Magazine article Business Credit

What Makes a Good Credit Manager? (Selected Topic)

Magazine article Business Credit

What Makes a Good Credit Manager? (Selected Topic)

Article excerpt

What is the mark of a good credit manager? Is it their ability to accurately assess credit risk, their success in collecting outstanding invoices, or even their mastery of relationship building?

Several months ago, Credico, (part of Coface UK, the credit solutions provider) was asked to help judge the Magazine Credit Manager of the Year on behalf of the Periodical Publishers Association (PPA). As we looked through the nominations, it became increasingly apparent that the best credit managers needed to be adept at more than just collecting money owed by customers or refusing them credit. In fact, the event prompted a lively discussion about what constitutes the model of a modern credit manager, before the winner (Girish Padhiar, of Emap Spectrum) was eventually chosen, While our conclusions may not be definitive, they do represent a fairly comprehensive guide to the demands of the job.

Personal qualities

Chasing customers for payment is obviously not for the fainthearted. However, while the description "the iron fist in a velvet glove" might be applicable to many credit managers, the best clearly offer something more: perseverance, for example, to chase unwilling payers; a sense of humor to respond to the excuses of the "check's in the post" variety; and diplomacy to resolve invoice disputes with major customers.

And it is even easier to list personal characteristics and behavior, which would spell disaster in any credit control department. Gullibility would certainly be the Achilles Heel of anyone working in credit management, but on the other side of the coin, cynicism is equally unhelpful when it comes to developing a good relationship with customers. Over-familiarity with customers inevitably leads to problems should they eventually default on an invoice, while displays of bad temper, or even shouting is regarded, within my company at least, as the worst crime a credit manager can commit.

Motivate the credit control team

The best credit managers are able to motivate the people around them and make them feel valued. The high staff turnovers which plague many credit departments inevitably cause disruption, making it difficult to adopt a consistent approach towards customers and forcing managers to bear the expense of recruiting and training yet more credit controllers.

For example, the winner of the Magazine Credit Manager of the Year had developed a team with an average of six years' experience and had lost only two staff in the previous three years. Staff were recruited as school leavers or second jobbers, trained as credit controllers and encouraged to study for ICM qualifications. The result was a settled, well-motivated team who could offer continuity of service within the business and to customers.

Establish watertight credit control processes

For the best credit managers, it is not enough to simply process invoices. They should have a good working relationship with the sales department and be involved in the sales process from the moment a customer is given credit terms. No matter if it is the greatest sales force coup in years, a sale is not a sale until it has been paid for. The credit professionals recognize the best way to minimize the risk of extending credit is to conduct a thorough check on the customer through established ratings agencies, rather than trusting the instincts of a sales representative more concerned about their commission!

Having agreed credit terms, the model credit manager will monitor clients and establish good business relationships with them, including taking the trouble to visit their offices and understanding the peaks and troughs in their business cycle. …

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