credit unions, and other lenders use data to innovate? To gain a competitive advantage?

This is where analytics sandboxes come in.

A sandbox is an innovation playground and every data-consuming organizations’ dream come true. More specifically, it’s a platform where you can easily access and manipulate data, and build predictive models for all kinds of micro and macro-level scenarios. This sounds great, right? Unfortunately, even with the amount of data that surrounds financial services organizations, a surprising number of them aren’t playing in the sandbox today, but they need to be. Here’s why:

Infinite actionable insights at your fingertips
One of the main reasons lenders need a sandbox environment is because it allows you to analyze and model many decisioning scenarios simultaneously. Analysts can build multiple predictive models that address different aspects of business operations and conduct research and development projects to find answers that drive informed decisions for each case. It’s not uncommon to see a financial services organization use the sandbox to simultaneously:

  • Analyze borrowing trends by type of business to develop prospecting strategies
  • Perform wallet-share and competitive insight analyses to benchmark their position against the market
  • Validate business credit scores to improve risk mitigation strategies
  • Evaluate the propensity to repay and recover when designing collection strategies

A sandbox eliminates the need to wait on internal prioritization and funding to dictate which projects to focus on and when. It also enables businesses to stay nimble and run ad-hoc analyses on the fly to support immediate decisions.

Speed to decision
Data and the rapid pace of innovation makes it possible for nimble companies to make fast, accurate decisions. For organizations that struggle with slow decision-making and speed to market, an analytics sandbox can be a game changer. With all your data sources integrated and accessible via a single point, you won’t need to spend hours trying to break down the data silos for every project. In fact, when compared to the traditional archive data pull, a sandbox can help you get from business problem identification to strategy implementation up to 30% faster, as seen with Experian’s Analytical Sandbox:


Cost effective analytics

Building your own internal data archive with effective business intelligence tools can be expensive, time-consuming and resource-intensive. This leaves many smaller financial services at a disadvantage; but sandboxes are not just for big companies with big budgets. An alternative solution that many are starting to explore is remotely hosted sandboxes. Without having to invest in internal infrastructure, this means fast, data-driven decisions with little to no disruption to normal business, fast onboarding, and no overhead to maintain.

For financial institutions capturing and consuming large amounts of data, having an analytical sandbox is a necessity. Not only can you build what you want, when you want to address all types of analyses, you’ll have the insights to support business decisions faster and cheaper too. They prove that effective and efficient problem solving IS possible!

CMA offers solutions, such as Experian and other bureau credit reports, Industry Credit Groups and more to help companies determine how much business credit to extend. For more information on how we can help your company, contact Credit Management Association at 818-972-5300 or visit

This article originally appeared here and has been reprinted with permission.

You May Not Know, CMA Has a Solution For That

CMA Has Solutions

Recently, a friend of mine told me that he joined a well-known national association. When I asked him why he joined, he told me he was really only interested in one of the benefits they offered, and that he would probably never explore the other benefits because that one thing was valuable enough to him to justify membership.

After having this discussion with him, I realized that some CMA members may think the same about its programs and services: they join for the Industry Credit Groups but are unaware about (and don’t explore) the other benefits that can help manage risk. Here is a quick look at some additional benefits that you may not know about that are included with your membership:

Credit Reporting: CMA is a reseller of reports from the major credit bureaus (Equifax, DNB, Experian), Ansonia, plus the hybrid anscersX multibureau report. Let CMA be your first call when you’re looking for customer information; report rates through CMA are often less expensive. Plus, members receive several free CMA Credit Reports, which is included with their annual membership.

RFIs: CMA offers the ability to submit an RFI (Request For Information) on specific accounts from other members who may have experience with those accounts. The system is fully automated and available online in an as-needed basis.

Professional Development Programs: CMA offers dozens of webinars, seminars, in-person networking opportunities and more to help you stay current in the quick-evolving credit management profession.

Construction Forms Filing: If your company has the need to file preliminary notices and mechanics liens in the United States and Guam, our staff offers everything you need, including a free lien provisions guide.

Business Insolvency Services: What options do you have if one of your customers threatens to file for bankruptcy? What if your company suddenly faces financial distress? CMA’s Adjustment Bureau is the largest entity in the United States specializing in neutral administration of out-of-court workouts and liquidations of insolvent businesses.

– Collections Services: CMA has partnered with AG Adjustments to handle all of your collections needs. All placements can be viewed on CMA’s interactive web site,

– Transactions processing: If your company offers Electronic Funds Transfer, Online Bill Pay, Credit Card Services, Fifth-Third Check Guarantee Services can probably help you get a better rate than you’re already receiving.

– And more!

With many benefits that you may not have already been aware of, if you’re in the credit management profession (or if you may need help with determining the riskiness of a potential customer), CMA should be your first call at 800-541-2622. CMA is known for its top-notch industry credit groups, but the association offers many more benefits besides them. CMA probably already has a program or service that can provide information to help answer your credit questions.

What is your biggest need in credit management today? I welcome your feedback.

Five Things You Need to Know About Your Customer Before you Extend Business Credit

All business customers are not created equal. Even companies that look solid at first glance can hide festering problems that eventually can impact your bottom line. Successful credit management requires you to carefully evaluate the financial health of every business that asks for credit terms. According to Experian, here are 5 questions you should be able to answer before extending business credit:

1. Is the business what it claims to be?
Sometimes, companies needing credit will provide inaccurate information to win approval. Before opening an account, you need to confirm the applicant‘s bona fides, including its location, size, number of employees, annual revenue, years of operation and similar financial indicators.

2. What is its payment history?
Although past performance does not guarantee future results, a company’s payment history is often a strong indicator of how it is likely to behave in the future. Pulling a business’ credit report can easily provide you a snapshot of an company’s payment history as well as other risk measures.

3. Are there hidden factors that could affect its ability to pay?
Are there pending judgments, lawsuits, bankruptcies, regulatory citations or other “red flags” that could make it difficult for the applicant to meet its obligations in the future? This is another area where a business’ credit report will be a key factor in helping you uncover a potentially risky business.

4. How much credit should you extend?
All credit contains an element of risk, but you can mitigate that risk by limiting the amount of credit you extend based on factors such as the customer’s sales volume, debt to-asset ratio and similar aspects.

5. Under what terms should you extend credit to this customer?
You can mitigate risk further by carefully calibrating the combination of interest rates, minimum payments and other contract terms based on each customer’s individual financial metrics.

CMA offers solutions, such as Experian and other bureau credit reports, Industry Credit Groups and more to help companies determine how much business credit to extend. For more information on how we can help your company, contact Credit Management Association at 818-972-5300 or visit

This article originally appeared here and has been reprinted with permission. 

D&B Credit Helps You Monitor & Manage Your Account Risk

When you work with multiple accounts, staying on top of each and every one can seem impossible. When risky accounts slip through the cracks, your business could be affected. But by closely monitoring your accounts and being alerted to changes, you can make faster credit decisions and protect your business.

D&B Credit can help you manage and monitor your account risk with ease. User-friendly, smart and simplified, D&B Credit makes accessing the industry-leading relationship data and financial scoring models from Dun & Bradstreet easier and more effective than ever. Now you can keep a close eye on your key accounts and better monitor your entire portfolio.

D&B Credit is a modern, dynamic platform that allows you to:

  • Configure alert profiles to effectively monitor customer financial health and protect your business.
  • Consolidate alerts into a daily email, plus view them on your portfolio dashboard, homepage and credit reports.
  • Get a detailed history of alerts on any of the businesses you’re tracking.
  • Enhance corporate governance by ensuring that all accounts are monitored and meet corporate standards.

Talk to your CMA account rep to learn more about D&B Credit!

Supplier Risk Credit Group created to help manage your vendors, by Larry Convoy

During my time in credit management, I’ve often heard the following: “We can survive if a customer goes bad, we cannot survive if one of our primary or secondary vendors has an interruption in delivering product, raw materials or services to us. For that reason, we invest an equal amount of resources investigating our vendors.”

CMA Industry Group Leader Larry Convoy
CMA Industry Group Leader Larry Convoy

Responding to members requests, CMA has established the SUPPLIER RISK CREDIT GROUP for companies that have expanded the credit departments’ risk management role to include key suppliers. There has been a tremendous increase in companies evaluating the risk and cost of business disruption when vendors are unable to deliver goods for reasons ranging from economic to political.  Credit Managers deal in risk evaluation daily, they have the skill set necessary to transition from customer analysis to vendor.

