Are you good credit manager or a great one? A good credit manager is one who is able to put out fires, tackle problems as they arise, protecting against unnecessary financial risk and get at least something out of a customer who won’t pay their invoice. A great credit manager is proactively avoiding fires and disputes in the first place; simultaneously mitigating risk and using credit sales as a way to improve profitability. Everyone wants to be great at what they do, but it’s not something that just happens, it takes work. But stepping up your game is possible when you make an effort to exude the qualities of a world-class credit manager.
First up, let’s talk about your mindset.
OFFENSIVE VS. DEFENSIVE MINDSET
When it comes to anything in life, perception play a large role in reality and “If you change the way you look at things, the things you look at change.” In other words, if you want to change the results you are seeing at work, you may need to look at it in a different light.
HOW DO YOU PERCEIVE YOUR ROLE IN THE ORGANIZATION?
A good credit manager look at their role in the company as a defensive one; they focus on doing everything they can to ensure the company doesn’t take on too much risk and wind up with bad debt. Enabling credit sales and protecting the bottom line is generally the focus of a good credit manager.
A great credit manager on the other hand perceives their role differently; approaching things just as much (or maybe more) offensively as they do defensively. He or she is careful to minimize risk while also using credit sales as an opportunity to drive business and increase profits through strategic credit management.
To go from good to great, changing your perception is only half the challenge. The next part is making that change happen. A great credit manager uses carefully thought out policies and procedures along with carefully chosen software systems to open the door to success.
Next up, understanding credit data
Both good and great credit managers alike know the importance of credit data but the difference is your level of data accuracy, accessibility, and reporting you have.
A good business credit management professional knows the importance of data and information but spends an inordinate amount of time gathering and organizing spreadsheets. This leaves very little time for the analysis of that data and using it to change credit policies and collection strategies to improve overall performance.
A great credit manager is a data hound who has the ability to quickly access and analyze all sorts of data relating to overall performance of individuals, customers, and the department as a whole. This type of credit manager can easily access information and analyze it to see what needs to change within internal processes and procedures to increase overall success.
If you struggle with the ability to access and report on data it’s not necessarily because you don’t want to, we know that. The difference is that despite your desire, you simply do not have the right tools in place to access up to the minute data and report on it. Therein lies the difference between a good credit manager and a great one- reporting tools.
If you’re currently using spreadsheets, aging reports, CRM, and/or ERP to manage credit and collections information, you’ll never be able to access up-to-the-minute information as quickly as you need to. Great managers know that and have implemented credit management software that can make accessing, analyzing, and acting on credit information significantly faster and easier with features and automation such as:
CREDIT APPLICATION MANAGEMENT
Create and send credit applications to customers for complete. The credit app may be received via email or via upload to a secure customer portal. Upon completion the system will alert your credit team to review the application and take next steps. Business and bank references can also be maintained using Word documents and stored in the account’s documents folder for credit reference activities.
Identify the date of the last customer credit review and build alerts so that the system notifies you when customers require a follow-up review of their business credit.
BUSINESS CREDIT SCORING
Track credit scores from up to three external credit bureaus and file full credit reports in account documents folder. Custom credit score formulas can be configured using external credit bureau information, your own internal data, or a combination of the two. You can classify accounts based on credit risk with color-coding to alert you to high risk accounts.
Receive notifications for account credit reviews, keep track of credit scores, manage payment schedules, and define custom credit scoring formulas.
INSIGHTS & REPORTING
The dashboard for receivables management provides a snapshot of what’s happening with your A/R. Reports and views analyze financials, activities, accounts, and all aspects of your credit and collections. Review projected cash receipts, manage broken promises, and setup alerts to keep everyone informed. Define email-based alerts so everyone knows what’s happening and what they need to do next in the process
If you’re ready to get started, here’s a few more resources to help you along the way of becoming a better business credit management professional:
How to Develop a Credit Policy Plan
Credit Risk Management Guide
Accounts Receivable Software Buyers Guide
Credit and Collections Law for Accounts Receivable Professionals