Credit Management Must Be Top Priority

Many sales are made because the right amount of credit was extended at the right time. Conversely, many deals are lost for lack of an agreeable credit policy.

Therefore, credit management must be top priority.

The solid credit management process in a company will benefit every area of your business. From sales to marketing, fast and savvy credit decisions keep the gears of the entire machine moving smoothly and cash flowing more freely.

That’s why company organizational structure is so important.

Many companies place their credit and collections department on the other side of the building from everyone else. They get compartmentalized right out of the thick of things. And it can be detrimental to the whole.

Too much distance can keep information from flowing to the people who need to have it. By keeping credit and collections in close proximity, the company has a whole can better understand its customers. Consider the following:

The history of a customer relationship is critical to unraveling the reasons behind non-payment. Moreover, customer history can help predict future business behavior. Each department has its own interactions with your customers, unique to that department depending on what they handle for the customer. When those experiences are shared with other departments, a more complete picture of customer health emerges.

As an example, the sales department may physically see things in your customer’s business that your credit department would never see: an empty warehouse or decreased foot traffic through the store. And from the other angle, your sales team may be unaware that his/her customer’s payments are growing further and further apart. These are predictive behaviors that effect both departments. Armed with the knowledge, they can collaborate to solve a problem before it actually becomes one.

By keeping your credit and collections department located within sharing distance of other departments, critical information can help wave red flags in time to make a difference.

Have you structured your operations optimally?