This new group will help companies assess their exposure to vendor failure, develop, implement and maintain a process to evaluate risk and gather business intelligence more efficiently and cost effectively.

CMA invites you to attend a complimentary organizational meeting to explore the benefits and features of a Supplier Risk Credit Group.

RSVP to and we’ll save a seat — either virtually or in-person — for you.

We hope to see you there!

President’s Blog: In Memoriam: Harold Fraizer, by Mike Mitchell

Harold Fraizer, RelianceA traditionalist. A pragmatist. A very nice man. These were the thoughts that first ran through my head after hearing the news that Harold Fraizer, Director of Credit for Reliance Steel & Aluminum Company, passed away suddenly last week on July 18.

I was introduced to Harold in 2013 over lunch at the Grand Café in the Omni Hotel, just walking distance from Reliance’s downtown Los Angeles office. I was invited to chat about CMA and explore what the Association could do to support the credit teams at Reliance Corporate and at the many Reliance branch locations in California. What I found was a long-time credit professional who cared deeply about the credit profession and the people he supported. He wanted them all to have the best tools, resources, and training available so that they would be successful in their jobs. Clearly, he was a mentor as well as a leader.

Thus began a tradition of meeting for lunch about every six months or so, where I came to hear what Harold and Brian Lacey, his corporate credit manager, had to say about the state of credit.

This past April, I was thrilled when Harold agreed to participate on a panel discussion for our CreditScape Spring Summit. I interviewed him a few weeks before the event to help us both prep for the panel. During our discussion, he shared with me that Reliance concentrates on the front-end process and good credit management. He wanted his branch’s credit operations to focus on making good credit decisions and was willing to provide many options for tools and resources that would help accomplish that goal.

When I asked Harold about various automation tools that he was using or considered making available to his vast network of Reliance credit operations nationwide, he made it perfectly clear where he stood on the topic. “Credit’s not hard,” he said, “but what sets it apart from accounting is that it’s an art as well as a science. We don’t believe you can automate credit decisions. There will always be a role for the credit professional in making the final credit decision.”

What I learned from Harold is that success in credit is driven by the fundamentals – customer due diligence, smart data analysis, strong customer relationships, and good decisions. Automation will continue to drive modern credit processes, but can’t replace good professional judgement.

“You’re a credit manager – invest your time looking at all customers, not just the ones that are in front of you on the credit applications.”

I had lunch with Harold and Brian last month at our regular spot, the Grand Café. I asked Harold about how senior finance executives view the role of credit. He dismissed the idea that credit can be spun as a profit center. “It is a cost center, but if you let me do my job, I’ll save you a lot of money.”

On behalf of the staff and members at CMA, our deepest condolences to the Reliance Family for your loss.

Mike Mitchell is the President and CEO of Credit Management Association.

CreditScape Spring Summit Helps Identify Ways to Create Efficiency in Credit

The CreditScape Spring Summit, Powered by United TranzActions, an interactive learning seminar and workshop took place April 12 at the Hyatt Regency Orange County. The event helped uncover areas in a company’s credit operations where they could improve efficiency, providing attendees with dozens of ideas to bring back to the office, according to preliminary survey results that were tabulated after the event.

With the common theme of “creating efficiency and reducing costs in the credit department,” attendees commented that the sessions gave them insights on the latest in legal issues affecting the credit department, improving efficiency in new customer onboarding, efficiency in the cash-to-cash cycle, plus services that could help companies realize these efficiencies. Also a hit were the panel discussions where attendees heard from their peers how they have successfully implemented these processes.

Additionally, for the attendees overwhelmingly said they’d recommend CreditScape to a colleague.

Here are some photos from the event:

Plans are forthcoming for CMA’s next CreditScape, which will take place next Spring at the same venue in Garden Grove, CA, April 4-5, 2018. More details will be announced as soon as possible.

Thanks again to our event sponsors United TranzActions, HighRadius, CreditPoint Software, Bectran, Credit 2 B, IAB, Ansonia Credit Data, AG Adjustments, NCS, Dun & Bradstreet, Skyminder and Esker, and to all who attended the event!

The Twelve Days of Credit

Though Christmas is now over, we thought you might want to see the imagination of credit professionals, as a group of them rewrote the holiday classic “12 Days of Christmas” to apply to credit.

You can watch the video of them singing it at their recent holiday party here, or read the lyrics below.

Happy holidays from CMA and we wish you a prosperous new year!


1st day – A Large Check for H&E
2nd day- 2 Returned Checks
3rd day- 3 Phony Excuses
4th day- 4 Calling Sales Reps
5th day- 5 Bankruptcies
6th day- 6 Lost Invoices
7th day- 7 Liens a Filing
8th day- 8 Customers Complaining
9th day- 9 Collectors Dancing
10th day- 10 Late Payments
11th day- 11 Dancing Divas
12th day- 12 Cards Declining

Why a good credit manager should have regular meetings with the CFO

Many credit professionals would agree that the credit management position is often overlooked and undervalued After thinking about the many areas that a credit manager is involved with on a daily basis, many would believe that a good credit manager can directly impact the company’s bottom line. This is why your company’s CFO should make a point to have regular meetings with the credit manager.

These are a few areas to help make this 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? We’d love to get your feedback. Thanks for reading!

A Comparison of Credit Risk Mitigation Tools, by Buddy Baker

Note: this is one in a series of international blogs to help credit managers learn how to assess risk in foreign countries and expand their potential customer base.

Most CMA members don’t know me. I don’t make it to many CMA activities because I live in Chicago. But about a year ago, I joined CMA as a vendor member who provides credit-related services to CMA members.

I’d like to invite you to a short webinar I’ll be conducting on December 3. I think you’ll find the information to be useful and maybe even compelling. The webinar will be a review of multiple techniques for managing credit risk. Maybe you are familiar with all of them but never compared them side by side. I’ve attached a chart that should give you an idea of what I’ll be talking about.

You can sign up for the webinar here.

Then, in January, I am planning to be in Los Angeles to conduct some classroom-style seminars on these techniques. If the webinar makes you decide you’d like to understand some of these techniques better or get some classroom practice at matching risks with risk-mitigation techniques, I hope you’ll come to one or more of these seminars. In addition to risk mitigation, one will be on structures for arranging financing for your domestic and international sales (much of which is built on the risk mitigation techniques). These seminars are not limited to CMA members, but CMA members will get a discount.

My objective is to provide education to Credit Managers. Information you can use. My experience-35 years of it-is as a banker and a credit insurer. I’m an expert in various techniques for managing credit risk and financing receivables, with particular expertise in export transactions. Please feel free to call me whenever you have a question about letters of credit or credit insurance or foreign exchange contracts.

And I look forward to getting to Los Angeles, and out of Chicago, in January.

Buddy Baker

Buddy Baker is president of Global Trade Risk Management Strategies, LLC, a consulting firm that specializes in providing education content to Credit Managers. Baker has 35 years of experience as a banker and a credit insurer, and is an expert in various techniques for managing credit risk and financing receivables, with particular expertise in export transactions. He can be reached at (847) 830-3038, or by email at

What Credit & Collections Professionals Can Learn from Football Coaches, by Mark Wilson

With the NFL season officially underway, let’s take a moment to explore what Accounts Receivable departments can learn from coaches, especially when it comes to the season’s biggest game changer: analytics.

As a credit and collections professional, take a look at the metrics you’re currently tracking. Throughout my years as a consultative resource for AR departments, I’ve found that most companies spend most of their time focusing on DSO and maybe how much they wrote off as uncollectible. Don’t get me wrong, tracking how fast you get paid is important. If collecting money was a game, DSO would be the score. But if that’s all you’re measuring, you’re not properly leading your team.

Let’s think about this from the perspective of a football coach. When evaluating a team’s performance, coaches look at many other stats beyond the final score. Tracking things like rushing yards, turnovers, quarterback ratings, third-down efficiency, help identify areas that need to be improved upon as well as potential opportunities. All of these ultimately feed into the final score and the overall success of the season.

Within accounts receivable, we need to go beyond DSO. Tracking underlying metrics allows companies to evaluate individual performance, uncover potential process improvements, gain valuable insights, and of course leads to an improvement in DSO.

