In Focus Commercial Credit


Is a credit-management policy a good or bad thing?


Although they are not universally accepted, a properly document policy is an essential aspect of doing business


Chris Wells Experienced credit professional christopherwells @btinternet.com


Recently, I became involved in a debate about the pro’s and cons of having a documented process of the company’s management of the credit function. It was interesting, in that there was a


position adopted whereby the feeling was that such a document was perhaps too rigid, and that it would not be able to change as the business need changed. On the contrary, I see it is a tool that


demonstrates a positive professional attitude and is a ‘must-have’ document. It is not written in stone, it is written policy of the moment which could (and should) be reviewed and updated in line with changing business needs on a ‘as and when’ basis.


Perspective of transparency From the angle of transparency and compliance, a well-written policy of what you do, why you do, and how you do, can go a long way in avoiding any assumptions or misunderstandings, should anything end up as a debate with Sales. In fact, the elegant solution would be to


propose to the board the need for having a policy, write it, get them to endorse it, and then widely publicise it so that all in the organisation (including your staff) are aware of the processes involved. It could be invaluable when a new


recruit – particularly a new sales rep – is employed and you are able to get some time with them at their initial induction. This is an important way of introducing, not only yourself, but setting out, quite clearly, what the company (board) expects the process to be from the opening of an account, through the management of the account, to, finally,


April 2017 Effectively, they are underwriting, not


On the contrary, I see it is a tool that demonstrates a positive professional attitude and is a ‘must- have’ document


the closing of an account, and leaving them with a copy should they need to refer to it at anytime.


Unexpected benefits Moreover, there are other unexpected beneficial spin-offs from having an endorsed credit-management policy in place. That is to say, it can also be used to impress your credit insurer.


www.CCRMagazine.co.uk


only your customer’s creditworthiness, but also your ability to manage the account to a high standard. Your credit-management policy would


demonstrate this to them and, hopefully, you will enjoy a reduced premium because of it. Similarly, it would give confidence to your


bank (or finance house) if you have invoice discounting (or similar funding) agreements in place. I would hope that, again, you would get a marginally better rate than a company that does not have one.


Conclusion So, in closing, I cannot recommend too highly the need for having a clear, concise credit-management policy that documents what you do, why you do it, and the how you do it. CCR


17


Page 1  |  Page 2  |  Page 3  |  Page 4  |  Page 5  |  Page 6  |  Page 7  |  Page 8  |  Page 9  |  Page 10  |  Page 11  |  Page 12  |  Page 13  |  Page 14  |  Page 15  |  Page 16  |  Page 17  |  Page 18  |  Page 19  |  Page 20  |  Page 21  |  Page 22  |  Page 23  |  Page 24  |  Page 25  |  Page 26  |  Page 27  |  Page 28  |  Page 29  |  Page 30  |  Page 31  |  Page 32  |  Page 33  |  Page 34  |  Page 35  |  Page 36  |  Page 37  |  Page 38  |  Page 39  |  Page 40  |  Page 41  |  Page 42  |  Page 43  |  Page 44  |  Page 45  |  Page 46  |  Page 47  |  Page 48  |  Page 49  |  Page 50  |  Page 51  |  Page 52