Leveraging a Tough Economy to Improve Risk Management: How Credit Managers Can Take Advantage of a Difficult Economic Environment to Implement a Consensus-Building Credit Policy. (Selected Topic)
Colina, Juan, Business Credit
The current economic downturn offers credit managers an opportunity to exercise their influence and implement better credit policies on behalf of their employers.
For much of the go-go decade of the 1990s, credit managers saw their job of minimizing risk consigned to the back burner. As corporate strategists focused almost exclusively on growing revenue at any cost, companies grudgingly accepted higher levels of bad debt in exchange for marker share. Often, credit managers were discouraged from following existing credit policies for fear of losing potential sales.
Everything has changed since the recession of 2001, which, along with a series of high-profile corporate bankruptcies, caused corporate strategists to rethink their growth strategies. With many companies now forecasting flat sales for at least the next two quarters, their focus is once again on profitability. As a result, credit managers find themselves with an opportunity to implement new credit policies and procedures that will have a lasting and positive impact on the bottom line--even after the economy rebounds.
To be sure, the softer business climate has not given credit managers authority to unilaterally turn off the credit faucet to questionable customers. Credit decisions that surprise sales personnel already grappling with difficult market conditions run the danger of igniting internal turf wars and alienating important customers. Rather than acting rashly, credit managers can enhance their reputations and careers by building consensus and following these six strategies.
1. Think Strategically
In the new economic environment, the credit manager's overriding responsibility is to develop a risk management protocol that aligns the company's credit policy with its overall business strategy. In a profit-over-growth environment, this means maximizing the …
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Publication information: Article title: Leveraging a Tough Economy to Improve Risk Management: How Credit Managers Can Take Advantage of a Difficult Economic Environment to Implement a Consensus-Building Credit Policy. (Selected Topic). Contributors: Colina, Juan - Author. Magazine title: Business Credit. Volume: 104. Issue: 9 Publication date: October 2002. Page number: 62+. © 1999 National Association of Credit Management. COPYRIGHT 2002 Gale Group.
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