Broaden your Credit Horizon

A while back, I was greatly encouraged by many noises coming out of credit organisations and indeed those directly involved in credit management.

This encouragement was borne out of voices that urged credit people to wise up, broaden their reach and involvement and strive toward greater recognition or achievement. I sat back and eagerly awaited news and updates coming out of publications, credit institutions and a plethora of conference agenda to see how this revolution was evolving.

Initial euphoria however proved a trifle premature when I realised that much of the ‘wise up’ and strive to greater achievements were once again focussed exclusively on risk mitigation and cash realisation, ergo if you’re currently achieving 85% of recovery and want to hit 95-100%, here’s what you have to do...and who you need to work with to achieve it; this is not extending the boundary of credit, it’s simply about optimising or challenging credit to achieve performance in its traditional key remit. We all know getting money in, resolving disputes and managed bad debt contribute to improved company performance but why limit ourselves to just this? Much of what we look at and see every day can so easily and effortlessly support a number of those old silo activities that today are more pressured than ever and frequently blinkered as a consequence.

Let’s be honest here, in any B2B environment hitting more than 95% receivables recovery each month is highly improbable, unless one trades on a cash up front cleared funds basis.  

Until the mid 1980’s, Corporate energies and structures were very much silo based. Sales would sell, Finance would finance (with credit buried somewhere in it), Production would produce, Marketing would market, Logistics would supply, Purchasing would purchase and HR was then called Personnel.

Customer service was not deemed relevant enough to merit its own regime and was perhaps the responsibility of all, part, or none.

In the mid eighties, we witnessed a revolution unlike any other; the emergence of the Far East and Asia as industrial powerhouses, the arrival of technology in the form of early desktop computers and new mediums of communication. Things began to change and so did the structure of corporate composition and cooperation. Those strong dividing lines that were almost impregnable metal doors between functions began to blur and indeed merge a little.

In the 90’s and beyond, in a world of immediate boundless means of communication, networking, and globalization,  the need to be lean, mean, competitive and above all, totally focussed in delivering return on investment became paramount. This is even more pertinent looking to the future.

Those silo activities are closely reliant upon each other and often have to deliver right across a company structure. Successful businesses are those that encourage and actively reward their people in working new ideas and practices and credit can, when applied correctly, do precisely this and across multiple ‘structured corporate borders’.

When I speak of broadening the credit mind and field of operation, I refer to direct involvement and support in selling, marketing, customer services, production, business development, research and yes, even HR and training.

It’s time Credit got to grips with the immense value it can offer beyond that which it is currently asked to provide. Credit is a selling process.