If you’re interested in diving deeper to improve your team’s performance but are unsure of what metrics to track, this AR Analytics Playbook can provide some insight on six simple, yet effective metrics that every financial executive should be tracking. By leveraging these metrics, your company is guaranteed to improve customer relations, reduce administrative costs, and get paid faster.

I encourage you to learn more by downloading the AR Analytics Playbook today.

Mark Wilson, a former CFO, is the President of TermSync, a cloud-based accounts receivable software company owned by Esker, Inc.

What to Do When You’ve Reviewed and Rejected a Request For Open Account Terms, by Michael C. Dennis

Let’s assume you have received and reviewed and rejected a request for open account terms from an applicant company. What would you do if that applicant called and demanded to know the specific reason for your decision? Would you:

  • Ignore the request, or
  • Might you offer a response such as this: “Your company does not meet our credit granting criteria”, or
  • Would you provide a more detailed explanation (and if so what information would you provide)

I think the answer is in part an internal policy issue, and in part a legal question based on relevant federal and state laws. I assume each of us has a process for handling this question from an angry applicant. I would be interested to know your process and your rationale for it.

This topic will be covered at the upcoming CreditScape Fall Summit, September 17-18 at the Tropicana in Las Vegas. For more information about the conference, visit I hope to see you there.

Michael C. Dennis is the author of the Encyclopedia of Credit, a free, fast, internet resource for credit and collection professionals. He is a frequent instructor at CMA-sponsored educational events. His most recent book, “Happy Customers, Faster Cash,” is available at He can be contacted at 408-204-0129.

Collections in the Digital Age: Technology, Outsourcing, and Compliance, by Eddy Sumar

‘Collections,’ ‘collectors,’ ‘collection agencies,’ ‘collection attorneys’: words that evoke strong emotions, sometimes even terror, in the hearts of uninformed debtors. Robocalls, automatic dialers, dialing for money, calling centers, SMS, texting, e-mailing, invoicing, phone calls, and personal visits—some of the avenues that companies pursue to collect their precious asset known as accounts receivable. When we look at the landscape of debt collection, we can see three things that beckon our attention: technology, outsourcing, and compliance.

These three areas have a great impact on people on all sides, creditors, intermediaries or third parties, and debtors. Let us look at each of these three areas separately.

Technology: Technology is a blessing, but it has side effects. When technology is employed, people lose their jobs. Technology leads to higher productivity at the beginning of the process, but it has long-term negative consequences. Digital technology, machines and robocalls do not satisfy the desires for human interaction. The fact is that technology should enhance the human factor, not diminish it. Technology should help us humans to produce more so we can have more time to interact and build the goodwill and loyalty. So the short-term need is to curb the negative effects of the technological factor in collection.

Outsourcing: Another factor that complicates collection is the outsourcing of debt collection to companies that do not understand the power of customer service and preserving customer and debtor goodwill. The calling-center mentality in collections is unempowered. It follows a certain script and cannot deviate from it. This railroad track mentality usually leads to derailment. The short-term benefits to the bottom-line will ultimately lead to long-term consequences that both eat the top-line and erode the bottom-line.

Compliance: As highlighted in the recent reports from the Federal Trade Commission (FTC) and the Consumer Financial Protection Bureau (CFPB), consumers are being hounded by unethical collectors and unscrupulous collection agencies. These dial for money at all cost, intimidating the debtors with lawsuits and other methods that convey the thought of threatening their livelihood and dignity. To them, it is the money that counts, not the individual. To them, the debtor is totally at fault and they approach the debtor in a manner not fit for human dignity. The result is that the reputation of collectors and the agencies they work for are negatively affected. They become something to fear and avoid. The good news is: the collection industry is still filled with good law-abiding collectors. But unfortunately, it’s the bad apple that corrupts the whole bunch; the little poison that makes the refreshing glass of water on a sweltering day undrinkable. With technology the offense could easily be amplified. Bad collectors tend to hide behind their technological gadgets and screens, thinking that they can never be found in cyberspace. This new digital landscape allows bad collectors to abuse debtors, hurling at them every insult, thinking that the path of offense leads to collection success.

All of the above issues highlight the significance of compliance, which is compliance with existing codes and regulations, but above all compliance with the codes of human decency.

So, how can a company thrive in an environment of constant technological change? How can a company outsource its collection function without affecting the long-term profitability? How can a company be compliant?

The answers lie in a simple acronym: COLLECTOR.

The word ‘COLLECTOR’ embodies certain key qualities that need to be present whether a company pursues internal or external collection. If these qualities are pursued, then compliance issues will disappear. And if a company outsources to a third party to pursue its collection function, then the third party should have strong ethical standards that highlight the human factor. Here is the acronym:

C: Compassion, Connection, Communication, Courtesy, Customer-centric, Common sense

O: Options, Overcoming obstacles, Open-minded

L: Listen! Listen! Listen!

L: Learn! Legally-minded

E: Empathy, Education, Experience, Expertise, Excellence

C: Collaboration, Cooperation, Compliance

T: Teamwork, Targets, Timelines

O: Organization

R: Respect, Resolution, Results, Regulation

The above acronym highlights the human dimension of collection, not the technological and digital. It starts with the ‘C’ of compassion. Yes, collectors should show compassion to the debtor, especially in consumer transactions. Collectors need to connect in order to collect. Making that connection by building rapport is vital. Two-way open communication hallmarked by courtesy is paramount. Furthermore, a customer-centric approach is crucial in every collection call. I believe that collectors should always put on the customer service hat when they engage in collecting a debt. Simply put, it is common sense that should rule in collection.

Next, we see the ‘O,’ that opens the doors to options and alternatives. Collection is not a black and white approach. It should not be either / or. Collectors should work with the debtors to find the options and overcome the obstacles. Collectors should be open-minded throughout the collection process.

The first ‘L’ underlines the significance of listening. The key function for a collector should be to listen—listen to the debtor, listen to the debtor, listen to the debtor, listen to common sense. It is through listening that collectors move to the second ‘L.’

The second ‘L’ is a natural by-product of listening. When collectors listen, they learn, they go beneath the surface to see the unseen and the hidden. When they listen, they find the options that are practical and relevant. And yes, collectors should be legally-minded. They need to know the law, abide by the law and respect the law. Listening leads to the next letter ‘E.’

The ‘E’ reminds us of empathy. And empathy will make the collector’s job more exciting. Empathy humanizes the process; it allows the collector to walk in the debtor’s shoes—to feel, see, and experience the world from the debtor’s perspective and through the debtor’s eyes. Empathy leads to education that equips the collector with the experience that builds the expertise needed to show excellence in handling the collection process.

The next letter ‘C’ puts the spotlight on collaboration and cooperation. I read a quote that says: “If you want to be incrementally better: Be competitive. If you want to be exponentially better: Be cooperative.” So, for collectors to be better, to feel better, and for debtors to be better and feel better, they all need to cooperate and collaborate. Collaboration that reflects all of the previous ingredients will lead to compliance. Ethical and moral collectors that embody humanity and exercise their function with integrity and dignity cannot help but be compliant.

Now, the ‘T’ introduces teamwork that adds the flavor of joint effort and togetherness. When teams come together, they have a goal, a target to achieve. And with targets comes timelines. Thus, the collection process has an objective to collect in a timely manner to ensure the timely cashflow of the creditor while helping the debtor to be released on a timely manner from the burden of debt.

For collectors to really be successful they need the ‘O’ of organization. Organization allows the collector to handle the workflow with ease and proficiency. Organization allows the collector to become efficient and effective.

The final letter ‘R’ reiterates the importance of the human factor. Respect is a human need and collectors should show it at every step in the collection process. In addition to respect, collectors should never forget that collection is about resolution, resolving the issues, dissolving impasses and finding the options that lead to results. All should be done with dignity and decency under the vigilant eye of the law and regulations.

Just imagine collectors who exemplify the above! Collections, collectors will become words that elicit admiration and appreciation.

The human approach in collections will yield greater results than the hard-nosed and hardliner approach. Good, ethical, and law-abiding collectors are guides. They guide their debtors through the collection process leading them to win-win solutions. They steer them in the direction of resolution keeping the goals in sight, while showing understanding and empathy, maintaining initiative, and demonstrating high integrity and strong discipline. They allow themselves to be educated by the process and by the debtor in order to reach the destination without victims and injury.

