Conflict Resolution: When Credit and Management Disagree

Conflict is unavoidable. It can arise at any moment in your personal life and professional settings, whether between peers or even within yourself. But what do you do when conflict crosses over the line of leadership?

Being able to settle differences respectfully and effectively with upper management is key to getting the credit team recognized by the C-suite, said Kevin Chandler, CCE, director of financial services at Zachry Industrial, Inc. (San Antonio, TX). “You need to understand their motivation,” he explained. “What is the business driver that will lead them down the path to see your point of view? Credit is not black and white; it is full of gray areas. If you want a seat at the table with the CEO on how to get things done, you must be perceived as adding value to the business process—and that means you cannot make credit decisions in a vacuum.”

There may come a time when you and your boss disagree about a credit decision. Maybe you will feel like a customer’s credit profile makes them too risky while upper management sees the sale as necessary. Take this as an opportunity to think outside the box and use different risk mitigation tools. “Credit is not the end-all, be-all final decision maker,” Chandler said. “You must be comfortable playing your role in your company. That means people will sometimes go against your decision, and if you give the right information, that’s the business decision and that’s okay. You cannot let your ego be hurt because someone makes a different choice.”

Disagreements can pave the way for a stronger relationship between credit and upper management when handled appropriately because it creates an opportunity for more conversations, said Craig Pluff, credit manager at Graco, Inc. (Rogers, MN). “I’ve learned that the more time you spend with business leaders and conversations you have with them, the more equity you’ve built with them,” he said. “Difficult conversations can foster trust and respect so that when I have a different opinion, I am heard.”

The job of a credit professional is not to eliminate risk entirely, but to mitigate and accept the risk where it happens. “If there’s a riskier credit decision that wouldn’t be touched traditionally, we can still make a business decision to say we are going to take a risk and if it comes back to bite us, it won’t come back on to the credit team as far as not collecting,” Pluff said. “Just make sure you have done everything possible in terms of additional security to try and make the transaction safer.”

Be sure to keep a paper trail if the credit department and upper management have ideas that do not align, said Brett Hanft, CBA, credit manager at American International Forest Products LLC (Beaverton, OR). “You have to document everything as much as possible,” he explained. “If I can provide due diligence and share my findings with upper management, I may not agree with a decision to move forward accepting a sale on open account terms. If the credit team does not feel like it is a good risk to accept, I want clear and concise documentation in our credit file confirming the decision to sell was not approved by credit but by upper management.”

When running a company or managing a team, the ability to speak openly about disagreements and settle differences is essential. “In some of my past roles, it’s been much more rigid in which there was a clear ladder approach that you had to go through,” Pluff added. “If I had an issue, I had to go through my boss to get to the next boss and so forth.”