In Focus Commercial Credit


Paradigms of credit management


Do you understand what optimal performance for your company looks like, and what actions will lead to that result?


Luis Eduardo Pérez Mata President, ICM


What is credit? Although there are multiple answers to


this question, the concepts, more or less, revolve around aspects linked to risk and trust, from the more traditional ones, which define credit by its etymological origin, to those that take a more practical approach, defining it from technical or economic variables, and from these definitions establish concepts, such as ‘risk appetite’ and ‘liberal or restrictive policies’. The truth is that, even though the


definitions may vary and sometimes even have an apparent contradiction, in the end, all of them are true and correct, because they clearly define the vision of the professionals who express them. When this definition comes from the top management of a company, it becomes a mandate to be operated by the corresponding area. Thus, we can realise that credit is, in


short, what management defines it to be and that is where we enter the terrain of our paradigms.


Our mindset Paradigms are mental models that we use to determine our mindset, the way we understand everything. Based on them, we interpret the environment, configure our actions, communicate and relate to others. Therefore, they certainly have a


determinant impact on the way we live and, of course, on the way we perceive business. A more concrete definition of ‘paradigm’


is that of Joel Arthur Barker, who says they are: “A set of rules, written or not, that set limits and tell us how to behave within them to be successful.” While it is true that there are also certain immovable laws that


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A traditional view of credit is as a risk activity whose origin is determined by competition and market conditions. This places it as a necessary evil


but, of course, there are other sources that help us to generate such beliefs. These include conversations we have, the studies we review, the people we interact with, the books we read, the courses we take, and the culture that we are exposed to. We can see that the value of the paradigms


is very broad and the business world is not alien to this because we also operate on the basis of beliefs, only here we must consider the element of hierarchical power determined by consequent influence. Ultimately, the beliefs that predominate are those of the top management.


govern human life and its interaction with the environment, it is also true that we all have paradigms about the different things that make up our day-to-day existence. This is true even of issues where we have


not had experience. For example, if a random group of entrepreneurs in general is asked the question that gives rise to this article ‘what is credit?’, no doubt, everyone will be able to respond regardless of whether or not they have had any experience of managing this area at all.


Opinion without experience How does everyone have an opinion about this if it is not the case that everyone has the experience? This is because experience is but one of


the sources from which we nourish our paradigms. Through these, we also generate beliefs that are included within the general mental model that, in this example, is credit,


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Company vision What beliefs are linked to the vision of credit in your company? A traditional view of credit is as a risk


activity whose origin is determined by competition and market conditions. This places it as a necessary evil. Or, on the contrary, it is an activity


whose purpose is to strengthen the competitiveness of the company, which is also used to strengthen commercial ties with customers, generating value and opportunity as a key stage of interaction with the target market. Another peculiarity of beliefs is that they


seek to assert themselves with the intention of giving us certainty about the way in which we should conduct our life. This self- affirmation can be given in a conscious or unconscious way and it works as follows. Let us say that you have just joined a


company that has the opinion that clients are just looking at how to take advantage of credit and are looking at how to take advantage at the expense of their supplier.


April 2017


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