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Fact and Fiction About The Credit Function
Michael C. Dennis, MBA, CBF

Business Credit Concepts
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Contrary to popular myth the credit department does far more than harass customers for money. A modern credit department will proactively manage risk by:

  • Setting rational credit terms.

  • Strengthening business relationships with key customers.

  • Forecasting cash inflows.

  • Updating credit policies.

  • Performing risk analysis on new applicants and on active customers.

  • Pre-qualify prospective customers.

  • Consider all options before any applicant is rejected for open account terms.

  • Meeting periodically with sales management to understand the sales department's goals and objectives [and vice-versa].

  • Strive to accelerate the order approval process in particular --- and the credit decision-making processes in general.

  • Educate sales about how credit decisions are made.

  • Eliminate bias from the credit decision-making process.

Reprinted with permission from the Covering Credit Newsletter 8/28/02 Edition
© 2001 All Rights Reserved

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