Magazine article Business Credit

The Changing Role of the Credit Professional?

Magazine article Business Credit

The Changing Role of the Credit Professional?

Article excerpt

Ask any business person what they consider to be the primary responsibility of the credit management professional and the most often heard response would be to "increase sales and reduce bad debt losses." Until about ten years ago, that same answer would have been given by nearly every credit professional as well.

However, factors influencing the business environment require changes in the roles business people play. For instance, look at the increasing importance to the revenue stream that treasury management has today compared with its historical place in American business. Many companies today attribute much of their success to the active management of "non-core" revenue. American business is always in a state of change. However, it seems that today business is feeling greater pressures than ever-from consumers, the competition for quality and price, the pace of technological development, and financial performance.

The Credit Professional's Many Hats

Facing the evolution in the business scene, today's credit professionals must explore how their roles must change. Are they still responsible for increasing sales and reducing bad debt losses? Of course they are, but that's not enough. Today's credit professional is responsible for the largest, most dynamic asset on the corporate balance sheet. The credit professional is now a business strategist, a business partner to internal clients and a business partner to external customers. Most importantly, the credit professional should be the logical survivor of the "assault on management" tactics that companies are using as a placebo to heal themselves of the inefficiency and excesses of the eighties.

Uniquely Positioned for Survival

Why do I believe the credit executive should be the survivor? Think about it. There is no other job in the company whose candidate must deal with both internal and customer senior management, partner with sales and marketing, understand the internal and customer banking and financial relationships, work with company accountants as well as with customer financial advisors, have an understanding of commercial law, have a thorough knowledge of a variety of systems within the organization to be able to react prudently to customer problems, and analyze vendors to be sure they will fulfill their commitments to the company. There is no other job in the company whose function requires the executive to meet face-to-face with corporate competitors to discuss customer, industry, business and economic circumstances, and then use that information scrupulously to help his own firm.

As a business strategist, the credit executive has a top-line impact. Sales maximization is the goal. Coupled with that responsibility is the credit executive's power to impact the bottom line through profit maximization.

No other person in the corporation acts as the warden of sales terms. This critical component of business policy is not only in place to maximize cash flow based on the criteria set by sales/marketing and treasury management, but to keep the company out of anti-trust problems. Finally, as a business strategist, the credit professional has the knowledge and foresight to assist other company managers to discover markets for distribution.

Since most customer related problems wind up in the lap of the credit area to reconcile, the credit professional, by default, often assumes the responsibility for identifying internal system or process problems throughout the organization. …

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