Five Popular Ideas it Would be Best to Ignore
By Valarie Dale
Idea: "The credit department must operate autonomously to
be effective". Facts...The credit department is part of the
larger organization. Credit managers that do not understand this
basic idea will sooner or later find themselves marginalized, or
in dead end jobs, or worst of all terminated for their failure to
understand that every employee and every department plays a role
in helping the company achieve its short term and long term objectives.
Idea: "Don't sweat the details." Facts...Big problems
often start out as small ones. Big problems are sometimes comprised
of a number of smaller problems. Credit and risk management requires
attention to detail, so credit managers have no choice but to sweat
the details, and to make certain their subordinates do the same.
Idea: "Do as I say, not as I do." Facts...Some managers
feel that certain rules don't apply to them. For example, they may
arrive a few minutes late or take a long lunch and justify it to
themselves because [a] they are exempt employees and [b] they frequently
work late. All their subordinates see is their manager bends the
rules - meaning the company's rules are "flexible." Credit
managers must lead by example.
Idea: "You can control credit risk through aggressive collection
efforts." Fact...This is like trying to engineer quality into
a product manufactured on an assembly line after the product has
been produced, shipped and sold. It is unlikely to work - except
on Fantasy Island.
Idea: "Busy people don't have time to prioritize." Facts...Busy
credit professionals cannot afford not to prioritize their time.
Credit managers that do not prioritize will soon find themselves
spending time on tasks that are urgent but unimportant. Their priority
Urgent and important, followed by
Important but not urgent, and finally
Urgent but not important
Reprinted with permission from the Covering
Credit Newsletter 9/10/02 Edition.