In Focus Commercial Credit


The art of sensitivity in credit control


Sometimes the business must understand that credit can bring a sympathetic approach


Matthew Brown-Bolton Chief executive, Leodian Consulting mbrownbolton@gmail.com


One of the biggest concerns that businesses have about operating an active credit-and- collections policy is that of sensitivity, or, more accurately, the lack of it. That can take the form of concerns about


courteousness of approach, lack of understanding about the dynamics of a business relationship, or, more seriously, where a situation demands empathy or even sympathy, The worry is that this simply does not happen when cash is being pursued from someone. That can lead to many businesses


effectively dialling down their cash-recovery processes, in some cases even leaving it to the sales force or operations teams to manage. More commonly though, that lack of trust manifests in an almost ‘uneasy truce’ between operations and those carrying out credit control.


Counterproductive It goes without saying such scenarios are often counterproductive, certainly in terms of the efficacy of those employed as credit controllers or credit managers. How often have we heard phrases like ‘do not call that client – I have got a good relationship with them’? Pretty often, I would bet! And what of the net effect? Each business will be impacted differently


in those circumstances, it may take the form of a ‘knot’ of aged debt for particular clients, impacting on bad-debt provision. It may be that clients from certain sectors, or with certain connections, are treated more favourably at the vetting stage and get better terms. These are both symptoms of not engaging the credit function as


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Each business will be impacted differently in those circumstances, it may take the form of a ‘knot’ of aged debt for particular clients


Think about it for a moment. You strike a deal as a sales director that


will be a ‘game changer’ for the company and for you. You meticulously plan out the complex processes and transactions to make it happen. You run them past the client repeatedly


and carefully, to make sure that they are getting what you want. You bill it when they want and all you hear from your own finance team is credit control calling the client asking for payment – now! You did not ask them to call because you


trust the client. They have just done your business an enormous favour by doing the deal; I mean – the impertinence!


professionals – and this is the key aspect it is important for any credit manager to make. That this is what we are.


Emotionally loaded industries I have been fortunate enough, in my career to date, to work in some especially ‘emotionally loaded’ industries and scenarios. From collecting funeral debt to healthcare and investment-property deals – the dynamics are surprisingly similar: l Personal investment on both sides – both reputationally and financially. l An unpreparedness to engage parties, not directly engaged in the transaction, at risk of ‘impersonalising’. l A shut-down in communications that are considered too risky to that transaction. I say working in these areas has been


fortuitous for me insofar as the experience you gain is invaluable, both in terms of human nature and of its impact in a business contact.


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Need for communication But so much of this is generally a result of poor communication. Engaging Finance from the earliest


stages, can ensure that the matter is dealt with entirely differently – and, potentially, adds something to the transaction. A credit manager, or controller, will be switched on to things like payment terms that suit the transaction, the paperwork that needs to be signed to ensure we get paid – and the client is protected from non-performance. They can support the client in making the payment to us, and let them know if there will be penalties for late payment. Keeping Credit Control in the loop is, in


short, critical. We do, after all, want to get paid here, do we not? But we all know this does not always


happen – and why is this? Well ‘shockingly’ some businesses see Credit Control as the


July 2017


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