A Sale IS a Sale, irrespective...

Credit is a selling process

·        Is your Credit Management considered a ‘back-office’ function and part of Finance?

·        Do you measure its performance largely on DSO and Bad Debt ratio?

·        Are your Credit Management KPI’s focused entirely on working capital and cash management?

·        Does your senior Credit Manager/Director report singularly to the Financial Controller or Finance Director?

If your answer is ‘yes’ to any or all of the above, you are restricting Sales by around 15% and suppressing net profit margin by anything up to 0.5%.

Business and Credit specifically, accepts the adage ‘a sale is not a sale until paid for’ but I argue a Sale IS indeed a sale, irrespective.

Credit, sensibly engaged and empowered, has to be involved before, during and after a sale has taken place, effectively completing the sale with client payment. It must work hard for repeat and new business and deliver selective quality leads to encourage more profitable business and incremental sales. It must also take a lead in marketing business activities.

Credit is as much a part of the sale as the initial sales approach, quotation and order. Some 95% of B2B sales are on open credit and receivables account for more than 50% of a company's total assets.

Expanding the Credit Management role and granting it licence to breathe will deliver substantial incremental business volume, better margin yield, improved client targeting, enhanced client relationships, maximised use of client database, greater utilisation of credit line availability and hugely enhanced Sales and Marketing data flow.

Credit today must provide a company, its clients and its markets with a service designed to create, stimulate, expand, secure and support business opportunity and profit; to be successful, it has offer a competitive, selling, commercial and financial advantage.

Collection to terms, low bad debt and bolt odd added financial services others offer too, are not signs of real success but low-level appeasement.

If you would like to know how to get much more out of your Credit Management function, I’d be delighted to speak with you.