Qualities of a good credit professional
Introduction to credit professionals and what they do
This article explores the qualities of a good credit professional. Many organizations still do not fully understand and appreciate the important role played by credit professionals. It is still lost to these organizations that having well-trained credit professionals is vital to realization of their missions. This article seeks to throw more light on this critical role.
If you are a Certified Credit Professional (CCP), one of the papers you sat for is Practice of Credit Management. This paper usually tests your understanding of credit issues within an organization. The issues tested range from credit policies, handling a collection department, risk assessment among others.
The paper deeply explores the cold realities that a credit department deals with. For a well-trained credit professional therefore, identifying a poorly run credit department is not difficult and you should be equal to the task of addressing the situation.
To a well-trained credit professional, three most important hallmarks of wonderful business are: happy customers, profitable sales and positive cash flow. A true credit professional will deliver all three. As such, credit professionals should be recognized as the heroes/ heroines of business. They deserve much support in carrying out their duty.
Quoting Roger Mason’s book Credit Controller’s Desktop Guide: “Generals throughout the ages have known that their troops will fight more effectively if they believe that God and the folks at home are on their side. This is another way of saying that soldiers fight best when they believe in the cause, and it is why an army of volunteers is usually better than an army of conscripts.” A credit manager requires the support of other departments for their work to be successful.
Credit is a challenging office and requires men and women who are truly passionate about this role; people who push themselves to achieve. Results can be sometimes hard to come by in this department. No wonder some credit officers feel like impostors just because they did not start out to work in credit.
The reality is that no one sets out to work in credit, they fall into it. Some hate every moment and last only a short time while those who have what it takes go on to a long and rewarding career.
There are various perceptions about a credit department. The sales people will sometimes refer to credit people as “sales prevention department’ whereas the finance people will refer to them as the “bad debts people´. This kind of reference is improper and serves to alienate the credit department.
Gone are the days when organizations had the mentality of “sell first; the rest will take care of itself.” Those who eschewed that philosophy suffered bad debts, which in some cases accumulated to unsustainable levels. This hastened the realization that collection is as important as selling and that none of them can be seen in isolation. Credit needs as much support as any other department.
As a credit professional practicing debt collection, I find it quite surprising that many organizations I visit do not have a written credit policy. This means that most of these organizations are lacking the services of real credit professionals to advise them on best practices.
A credit manager is like a priest who takes all the problems of the organization; when the managing director has no money, he blames it on the credit manager; when the sales people have no allowances or are not selling, they blame the credit department; when salaries are delayed by the HR department, it is blamed on the credit department.
They all blame it on the credit manager and he has to listen to all, just like a priest takes all the problems of the parishioners.
It is worth remembering that credit control and collection are critical aspects of an organization. Credit managers are the individuals who sit in the middle office and deal with credit limits and credit support arrangements among other roles.
In the past, credit departments have been poorly recognized for the valuable work that they do. The principles of best practice in credit risk management need to be more understood and embraced.
Knowledge and skills required for a good credit professional
- Knowledge of the financial ability of customers.
- Hands-on customer assessment by understanding how to assess how much credit to allow; process orders quickly; collect funds on time.
- Interpersonal, numeracy and literacy skills.
- The art of integrating with sales colleagues.
- Cultivating customers.
- Thorough knowledge in collection techniques including email, fax and videophone; electronic transfer of funds.
- A good understanding of external services: credit reports (online), insolvency warnings, credit insurance, factoring, collection agents, temporary staff, outsourcing, shared service centers, call centers, query resolution and analysis.
- Knowledge in international payments; cross-border computer literacy, trade, using EDI documents and credit training needs to concentrate on all these as well as focusing on the impact of any action on customer relationships and the needs of the business.
- There are many aspects of changes in legislation which require the credit manager not only to keep up to date with what is going on, but also be in a position to advise sales and marketing, production, transport and distribution – in other words, be very much part of the eyes and ears of the company.
These perhaps apply to the business environment as a whole, it important to note that this will affect the proper functioning of a credit department. This brings us to discuss the qualities of a good credit professional, what they should do and the skills they should possess.
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Qualities of a good credit professional
There are several qualities of a good credit professional. Indeed, good credit professional are:
- Good communicators – Dealing with customers can be challenging. Dealing with the other departments within your own business can be frustrating.
- Being a natural problem solver. So much time in credit is spent solving problems and correcting things that have gone wrong. Rather than getting annoyed by the issues, a true professional will relish the challenge to get things done, not only fixing the problem at hand but making the necessary adjustments to prevent recurrence.
- Being the go-to person – No doubt he has to be the source of all information within your business, the go to person when information is required.
- Keen attention to detail. Mundane tasks like cash entry and allocation, customer account and bank reconciliations have to be 100% accurate at all times.
- Keeping an eye on the big picture at all times
- Another quality of a good credit professional is that they have an understanding of systems, both manual and computerized, to maintain the required controls and to keep things moving seamlessly is a prerequisite for a forward looking credit professional
- Self-driven – one should work and behave as if an auditor is looking over your shoulder at all times.
- Being naturally curious. Getting as much information as you can to make the best possible decisions.
- Being results-focused. Hitting the monthly cash targets (provided they are set correctly!) is what drives them. You have to feel the “buzz” – when a payment arrives, when an account is cleared, when an old balance is resolved – celebrate!
- Being confident in his/her own position. There is need for courage to stand up for what is right, even when faced with opposition. This is more common where interdepartmental conflicts are concerned. This is also one of the most valuable qualities of a good credit professional.
- Empathy for customers (internal and external). Make sure they are looked after courteously and professionally at all times.
- An understanding of the entire cash cycle of the business.
- Being positive at all times – This is one of the qualities of a good credit professional. The credit manager needs to present a positive picture of their achievements to the senior management team. Tell them what they have done (for example, cash collected, issues resolved) and avoid telling them what you did not do (for example, overdue debt, provisions and write offs). Most credit professionals focus exclusively on what they did not do and wonder why they are not appreciated!
As is evident, there are several qualities of a good credit professional. Indeed, credit professionals are tasked with heavy responsibilities. Their role in an organization is quite demanding and as such, they need as much support as any other department. A credit professional will perform best if he believes that he is a valuable member of the staff doing a vital job and if he believes that the requests being made are entirely fair and reasonable. He should feel that his work is appreciated and that his bosses take an interest in it.