Magazine article Business Credit

Credit Managers-Major or Minor Players in Overall Corporate Strategy?

Magazine article Business Credit

Credit Managers-Major or Minor Players in Overall Corporate Strategy?

Article excerpt

Credit managers play a key role in the setting of overall credit policies, determining credit risk on potential and existing customers, managing accounts receivable, collections and other functions usually associated with the credit department. Some companies confer a high degree of autonomy upon credit managers to manage the duties of their position without having to receive approval from higher-ranking executives for many decisions. But, what role do credit managers play in the overall financial risk and strategy formation of the company? The answer depends on the particular company in question, as a sampling of five credit managers recently revealed.

Setting Credit Terms for New and Existing Markets and Products

Credit terms are an integral part of a company's overall financial strategy. They have a direct impact on cash flow and overall sales, among other things, which factor into a company's level of financial vitality and profitability. Hal Wineland, CCE is general credit manager at Pendleton Woolen Mills, a manufacturer and wholesaler of men's and women's apparel and fabrics. He said that he has the authority to set credit terms and credit policy. Wineland noted that, while he does not play a major role in determining new markets or products, his authority takes place after upper management decides to go into a new market. Likewise, Dorothy Morris, CAE, CCE, CICP, director of credit of Wolverine World Wide, Inc., a manufacturer of footwear and apparel, said her input is, "Not in regards to if they're going to do it, but how we're going to handle it from the credit service aspect." Morris said her company is involved in a lot of product changes. During the deliberations on new product launches such as apparel, Morris said, "Very early on I would become part of a committee to identify the credit initiatives." Morris added that she is also a liaison for her company's credit staff in the UK and Canada. "We may get involved in reviewing credit exposure and risk (in markets and with specific customers) and formatting reports so they are all unified."

Mary Moore, CBA and Mike Bauler, CCE also detailed their credit-setting roles. Moore is credit manager of Carlson Systems Corp., a supplier of construction products. She provides credit and financial information on companies that are not currently customers, noting that she provides this information to sales to help them in selling to new customers. Bauler is corporate credit manager of McBride Electric Co., Inc., an electrical and data service contractor. Bauler said he is responsible for setting credit policies and also reviews and approves credit for all jobs over $25,000. He also approves contracts for larger projects and over sees the credit staff at branch locations. Even before a contract is signed on a project, Bauler noted he plays a key role. "I'm involved in contract negotiations and negotiating credit terms before we do the job."

Beyond Setting Credit Terms

Some credit managers, because of the overall skills they have acquired in credit, also get involved with providing advice on other financial matters. For example, Moore said she is sometimes tapped to provide financial information on potential acquisition targets. "When we're considering an acquisition, I analyze the company's financial background to determine financial stability." Moore also noted she is involved in her company's marketing into Mexico as her company embarks on a major southward expansion. "We're developing Mexican credit applications and getting involved with Mexican credit bureaus," Moore said, which includes a staff person fluent in Spanish. Bauler noted that he's also been involved in his company's increasing presence in a new market. "We're getting more involved in the telecommunications industry," he said. "I'm moderately involved in that process."

David Garere, CPA, CCE is VP finance credit and account settlement for Rich Products Corp., a manufacturer of nondairy icings and toppings and frozen dough products used by supermarket chains and restaurants. …

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