Top Five Credit Management Tips to Ignore
By Michael C. Dennis, MBA, CBF

1. "The credit department must operate autonomously to be effective."
   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.

2. "Don't sweat the details."
   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.

3. "Do as I say, not as I do."
   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.

4. "You can control credit risk through aggressive collection efforts."
   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.

5. "Busy people don't have time to prioritize."
   In reality, 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 should be:

   • Urgent and important, followed by

   • Important but not urgent, and finally

   • Urgent but not important