According to a recent article by CMA partner Credit Today, a survey of the participants in Industry Credit Groups throughout the United States (including some CMA members) explained that their overall investment of under $2,000 per year in an industry credit group returns over $250,000 in cost savings (yes; you read that correctly). That’s an investment that is hard to pass up. This cost savings is up from the last survey, which was conducted in 2012.
For those who don’t know, Industry Credit Groups are simply a group of companies that share customers in a common industry who meet either in person or virtually to share factual credit information about their common customers.
According to the article, it can be a daunting task to try to make sense of all the data out there about your customers. Membership in a credit industry groups is so valuable because it provides a mechanism for socializing the data surrounding your customers, giving insights and context to it. The data socialization aspects, along with greater efficiency, make Industry Credit Group membership compelling, even for those that may only share a minimal number of customers with the other group members.
According to the survey, a very large majority (81%) of credit organizations are members of credit industry groups. Additionally, most groups (86 percent) do not share payment data outside their group.
As a whole, the total yearly cost associated with industry credit group membership is rising, although the cost of credit reports is falling, but despite these rising costs, industry credit groups are viewed as providing more value across the board than information from the credit reporting agencies.
To read the entire article, click here (note: you must be a Credit Today subscriber to access).
To read more about the Industry Credit Groups that CMA offers, click here.
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!