From the above, we can see that collection is a multi-disciplinary process combining among many things a human approach that reflects knowledge of psychology, anthropology, sociology, negotiation, time management, organizational techniques and a host of functional skills needed in the collection field. To collect is not just about the moment, it is about the future. Though the digital age is here collection will always be a human function.
Eddy A. Sumar is the President & Founder of ERS Consulting Services. He is also the director of education and community outreach for CMA, and will be speaking at the upcoming CreditScape Fall Summit. He can be reached at 909-481-9869 or 

Because “That’s the Way We Always Did It” Doesn’t Cut it Anymore, by Larry Convoy

Larry Convoy, lead group facilitator
Larry Convoy, lead group facilitator

To change successful formulas or brands takes courage. Sometimes it works (Datsun becoming Nissan), sometimes it doesn’t (remember the “New Coca Cola”?). But in this current environment, where you can close or lose a multi-million dollar deal by touching an app on your phone, being passive will leave you behind the crowd.

For that reason, CMA is taking an aggressive approach with its new CREDITSCAPE Summit. CreditScape is unlike any other education activity CMA has ever offered. For one, the topics were created from feedback direct from CMA members about items they need to know. It focuses on only one topic (collections), and covers it thoroughly. If your idea of an educational event is to sit and passively watch a PowerPoint presentation given by someone pushing a product or book, this is NOT for you.

CreditScape will present collection options, not by a vendor pushing their services, but by credit managers who are actually using them so you can hear about their experiences. It will allow you to break into small groups and brainstorm various scenarios and hopefully come up with better ways to run your collection department.
CMA is offering workshops, role playing, a collaborative approach to learning instead of the standard classroom style for the credit and collection manager and their staff.

The event takes place September 17-18 is the Tropicana Hotel in Las Vegas.

Brainstorm with your peers, hear their procedures, tell them yours and then divide into smaller groups and address the issues presented. Leave Las Vegas with some solutions to your collection issues and real-world case studies, ones that you can implement immediately.

All credit professionals are encouraged to look over the agenda for the conference and decide if you’re ready to learn the latest in collections by being a participant, not a spectator.

You can register now at

I hope to see you in Las Vegas.

Larry Convoy
Lead Group Facilitator
Credit Management Association

Should Your Company Outsource its Credit and Collection Functions?, by Michael C. Dennis

Michael C. Dennis

Many companies are interested in concentrating on core competencies and looking for ways to outsource so-called “non-core functions” including certain credit and collection functions. The simple truth is that any function or department or position is a candidate for outsourcing if the third-party service provider can convince the company that:

1. The work can be outsourced safely,
2. The outsourced work will be done promptly, and done well,
3. The service provider has adequate resources and sufficient experience to perform the work,
4. The cost to outsource the work is ‘reasonable’ compared to the cost to the company of continuing to do the work internally.

Third-party service providers are getting better at addressing each of these four concerns. Some service providers do an exceptionally good job of marketing these services to companies.

In my opinion, the key questions is this: What role should the credit manager play in any discussion about outsourcing certain functions in credit and collection such as cash application, deduction management, or day-to-day debt collection activities.

I think the credit manager needs to be an active participant in evaluating the outsourcing option. Creditor companies who outsource cash application or even debt collection tend to want to perform these processes in house:

• Establishing credit limits,
• Evaluating new accounts,
• Performing pending order review and approval
• Contributing to analysis and reporting in the following areas: cash flow, working capital, risk assessment and customer portfolio optimization (risk/reward analysis) including software solutions.

What is clear to me is that the company will be better off if the credit manager is a willing participant in the decision-making process as it relates to outsourcing some or even all of the credit and collection related activities.

By the way, this is one of the topics that will be covered at the upcoming CreditScape Fall Summit in Las Vegas, Sept. 17-18. For more information on that, visit

Does your company outsource its credit and collection functions? What criteria did you use to make that decision? As always, I welcome your feedback.

Michael C. Dennis is the author of the Encyclopedia of Credit (, 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. His most recent book, “Happy Customers, Faster Cash,” is available at He can be contacted at 949-584-9685.

Should a Credit Manager Request Personal Social Security Numbers?, by Michael C. Dennis

Michael C. Dennis

In a recent post on LinkedIn, a question was asked about If, When and Why B2B creditors such as CMA members request or require Social Security Numbers from credit applicants. ( At the time, I posted two responses in which I posed questions for CMA members in connection with the laws governing the use and the protection of SS numbers.

As I read through the other comments, I saw that several credit managers did routinely ask for them, while others were vehemently opposed to doing so.

Now that some time has gone by, I would like to offer the following additional comments for members who obtain SS numbers from applicant companies:

• Create strong policies and procedures about If, When, Why and Which applicants will be asked to provide their Social Security Number.
• Make sure your attorney has reviewed these policies and procedures and has confirmed that your actions are lawful under applicable federal and state laws.
• Publish these policies and procedures, and then enforce them.
• Create a robust mechanism to ensure there is limited access to customer SS numbers and related information.
• Assign one or a limited number of employees the task of safekeeping and safeguarding SS numbers.
• Be sure there are consequences for employees if policies, procedures or safeguards are ignored for any reason.
• Understand the potential costs of a data breach involving personal information including but not limited to SS numbers.
• Understand the disclosure requirements and the remediation obligations and out-of-pocket costs in the event of a data breach.
• Make sure you have a compelling business reason to obtain SS numbers and consumer credit reports.

Where do you stand on this issue? As always, I welcome your feedback.

Michael C. Dennis is the author of the Encyclopedia of Credit (, 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. His most recent book, “Happy Customers, Faster Cash,” is available at  He can be contacted at 949-584-9685.

Puppets and Puppeteers, by Michael C. Dennis

Michael C. Dennis

Collectors often make the mistake of talking to “Puppets,” those who are not authorized to make decisions, and are surprised and disappointed when a Puppeteer working at the customer company overrides, overrules or ignores the payment commitment provided by their Puppet.

In a credit manager’s world where the norm is to deal with “puppets,” how do you determine whether you’re working with a Puppet or a Puppeteer? In my opinion, the solution is relatively simple. To the extent that the person you normally interact with in the customer’s accounts payable is able to keep their commitments, they are Puppeteers. If the debtor company does not honor the commitments you receive, this is a clear indication that your contact is not ‘pulling the strings.’

When this happens, the obvious solution is to make sure that in the future you speaking to and receive commitments from a Puppeteer, not a Puppet.

Food for thought: One of the key “unwritten” benefits of being in an Industry Credit Group is that your peers may be able to reveal the name of the “Puppeteer” to you. How do you reach the “Puppeteer?” I welcome your feedback.

Michael C. Dennis is the author of the Encyclopedia of Credit (, 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.

Finding Hidden Gems in Your Organization, by Melissa Kobus, CCE

Melissa Kobus, CCE, is the Credit Management Association Chair and Regional Credit Manager for Anixter Inc., based in Anaheim, CA. She can be reached at 714-695-2219, or
Melissa Kobus, CCE, is the Credit Management Association Chair and Regional Credit Manager for Anixter Inc., based in Anaheim, CA. She can be reached at 714-695-2219, or

The role of credit is ever changing.   What credit professionals handle on a daily, weekly, monthly basis is challenging and can sometimes feel overwhelming.  The requests from your customers, internally and externally, require you to reprioritize at any minute of the day.  What happens when the requests outweigh the resources available?  How do you handle the workload?  What steps have you taken to help balance your day?

I recognize that every company is different, what is a priority at one may not be a priority at another.  As the workload changes, have you taken a moment to rank your tasks by importance?  Are there tasks that you do as a matter of course “it’s always been done this way”, that are no longer really required.  Have you asked those who you are supporting, if the action is still necessary?  Eliminating redundant or outdated activities will easily add time to your day.

A challenge that I face with regularity is keeping up with technology.  Our customers ask us to support any number of different platforms for billing services and customer research.  Having the time and knowledge to provide excellent customer satisfaction is important, so I engage weekly with our IT group.  They have strong technical skills and have helped us out of a bind in a number of cases.  They too lack resources but I have found a good relationship has been mutually beneficial.

Sometimes there are those special projects that seem to come out of nowhere.  What about those projects that have been on your to-do list since last summer?  I have found resources outside the credit department to be extremely helpful depending on the project.  I have engaged sales support and front office staff to assist in getting the job done.  They welcome the new experience and opportunity to be involved.  They become part of the credit department extended family.  Who knows, they might bloom into the newest credit team member.

