Topic: Louisville, KY

Subject: Credit, Collections and AR Management
David Stokes
Member: 2010
Submitted on 06-07-11 9:09 am
As a Credit Professional I have my perspective on the utility and value of the credit, collections and accounts receivable management function within a company. However this is a limited perspective and I would like to broaden thaat view. Therefore, I would like everyone's input and perspective on how as a finance professional, CFO, Controller, etc., you see the utility and function of the Credit Department. Is it under utilized, could it do more to support strategic goals, etc.

David L Stokes, CCE
Chapter Chairman
Bob Shultz
Member: 2002
Posts: 31

Subject: Re:Credit, Collections and AR Management

Submitted on 07-22-11 1:33 pm.
Great question. Credit professionals are typically underutilized and their value underestimate. Credit and collection is a key factor in a company's ability to generate cash and profit. A good credit professional is an integral part of the quote to cash process. Properly used a credit exec will help maximize revenue, operating efficiency and enhance the customer's experience with the company.
CFO's often, and mistakenly, see this function as a "back room" accounting operation. If a major fire is not burning than little attention is given to the credit department.
Savvy CFOs do the following: 1. Hire and incentivize quality staff. 2. Arm the credit department with effective automation and workflow tools for credit, collection and dispute management. 3. Have an effective and flexible credit/collections policy granting exception approval authority to the Credit Manger and quick apprival escalations when hard business decisions are needed. 4. Brings the Credit Manager in to the begining of the process as quotes are being developed. This ensures that terms and conditions best serve the company and the company has the administrative capacity to manage deals after the sale. 5. Sends the Credit Manager out to the field to engage with the company's Saleforce and visit customers. 6. Creates cross department accountability with cross-functional KPI's and effective reporting. 7. Empowers the Credit Manager to identify and become a leader in resolving root cause issues causing payment delays and disputes. 8. Involves the Credit Manager in the cash administration and banking process to ensure that the most effective tools are utilized to process and automate the payment receipt cycle.
Some starter ideas but there are many more ways to leverage this incredibly valuable function.