The job of a credit professional is to analyze complex business situations and make an informed judgment about the extent the lending company can have financial exposure to a borrower. This apparently-simple task is a mammoth responsibility for it has the potential to make a very drastic impact, good and bad, on the company the credit professional is employed with. While earlier, credit professional had been viewed as a necessary evil, in recent times, there has been a transformative change in the perception. There is increasing recognition among the senior management that the role of the credit manager is crucial to the success of the business and finally, there is an appreciation of their importance to the company’s financial health. An insight into the traits and proficiencies that enables some credit professionals to be far more successful than the rest:
Ability to Establish Robust Credit Control Processes
Rather than getting involved at a stage when the sales team has made significant progress with the customer and is on the verge of finalizing the contract, the professional credit manager will insist on being part of the sales process right from the point that the customer is offered credit terms. Being on very good terms of with the sales department that enables them to be seen as a part of the team and not someone appointed to oppose the deal is critical. It is their responsibility to convince the salespeople that a sale, even if it is a humdinger of a deal, is only successful when it has been paid for on time and in full. Rather than relying on the gut feel of the sales rep who is more concerned about making the sale, a professional credit manager will recognize that the most effective way to minimize the risk of extending credit is by conducting thorough checks on the customer profile.
The Personal Touch
After the risk has been assessed and the customer has agreed to the credit terms, the professional credit manager will continually monitor the financial health of the customer. He will try to establish a good relationship with the customer and make an effort to understand their business more thoroughly by regularly visiting their offices and factories so that if something is out of sync with the financial reports or projections, the aberrations can be spotted earlier and the alerts sounded. Knowing the customer personally also works better in dispute resolution. Usually, a phone call or a visit will bring better results than a stern letter from a lawyer.
The experienced credit manager knows when a loan will not be repaid and whether the only way of recovering the money is to take legal action, hand it over to collections, or even sell it off at a deep discount. The credit manager’s skill and experience will enable him to take the most appropriate action while keeping all other departments, including sales, of the situation and the action being taken.
Ability to Stay On Top Of the Game by Measuring Results
In a large financial services institution, like https://www.libertylending.com/, the workload in the credit department can be very heavy. A heavy load puts to test the quality and robustness of the credit control policy. It becomes imperative to measure accurately the effectiveness of the credit policy and processes and also to set benchmarks for performance measurement in the future. Measurement of vital metrics like cash collection as a percentage of sales revenues, days of sales outstanding, level of bad debts, and the amount of credit notes issued is part of the essential workload of a professional credit manager. It is this date that can be used to demonstrate the efficacy of the credit department especially when disputes arise between it and the sales department who view the credit function as an obstacle to successful sales transactions.
Perseverance and Behavior
Needless to say, one important role of the credit manager is to chase customers to make the payment on time. While it is obvious that all credit managers have to be firm but without offending the customer, the truly exceptional credit professional will have loads of perseverance to keep on following up with customers who are not in a position or unwilling to pay their dues. Very high up on the list of qualities are a very refined sense of diplomacy as well as humor to take into stride proffered excuses that are patently not the truth. Whatever are the qualities of credit professional, gullibility is simply not one of them, however, overly developed sense of cynicism may well be equally unhelpful in developing the desired good relationship and trust with customers. Credit professionals should also guard themselves against being over-familiar with customers because the customer may well take things too lightly or the relationship can turn bitter in a moment of madness by the display of temper or a bout of shouting when trying to extract payment.
High Degree of Motivation
Not only is a successful credit manager very highly motivated personally but also he is also equally able to charge up his entire staff so that they feel valued as important and contributing members of a team that is of vital importance. According to http://c2cresourcesblog.com, outstanding credit managers know how to show appreciation to their team members. Due to the high levels of stress in the credit function, credit departments in most financial companies witness a very high rate of attrition. The frequent change of credit analysts and executives causes disruption and results in the approach to customers becoming inconsistent. Credit managers are also forced to bear the additional expense of recruiting and training new people. With their charismatic approach and a high degree of motivation, successful credit managers can drastically lower the attrition rate and reduce the points of discomfort internally as well as with customers.
Conclusion
As is evident, credit and risk management goes far beyond evaluating customer risk profiles and chasing past due payments. The credit management function is an integral part of a financial institution that is responsible for its profitability to a far larger extent than what most people appreciate. Accordingly, a credit manager who is truly outstanding in his work can make a vital difference in the way the institution functions.