Streamlining your main activities and prioritizing; partnering with other departments; and developing resources outside of your specific team will help in balancing the ebbs and flows of the credit dept.  Can you too find hidden gems in your organization?

Melissa Kobus, CCE, is the Credit Management Association Chairman and Regional Credit Manager for Anixter Inc., based in Anaheim, CA. She can be reached at 714-695-2219, or

How Can You Give Back to the Association, and Get Something in Return?, by Melissa Kobus, CCE

Melissa Kobus, CCE, is the Credit Management Association Chair and Regional Credit Manager for Anixter Inc., based in Anaheim, CA. She can be reached at 714-695-2219, or
Melissa Kobus, CCE, is the Credit Management Association Chair and Regional Credit Manager for Anixter Inc., based in Anaheim, CA. She can be reached at 714-695-2219, or

I find that the more you give the more you get back.  Sometimes it’s obvious, sometimes it’s in smaller increments.  In the credit world however, sometimes it can be hard to give.  You never know if your customer will send the payment your way, if the sales rep will get that RA or credit issued.  If you give too much, will you be able to meet your objectives?  Well, I have found a way to give back to CMA and its members that actually helps me to be more comfortable with my credit decisions.

Anixter has been a long-standing member with CMA.  We had always participated in the credit industry groups, submitting accounts for discussion and being involved.  In the last 5 years or so, we started to submit our aging too.  It was a great decision!  We are able to have our data available monthly for the members to pull electronically.  Having fresh data is so important in making an informed decision.

I download a report the first week of the month and submit it to the CMA data group.  They do all the rest.  They make sure the data gets into the anscers system quickly.  All members who pull a credit report from CMA have the immediate data at their finger tips.  If someone pulls an RFI, they will see the trade line from that month.  It is great!

I am making a call to action for all CMA members in 2015!  Start the New Year off by giving back to the association: submit your aging!  It is simple to submit the report in an Excel, CSV or tab delimited form. Simply send it via email at   When you give to CMA, you will reap the rewards tenfold.  You will be able to make a solid credit decision and you will be helping other credit professionals too!

Melissa Kobus, CCE, is the Credit Management Association Chairman and Regional Credit Manager for Anixter Inc., based in Anaheim, CA. She can be reached at 714-695-2219, or


Not The Top Ten List You Want To Be On, by Larry Convoy

With due respect to David Letterman and Sports Center’s nightly “Top 10” lists, there are some lists that you would be better off not being on.  One that directly affects you and your company is “The Top 20 Creditors in a Bankruptcy Case,” a document that is easily obtainable by accessing Pacer. No company likes to see their losses published for all to see.

CMA Industry Group Leader Larry Convoy
CMA Industry Group Leader Larry Convoy

However, this document of doom will now be turned into an excellent prospect list for any industry credit group (ICG). Whenever you post an alert of a Chapter 11 in your industry, CMA will run a list of the top 20 creditors. These companies could be competitors of yours, or they are at least selling into the same market as you and have just taken what could be a major hit. A phone call from a group member informing them about the group, and mentioning that the group was aware of the problem and therefore had minimal exposure, could get the group a new member very easily.

Therefore, effective with the next Chapter 11 alert posted on anscers, the ICG department will forward this list of names to the group chairmen and group facilitator. There will probably be some banks, factors or lending companies that would not fit but you should be able to identify some HOT prospects. Tell them that the best way to avoid the next BK is through membership in your credit group.

Thank you for your support throughout 2014, and we wish you and your family a Happy and Healthy Holiday Season and a Prosperous 2015.

Larry Convoy
Lead Group Facilitator

To Ship to Not to Ship – Should a Credit Manager Be Santa Claus or the Grinch?, by Melissa Kobus, CCE

Melissa Kobus, CCE, is the Credit Management Association Chair and Regional Credit Manager for Anixter Inc., based in Anaheim, CA. She can be reached at 714-695-2219, or
Melissa Kobus, CCE, is the Credit Management Association Chair and Regional Credit Manager for Anixter Inc., based in Anaheim, CA. She can be reached at 714-695-2219, or

It’s December, the last month of the fiscal calendar for most companies.  There is a lot of pressure to make sure your results are strong.  The sales team wants to have as many orders as possible go out the door. You need to have as much money as possible come in but your customers are having cash flow concerns, and it’s not making your job any easier. What is a credit manager to do?

It might be easy to just say ship the material and say “Happy Holidays.”  It will help increase sales and will make your past due percentage smaller and possibly improve your DSO.  The orders will help your customer complete the job they are trying to finish before the holidays.  Your sales manager will be happy as that will increase their bonus payout for the month, no coal in their stocking this year.  You can collect those funds in January.  However, is this really in the best interest of the company?  Are there other options that might secure the order, entice your customer to pay you sooner or can you just bring in the cash?

In my credit experience, I have worked with a lot of contractors.  We ask questions about the order and find out if this is material that is being used to improve a particular piece of property, if it is we will ask for a job sheet.   With that information, we create a job account to secure our transactions either through lien or bond rights.  There is a level of comfort when we have a job account: we know that if there is a payment issue, we can reach out to the owner or the general contractor for their assistance.  If I am questioning if an order can go out the door, I will always ask, “Can we secure it?”

All credit professionals are trying to be paid before other suppliers.  Providing excellent customer service helps as the customer is more willing to pay you first but that may not get the job done.  Have you ever tried to offer a one-time discount for a large payment?  Have you asked the customer if they can dip into their line of credit?  In the construction industry, you can ask for a joint pay agreement, when they get paid by their customer, you’ll get paid at the same time via a two-party check.  We are all leery about accepting a credit card payment, but is that an option you can offer?  Being creative is a key asset to success in credit. Find a way to get the order out the door and to collect the funds.

Your goal within the credit department is to maximize sales by managing risk and minimizing write offs.  This is the same throughout the year but even more important at the end of the year.  So how do you make that decision to ship or not to ship?  Are you going to be Santa or the Grinch?  My suggestion, pull out your red bag of tools & tricks and surprise the sales team, your boss and your customer and show them that Santa does really exist and find a way to accept the order and get paid.

I wish you all the very best during the holiday season.  If you have any questions or comments, please reach out to me.

Melissa Kobus, CCE, is the Credit Management Association Chairman and Regional Credit Manager for Anixter Inc., based in Anaheim, CA. She can be reached at 714-695-2219, or

Save the Date: CMA Announces “A Credit Paradise,” the 2015 Annual Meeting

Credit professionals will experience “A Credit Paradise” on April 9, 2015 at Credit Management Association’s Annual Meeting. Taking place at Disneyland’s Paradise Pier Hotel in Anaheim, California, the “A Credit Paradise” event includes a full day of training, education, awards and networking opportunities with other credit professionals.

CMA is currently surveying its members about the resources that would be “A Credit Paradise.” The results of this survey will direct the event’s education and training topics. Details about the program, including the keynote speaker and education topics, will be announced in early 2015.

The Annual Meeting allows CMA members from all over California and Nevada the opportunity to learn about the latest trends affecting the credit profession. Last year, the event addressed the relationship between the sales and credit departments, and received some of the best feedback scores it’s ever had from the exit survey. In 2015, CMA is considering valuable training programs and topics requested by its member so they can attain ‘A Credit Paradise’ in their offices.

The Annual Meeting is the largest in a series of in-person educational opportunities offered by CMA. To learn more about the other sessions and topics, visit or call 800-541-2622.

It’s a Goal, by Michael C. Dennis

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 (, 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.

What’s the Bad News?, by Michael C. Dennis

Credit managers manage risk. Therefore, I think credit managers need to actively seek out “bad news” from their collectors. Small problems can be used as opportunities for credit administrators and collectors to learn more about how to manage risk and collect past due balances more effectively and more efficiently. It’s clear that credit administrators are far more likely to report good news than bad, but that tendency is exacerbated when managers tend to either (a) shoot the messenger, or (b) ignore bad news or (c) cannot offer advice and guidance about how to address and resolve the problem.

One resource that CMA members have to help them seek out this “bad news” is the Industry Credit groups which are intended to help companies in the same vertical market get the most complete picture available about their customers.

Actively seek out bad news and use the information as an opportunity to learn, and to train others, and to improve processes and procedures.

Have you used CMA’s Industry Credit Groups? Did they help? As always, I welcome your feedback.

Michael Dennis is the author of the Encyclopedia of Credit (, 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.

