I Quit

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First and foremost, the point of this article is not aimed at having a go at anyone or any company / organisation but, it is aimed at highlighting the importance of credit management and supporting and developing a credit control team as well as what it can add to the bottom line. 

So, the title states I quit, and I want to talk about credit management? Stay with me! 

I wanted to share my experiences as a Credit Manager who was tasked with driving improvement to processes, reducing debts etc. 

It is a fact the a well-run, well supported Credit Management Team will deliver results and pay for itself but, only if supported and invested in as well as motivated. 

The importance of Credit Management can not and should not be underestimated but, it is and one must wonder why. As mentioned, I was tasked with driving improvement and one of the first things to do in driving such improvement is to find out what the problems are in the first instance. 

In one of my roles; it was clear that the debt levels were too high due to queries, billing errors and lack of support for Credit Controllers, no credit policy, no terms and conditions and a blasé attitude towards credit risk.

Having dealt with the support issue, provided training and shared knowledge, it was time to set about the queries and billing errors. It was too easy to lay blame at the billing department as they were only billing what they had been told to, so, I dug deeper to find out where the issues really are. By and large it was customer identification, billing late and proving work had been completed. 

If I could address these issues with the support of senior management and departmental managers / directors, no doubt debt levels would reduce, DSO would improve, cash flow would improve and customer satisfaction would improve. Alas, others could not see the importance of getting it right at the outset or simply did not have the desire to drive improvement in their departments. More so when someone outwith their department was highlighting the issues! 

So, with no desire to improve, no support, no support for credit policy from senior management, it was a very difficult task to improve but, still, we managed to improve some processes and debt levels also improved.

Now we come to the value Credit Control can add to the bottom line and the cost as some seen it. Whilst trying to keep a team motivated, a team that was being pushed from pillar to post, asked to take on other department’s tasks etc. I was then tasked with reducing head count in Credit Control! 

If we look back to the start of this article and look at the issues and look at some of the improvements we wanted to make, we may have been able to reduce staffing levels but, as support was not given, process improvements were opposseed and issues that needed to be addressed were not, we could not afford to reduce staffing levels. But, what was cost of not reducing staffing levels? Well, that I guess is answered by saving X amount on salary which adds to profit through reduced costs. 

The bigger picture is, could we afford to keep staff or to put it another way, could we afford to lose them? To answer that, consider the following: – 

1.     What impact on the bottom line does bad debt have?

2.     What impact on the bottom line does late payment have?

3.     What impact on the bottom line does not addressing issues have?

4.     What impact on the bottom line does cutting a team in half have?

5.     What impact on the bottom line does not getting it right at the outset have?

6.     What impact on the bottom line does not supporting the Credit Control staff have?

7.     What impact on the bottom line does not supporting your Credit Manager have? Having considered the above, what is the true benefit of cutting staffing numbers in a crucial part of the business? Is there in fact a benefit or is it short sighted and actually costing more? 

I concluded it was short sighted, costly to the business and given the pressure to continually improve whilst having the rug pulled from under my feet, I as the title suggests, quit! 

The moral of the story and what I have tried to get across is that Credit Management, Due Diligence and getting it right at the outset are of vital importance. If they are not considered as such then don’t expect bad debts and debt levels to reduce. 

A well resourced and supported Credit Management Team is worth its weight in gold more so when it is properly resourced and supported by the powers that be not to mention a good Credit Policy. 

Please remember that if a Credit Management Team and a good Credit Policy has at its heart sound decision making, Credit Control has ‘control’. This point is often overlooked by companies that push every sale and ‘wait and hope’ for debtors to pay invoices on time. 

I hope this article come across as a shout out to companies to see the importance of Credit Control rather than a long-winded rant! Support your Credit Management Team and they will support the bottom line and improve cash flow which, after all, is the lifeblood of any company irrespective of size. 

Turnover is vanity, profit is sanity, cash is a reality and no business can survive without cash in the bank.

As ever, I welcome people’s opinions be they good, bad or indifferent!

© Jim Sleith

JMS Credit Consultancy ®

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