Thursday, February 07, 2013

The Credit Manager

For more than a decade, I have worked as a Credit Manager.  This particular job is a great fit for me, but it's not for everyone.  On the odd chance that the reader might be interested in becoming a Credit Manager, or if you're just curious about the job, this post sets out to describe the job.

Not every company has a specific person set out to be the Credit Manager, but someone has to do it.  This is because every business takes a certain risk in selling to people.  Let's be clear; some folks will try to steal from you, and some will have very different ideas about their responsibility to pay the way you expect.  So, you'd expect a Credit Manager to be careful, maybe even a bit paranoid, about giving credit to someone.

But all business needs Sales.  And if you won't grant credit to someone, they will often go buy from someone else, and if you are too cautious you'll lose business you need.  Also, there are a lot of customers who may look risky, but if you give them credit when others won't, they will respect you and give you more business out of loyalty.  So it can be tricky.

As a result, when a company has a Credit Manager, that person spends their time basically making sure new customers are worth granting credit to, that existing customers have the right credit level, and of course, chasing the customers who owe money.

There are a lot of ways to do this job, but you should make sure you have a credit policy in place before you even start. That way, you can stay organized, if your business ever goes public it will be easier to be SOx compliant, and you can honestly tell your customers that you don't play favorites.   The policy should define what you need from a customer to make a credit decision, what determines the limits, and when those limits may be revised.

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