Understanding your Customers, by Michael C. Dennis

Michael C. DennisHow many different types of customers do you have? The way I see it, the credit department has at least three customers:  (1) The Sales Department, (2) their Company’s Senior Management, and (3) The Customer.  Business gurus may differ in opinions and approaches to customer focus and customer orientation, but these truths about customers are timeless:

  • Customers have choices.
  • Customers have expectations.
  • Customers have influence.
  • When your customer has a request or a problem, they expect your response to be timely.
  • Customers expect to interact with knowledgeable and professional credit team members, and that the information they receive will be accurate and helpful.

Do you know what your Customers want?  Do you provide everything they need?  Can you provide better or faster service to your internal customers [meaning to Sales and Senior Management]?  If so, when will you start doing so?  And is there any reason you cannot start today?

As always, I welcome your feedback as well as your questions, comments and constructive criticism.

Michael is the author of the Encyclopedia of Credit (, 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.

Senior Accountant Cheryl Lloyd Celebrates 50th Year With CMA

Congratulations to CMA senior accountant Cheryl Lloyd, who on Monday celebrated her 50th anniversary with Credit Management Association.

Lloyd, who began working at the CMA headquarters (then located in the Koreatown area of Los Angeles) on Sept. 8, 1964, started as an Industry Credit Group clerk, moved over to maintaining membership records, then to accounting in 1983, where she has been ever since.

“Throughout my time here, some things have changed and others haven’t. When I started at CMA, the groups were different because we didn’t have computers. We had to do our work on a typewriter. We copied our reports and group information on a Xerox machine and passed them around the office to share data amongst our staff. Computers have made my life (and job) much easier. On the other hand, the Group meetings themselves were about the same. Group members discussed information on their delinquent accounts in meetings and lunches back then, and still continue to do that,” Lloyd said.

Having only worked part-time jobs prior to coming to work at CMA, Lloyd says that some of her most fond memories have come from the family atmosphere that’s been cultivated while working at CMA. “I’ve appreciated the support over the years that I’ve received from my co-workers. We have shared life and work experiences, and many of them have become as close as family,” she said, adding that she met her husband Ed while he was running the mailroom for CMA from 1976-1992.

The CMA staff participated in a surprise celebration of Lloyd’s amazing feat last Friday, and we’re happy to report that Lloyd has shown no signs of slowing down.

cheryl lloyd

U.S. International Trade Administration to Offer Educational Resources to CMA Members

Credit Management Association® announced that it has entered into a strategic partnership with the International Trade Administration (ITA) of the U.S. Department of Commerce (DOC). The Memorandum of Agreement (MOA), titled the “U.S. Trade and Investment Expansion Partnership,” will help credit and risk management professionals gain access to educational resources needed to expand their businesses nationally and globally.

The agreement, which represents a relationship between CMA and the U.S. Department of Commerce, will promote international trade to CMA’s members by increasing awareness of the economic benefits of exporting, and educating them on trade activities as a job creation and growth strategy. As part of the agreement, CMA will work with the DOC to increase trade and business investment awareness among the U.S. business community, emphasizing the small- and medium-sized businesses that make up CMA.

Through this program, CMA and the DOC will jointly develop a series of educational webinars on topics such as the importance of trade and business investment and associated benefits to the economy, export and business investment opportunities, and ITA’s role in opening foreign markets to U.S. exporters. Additionally, this partnership creates the platform to engage in a dialog between CMA and the DOC. The program expands upon the resources of another CMA-sponsored service, the Global Trade Credit Consortium, which offers assistance for companies that sell internationally by providing access to letters of credit, international collections, banking resources, credit insurance, international credit reports and education and training.

“In this global economy, CMA is constantly evaluating which programs and services it offers that will help our members the most,” said CMA President Mike Mitchell. “Participation in this project furthers CMA’s programs such as the Global Trade Credit Consortium which encourages the economic growth of its members and other small and medium-sized businesses, and gives them access to some high-powered government resources on these topics. CMA is helping its members to better understand how to navigate and effectively compete in a global marketplace.”

“The function of the ITA is that it strengthens the competitiveness of U.S. industry, promotes trade and investment, and ensures fair trade through the rigorous enforcement of U.S. trade laws and agreements. ITA works to improve the global business environment and helps U.S. organizations compete at home and abroad,” said Eddy Sumar, CMA Director of Educational Services. “The goals of this U.S. Trade and Investment expansion partnership are to increase the economic benefits of trade; educate the public on trade activities as a job creation and growth strategy; to create general awareness of ITA and other government resources, and encourage U.S. businesses interested in exporting and foreign businesses interested in investing in the United States to seek the assistance of ITA. I can’t wait to announce some of the great training programs that we have planned.”

“In the coming months, CMA members will be reading more about these developments via CMA’s social media sites, blog, newsletter and other communications. I am very excited about the growth possibilities of this program,” Sumar added.

These educational sessions will complement the nearly 100 annual seminars, webinars, courses, conferences and training sessions that CMA offers. For details on other offerings, visit

What’s on Your Tool Belt?, by Michael C. Dennis

Michael C. DennisWhen I earned my MBA, I learned new skills and added them to my tool belt. Then, I got my first job as a collector and found I needed an entirely different set of tools. CMA offers a variety of educational options that will provide you with some new tools…new ways to think about how you might solve a problem or approach your work differently. When you attend a webinar/seminar/class, think about how you can apply that knowledge to address real-world problems. I am convinced that the ability to effectively apply skills and capabilities (tools) to address new challenges is critical to your success in any job.

Also, for those of you looking for employment, my experience both as a job candidate and as the hiring manager has been that the applicant who can successfully describe how their current talents can be applied to the new task, challenge or position automatically becomes worthy of further consideration.

What’s the biggest factor you consider when hiring a potential new employee, or the one you think was the biggest factor in you getting hired in your job? I welcome your feedback.

Michael is the author of the Encyclopedia of Credit (, 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.

If It Ain’t Broke, Fix It Anyway, by Michael C. Dennis

With the so-called “information age,” the business landscape is very different than it was 10-15 years ago. Lots of things are happening faster than ever before: speed to market, speed at which your customers demand information about your product, venues of where your products are sold, decreased budgets (read: do more with less resources) and more data than ever before now available about your customers, and that just scratches the surface.

The conventional wisdom is not to change anything until you are forced to do so, but sustained competitiveness can only come from improved productivity. Improving productivity requires change. Unfortunately, no matter how good or how well-reasoned or how well-documented a proposed change might be, some people on your team will resist it anyway.

In this changed world, it’s necessary to completely evaluate everything you’re doing as a company and be ready to answer the WHY question: “WHY are you doing this task, and how does it add to the whole project?” If you cannot answer the question, it’s time to let go of that project in favor of one that does have an answer. “We’ve done it this way since before I was here” no longer is a good enough answer.

As a manager, lead by example. Change is not easy, but when your staff sees the benefits firsthand of process evaluation, though it may be hard for them to adapt, this evaluation process will (slowly) find its way into your corporate culture. Remember, it’s all about working smarter, not harder.

Have you had any experience in your organization with process changes? We’d love to hear your stories.

Michael is the author of the Encyclopedia of Credit (, 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.

Credit Manager Lessons Learned from Watching the World Cup, by Michael C. Dennis

Like many people, I’ve been watching the World Cup soccer matches (time permitting). For whatever reason, I’ve been trying to draw insights from the competitions that are applicable to the workplace. Here are a few I’ve come up with:

  1. It pays to be a winner
  2. Teamwork is critical to your success…
  3. …So is having a good game plan
  4. Don’t become overly reliant on your star performers
  5. Even the most unlikely members of the team can become superstars
  6. Inappropriate behavior can result in red cards [or pink slips]
  7. We have to think more globally
  8. The best teams have the best coaches
  9. Winning is always a team effort
  10. Sometimes, it pays to be aggressive

In sport or at work, there are many things you can accomplish if you remember this: everyone on the team has the same GOOOOOOOOOOOOOOOAL.

How do you choose to manage your team? As always, I welcome your feedback.

Michael is the author of the Encyclopedia of Credit (, 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.

