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Credit Management Articles All Articles • Home |
9 Ways to Run Your Credit Department
More Efficiently and Effectively
By Michael C. Dennis,
MBA, CBF
The economy is in a recession and companies are looking to cut back on expenses. Credit managers should constantly be on the lookout for ways to cut costs, while at the same time improving the department's overall effectiveness. Here are 9 ideas that can help your department to run more efficiently:
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Remember that people are any credit department's most valuable resource. The time spent teaching, coaching and encouraging subordinates will pay dividends in terms of improved performance, lower absenteeism, and lower turnover rates.
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Always shop around for the best price on outside services the credit department uses such as collection agencies, attorneys and credit reports. In many instances, charges are negotiable - particularly with collection agencies.
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Use the Internet to gather financial information on publicly traded customers since Internet web sites are normally free and credit reports are not.
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Surround yourself with the best and brightest people you can find and hire. Don't be intimidated by subordinates who know as much or more about their particular area of specialization than you do.
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Try to limit bad debt losses by periodically updating every active customer's credit file.
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Refine the automated order review and approval system so that fewer orders are placed on credit referral. This frees up time for collecting, analyzing customer files, negotiating with delinquent debtors, and addressing deductions and disputes quickly.
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Join one or more industry credit groups. The expenses of membership are usually more than offset by the information members share with one another.
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Delegate work to others. Even if it takes a subordinate twice as long to complete an assignment, on an hourly basis the company is probably still better off having them do the work than you - not to mention the time that you free up can be put to use on assignments requiring a higher degree of skill and experience.
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Ask subordinates for ideas and suggestions when problems arise. It is a mistake to believe that you are the only person in the department capable of making suggestions that would make the credit department faster, or would result in cost savings.
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