What’s the Link Between Communication and Credit Management?
Ultimately, having a credit policy only works if people know about it; what it covers and what the rules are. Put another way, why have a policy if staff members don’t know what is, or what it means? After all, it’s not a secret. So, the next step after you get a credit policy in place is to let your organization’s team know about it. This is the role of the credit team. They should meet with owners and/or a senior manager, to get the buy-in and sign-off, if that has not happened already. Once this is done, the next step is to bring internal stakeholders up to speed. The credit team should ensure that everyone knows (especially sales) what it takes to get a new account approved (i.e., application, credit history/reports, maybe financial information). What does it take to release an order on credit block? Does the staff in the warehouse know what to do and who to contact to get approval to release a blocked order? The credit team will have to take the lead in communicating the policy to other staff members and stakeholders. Also, the credit team should be aware that this will not be a one-time effort; it will be an ongoing process.
Communicating credit policy is part of a larger role that the credit team has in every business. I believe that credit teams are most successful when they are involved with the business. What I mean is that I see the credit department as a part of the business, not separate from it. To be successful, credit practitioners should meet regularly with sales to go over results, resolve issues and problems, talk about opportunities and plans the sales department has to grow volume. Credit practitioners should ask for time on the sales meeting agenda to provide updates on things like AR (Account Receivables) performance. Report what is going on with DSO, past due %, and bad debt provisions. Be transparent and explain what the credit practitioners are doing and why they are doing it. What if the customer has a problem? Let everyone know that the customer can talk to the credit personnel, anytime. Offer to pre-qualify leads and to help vet sales contracts before they are signed.
The more credit practitioners are involved in an ongoing manner with the business, I believe, the more successful the business will be. To achieve this goal of being involved in the business, credit staff should communicate with stakeholders, as much as possible.
Do you have questions about how to proceed? Don’t hesitate to contact us. The Credit Institute of Canada will direct you to the right resource.