Maximizing Your Ability to Collect, by Sam Fensterstock

One of the most frequently asked questions AGA gets from our clients is “how do we capitalize on our ability to collect from our customers?” Our answer is always the same: to be successful in maximizing your cash flow and reducing write-offs you must have three critical policies in place:

1. A Defined Credit Policy – While most companies have defined policies for best practices when it comes to employment, security and many other facets of their business, many companies we speak to do not have a clear policy when it comes to granting and reviewing credit . If you want to get paid after you have delivered your goods or services, you need to made good credit decisions when you decide to engage your customer. If you have not, your chances of collecting, if there is a problem in the future will decrease significantly. What your credit policy should be? Well, that is something that is hard to answer because it needs to be industry and company specific. However, best practices say it should be based on factors such as company risk tolerance, industry standards, gross profit margins and your internal risk assessment capabilities. The bottom line, a good credit policy will help you minimize your risk while maximizing your profitability. The acquisition of all pertinent information about a company such as a fully executed credit application (with verbiage that allows you to add interest and collection fees), financial statements, industry credit reports, trade data as well as a personal guarantee with home address and cell phone information should be a rule of thumb to most credit grantors.

2. A Defined Collection Policy – Just like with your credit policy, your collection policy should be specifically defined, documented and if possible, best practices recommends the use of an order to cash technology solution to help automate part of the collection process. No matter how your credit & collection department is set up, a pre-determined collection strategy that triggers a set of calls and e-mails with specific grace periods based on promises to pay should be deployed. To maximize collection results, the ratio of customers to collectors must also be taken into consideration, given your technology environment. If you’re in a fully automated collections environment you may be able to do more with less, compared to a manual collection process where you may need more collectors to handle the same amount of customers. As we all know, the sale is not complete until the money is in the bank and a defined collection policy will help ensure that your DSO and write offs are in line with company expectations and industry standards.

3. Having Defined Collection Placement Policy and a Strategic Collection Outsourcing Partner – No matter what kind of credit and collection policies you have in place and even if you have state of the art order to cash technology solution deployed, at some point, some customer will ignore all of your all internal collection efforts and not pay you. This is when we believe you should engage with an outside 3rd party collection outsourcing provider. Determining the “point of no return” with your customers is critical. Your collection placement policy should be specifically defined, as it has a direct correlation to your collection outsourcing partner’s ability to successfully recover what you’re owed. Remember, the older a receivable gets the harder it is to collect, so if you want to maximize cash flow from your aged receivables, you don’t need to “beat your customer to death”, just place them in a timely manner and let your partner do their work and you will see more cash come through the door. A proactive and professional approach will also assist in the possible re-acquisition of your customer.

Also, when choosing a collection outsource partner there are several things you should consider such as;
• Is the agency certified by the International Association of Commercial Collectors?
• Is the agency certified by the Commercial Law League of America?
• Does the agency have appropriate bond and liability coverage?
• Does the agency have web based reporting tools that provide you recovery analytics and 100% visibility into their collection efforts?
• Does the agency have the technology capabilities to integrate with your order to cash platform for automated placements?
• Does the agency provide a competitive rate for their services?
• Does the agency have a good reputation in the market?
• How many years has the agency been in business?
• Can the agency provide multiple references of companies who have been customers for more than 5 years?

Choosing the right outsourcing partner is critical in helping maximize the recovery of lost funds. Why is this so? It’s simple, if your company is earning a net profit of 5% and you write off $25,000 you will need and additional $500,000 in sales to offset the loss. In the long run, the success of your collection outsourcing partner can have a tremendous impact on your bottom line.

Sam Fensterstock is Senior Vice President, Business Development,  for AGA, a leading commercial collection agency based in Melville, NY. He can be reached at (631) 425-8800 or

In the Dark, by Michael C. Dennis

Your company’s pricing is predicated on certain assumptions about risk mitigation, payment delinquencies and bad debt write offs. Even with customer financial statements in hand, the credit decision can be complicated and the answer may be unclear. Without customer financial statements, you are truly in the dark about the amount of credit risk you are accepting.

We all recognize how limited a credit evaluation must necessarily be without customer financial statements to evaluate.  I am not suggesting that you should never make decisions in the absence of customer financial statements. Instead, I’m suggesting that if you must go into the dark, do so with your eyes wide open.

CMA offers some tools that can help “shed some light” on that amount of risk.  By utilizing the reporting services that CMA offers, such as those by D&B, Experian and Equifax, plus its own anscersX reports, anscers RFI service, and industry credit groups, you will get a more complete picture of the factors that could affect the amount of risk your company would want to take on.

I never like to fly blind. How about you?

As always, I welcome your feedback.

Michael is the author of the Encyclopedia of Credit (, 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.

How More Data Can Help You Save Time and Money, by Larry Convoy

I don’t know about you, but I’m all about doing things as efficiently as possible.  Efficiency saves me time and money, and allows me to get more things accomplished. Sometimes I have to do an extra step or two at the beginning in order to implement the efficiency, but when I do, I know I’ll reap the benefits in the long run.

At this month’s group meetings, all members will be asked to fill out a short survey expressing their company’s position on contributing their AR to the CMA and NACM data bank.  The survey should take less than 2 minutes to complete, and your answers could provide an opportunity to save time and money.

When I first started working at CMA, a time when Ronald Reagan was President and the Clippers were actually the worst basketball team in LA, there were 2 options for contributing data. The first was a tape with rigid guidelines that had to be in one format. The second was OCR, drawing little circles in boxes to indicate what the balance, aging and terms were. Neither were user friendly, and it was difficult to get companies to provide a second submission. The incentives were not very appealing either.

Today, you can conduct business from your cell phone, the Kings are going for their second Stanley Cup and contributing AR can be done from virtually any computer system.  The benefits have improved as well: you will save time by never having to answer an RFI nor fill out a past due or meeting review report. You will save money by having an industry-specific data bank at your disposal 24/7, reducing your dollar commitment to third-party reporting agencies.

What we used as our sales pitch in the early ‘80s still applies, “To get information, you have to give information.”  It has just been made easier and more beneficial to you and your company.

Encourage your management to get on board.


Larry Convoy
Supervisor-Industry Credit Groups

My Favorite (Hidden) Advantage to Joining an Industry Credit Group, by Michael C. Dennis

There are many benefits associated with joining an industry credit group. In my opinion, one of the best reasons to do so is to make certain that your company’s tolerance for credit risk is similar to other companies selling to common customers.

I am all in favor of leading rather than following, and I fully support the idea that credit decisions need to be made independently and in a manner that does not violate antitrust rules. However, I assume and expect that I will benefit from knowing how other creditor companies have assessed the risk associated with extending credit to a common customer.

I think the opportunity to understand how other creditors evaluate/ assess credit risk is probably the most under-appreciated benefit of credit group membership.

Credit Management Association offers more than 40 industry credit reporting groups. In my career, I’ve been in several groups.  As a result of what I have learned from others, I’ve saved my employer tens of thousands of dollars over the years. How have credit groups helped your company? I welcome your feedback.

Michael is the author of the Encyclopedia of Credit (, 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.

The True Cost of Hiring Good Credit Professionals, by Michael C. Dennis

A friend of mine was told by a headhunter that she was overqualified for a position.  What does it mean?  Usually, it is code for: (a) you are too expensive or (b) you are too old.  If we give the hiring company the benefit of the doubt, we are left only with (a).

In my experience as a consultant, many companies fail to understand the potential costs of a bad hiring decision in credit management, which include but are not limited to:

•         Higher bad debt write offs [not risk averse enough]
•         Missed sales opportunities [too risk averse]
•         Higher DSO and A/R carrying costs [inadequate follow up, or poor negotiating skills]
•         Damaged goodwill [with customers, and internal customers such as Sales]

There is an old saying:  If you think it is expensive to hire a credit professional, wait until you hire an amateur.

Michael is the author of the Encyclopedia of Credit (, 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.

It’s Frustrating, by Michael C. Dennis

Credit managers, are you involuntarily contributing to this situation by lack of communication?

With some customers, getting the purchase order is a long process that involves significant work by your salesperson.  It is easy to understand how frustrating it may be if at the end of a long process it turns out that the company is not creditworthy.  There is no simple solution to this problem, but the credit department can help by working with sales as early in the process as possible and by evaluating the creditworthiness of the company and sharing information and insights with sales.

I know some of you will agree that is not always possible to offer a definitive answer about a potential customer’s creditworthiness until you have completed your review process.  However, the fact that you provide any guidance to your sales department in advance is better than sitting on your hands and waiting for these orders to be submitted.

I choose to work with my sales team to help alleviate frustration. How about you?

Michael is the author of the Encyclopedia of Credit (, 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.

What’s in a Job Title, by Michael C. Dennis

A friend of mine recently added something new to the signature line on her emails.  They now read:  Dana Keating, LCP.  You know how some people [including me] are afraid to ask questions for fear of showing weakness and ignorance.  Well, I finally asked about her new LCP designation.  Dana told me I am also entitled to use it, and to “tell a friend.”  LCP is the acronym for: Lowly Credit Professional.

So my friends, please consider yourself told.

What’s in your job title?

Michael is the author of the Encyclopedia of Credit (, 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.

Don’t Delay Dealing Decisively, by Michael C. Dennis

I was just re-reading my recent blog post about career limiting mistakes, and thought I’d add this insight that applies to anyone who is a manager.

Don’t delay difficult discussions with your subordinates relating to performance or behavior problems. Doing so tends to de-motivate and demoralize other members of your team who are usually watching carefully, and will be quick to note when such a problem is not managed effectively. Managers can lose the respect and confidence of other direct reports if they delay dealing decisively with problematic employees.

In this case, I’ve used alliteration to make a point: if one bad apple can ruin the whole bunch, don’t let that bad apple be you.

What trait do you believe makes the most ineffective manager? I welcome your feedback.

Michael is the author of the Encyclopedia of Credit (, 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.

Karen Schmidt Named 2013-2014 CMA Mentor of the Year

Karen Schmidt has been named 2013-2014 CMA Mentor of the Year
Karen Schmidt has been named 2013-2014 CMA Mentor of the Year

Karen Schmidt, who has been named Credit Management Association’s 2013-2014 Mentor of the Year, has truly been an asset to the association and is the quintessential volunteer. Schmidt has served on the CMA Membership Committee, Service Committee, Honors and Awards Committee, Chair of her Industry Credit Group and the CMA Board of Directors.  Aside from all that volunteering, she’s found time to mentor countless people in the credit industry. In fact, the Honors and Awards Committee received numerous nominations for this recipient, all from individuals she has mentored.  They describe her as a “great source of information and support”; “Always available to assist when needed”, and “Her patience, knowledge and outstanding work ethics make her a stand-out in her field.” Aside from her loyalty to the Credit Management Association, Schmidt’s loyalty extends to her employer, whom she’s been with for 43 years.

My Favorite Payment Excuses, by Michael C. Dennis

My Favorite Payment Excuses

The check signer is:
…on vacation
…on maternity leave
…not taking calls from creditors
…away from his/ her/ its desk…

…Dying or Lying

Payment is:
…in the mail
…lost in the mail
…going to be mailed
…Gone with the wind

In order to issue payment to you, I need:
…an RMA
…an original invoice
…an account statement
…a signed original invoice
…our purchase order itself
…copy of our purchase order
…a credit for xx% of the invoice amount
…A Miracle

What are your favorite excuses?

Michael is a consultant, and the author of “Credit and Collection Forms and Procedures Manual”

Big or Small?, by Michael C. Dennis

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”

Credit’s Role in Customer Visits


It seems that, in an age of heightened travel concern, everyone knows someone or has their own story of an airport security nightmare, whether from an overzealous TSA agent or an innocently misplaced bottle of mouthwash. In general, increasingly stringent security policies have removed a bit of the sheen that once characterized the world of air travel. “Traveling today is certainly no glamour gig. It’s a lot of work,” said Susan Delloiacono, CCE. However, she added, braving the crying babies, metal detectors and parking fees may be just the trick for credit professionals looking to enhance their relationship with a customer and, in the end, generate a solid, tangible benefit in the form of quicker customer payment.

Delloiacono, a long-time credit professional and expert on customer visits, recently delivered a CMA-sponsored teleconference, entitled “Customer Visits: Credit’s Role,” where she outlined the many benefits of visiting a potential or existing customer. “This is the best weapon in your credit arsenal when you think about knowing your customer, having them know you,” she said. “You become a human to them. And you become accessible. When there’s a problem, you get the first phone call.” In addition to bringing credit departments and their customers closer together, Delloiacono argued that customer visits can also bring other company departments in on credit’s mission as a sales generator and customer service organization. “Our purpose is to develop a win-win customer service strategy that really looks beyond just the credit department,” she said. “Early in my career I thought the world revolved around the credit department, and clearly, as we grow, we realize that although all roads go through credit, we need to understand other members of our company, other members of our team and their touch-points with the customer.”

“When you go to visit a customer, it not only brings you closer to them, it also brings you much closer to your sales organization,” she added. “You really adopt that team approach.”

As with any well-considered business venture, Delloiacono noted that proper planning for a customer visit is essential and offered tips about what to prepare for when visiting a buyer. She also outlined the different considerations that need to be made depending on the type of customer visit, whether it’s at your office, theirs or in a neutral territory like a trade show or whether it’s a pre-sales customer visit, a maintenance visit, or a problem solving visit.


Survey Says: Sales Can’t Override Credit, Both Work Best as a Team

According to a recent survey, “In your company, can a sales team overrule a decision by the credit department?” the
majority of respondents noted that sales cannot overrule their department’s credit decisions, with 60.7% of participants answering “No.” However, while a still sizeable 39.3% answered “Yes” to the survey question, many of these respondents noted that the occurrence of a sales override over credit is exceedingly rare and happens when a member of a sales team or upper management has a relationship with the customer in question.

The type of account upon which sales tends to override credit is also similar among participants, with many of them noting that, in many instances, sales will override a credit department’s decision regarding marginal accounts. Many “yes” respondents also noted that sales overrides cannot be done whenever sales finds it necessary; most of them require the approval of a vice president or officer of the organization and some also require that the customer meet certain previously agreed-on creditworthiness criteria.

There were some participants, however, who noted that, in their opinion, sales can often function and overrule a credit department decision without any prior approval whatsoever. “The local sales managers or the general sales manager can and do override credit decisions with no impunity or consequences,” said one respondent. “Creditworthiness is not a concern, only the sale.” When asked to characterize their credit department’s
relationship with sales, the aforementioned respondent noted that the relationship is “good, as long as sales gets their way.” This sentiment was echoed by a number of other respondents whose credit decisions can
be overridden by a sales team, with many noting that their relationship with sales is “combative” and “adversarial.” In one instance, a participant simply responded by asking, “What relationship?” Another respondent, who answered the question positively, noted that sales’ decisions to override have taken their toll: “After 20 years of dealing with marginal credit and tons of collection problems, I am rundown and about ready to give up and retire.”

A large portion of respondents noted that, while sales does have the ability to override a credit decision and make a sale, for the most part, the sales and credit teams work together to come up with an agreeable solution to the problem. “The main objective is to find that unique balance between sales and credit,” said one respondent, who also noted that, at their company, “There is mutual respect between credit and sales. I am very fortunate to have the support of sales, as well as upper management, especially in this economic climate we are currently working in.” The economic climate was also cited as a reason for why, in the last several months, many sales people have stopped overriding to make sales and taking greater heed of what the credit department has to say. “It is not happening as much as it used to happen,” said one respondent. “Economic times are curbing their recklessness.”


Are You Viewed As a Leader?

Company executives are fully aware of the impact sales has on their company’s future, but many of them might not be so aware of how close accounts receivable (A/R) relates to the organization’s sustainability and potential for growth. “It’s really important to show them how credit can affect them,” said Susan Archibeque in a recent CMA-sponsored webinar entitled “Credit Leadership.”

Archibeque noted that while sales may have the most obvious tie to a company’s position, it’s important for the business’ decision makers to understand how important credit is to help the company make more sound strategic
decisions and also to increase the profile and clout of the credit department within the organization. Archibeque noted that the relationship between credit and sales should be an equal and mutually-beneficial one. “The only way that we can change perception of credit is to have a positive experience with sales,” she said. “It’s important that sales and credit are on the same committee.” Archibeque even noted that, in some instances, sales should be tied to credit and suffer the consequences when one of their customers fails to pay.

Before any of these options are put into place, however, Archibeque noted that a credit department needs to take stock both of how they’re performing and how they relate to the rest of their company. “We need to look at your company internally,” she said. “Look at the impact A/R is having. You need to know where improvements need to be made… to change the philosophy of credit in [your] organization.” Archibeque also added that it’s important for credit staff to be involved in the company’s future as much as its present situation. “You need to be on the strategic planning committee so you can be in on your company’s growth,” she said. “You need to know where your company’s going in terms of expansion.”