’Tis the season for strategy: Managing credit through the holidays

The fiscal year-end is one of the most demanding periods for any business, and the credit department is often tasked with managing audits, collecting outstanding payments and meeting tight deadlines. Completing the annual closing can be especially challenging if it coincides with the holidays, which brings its own unique demands to businesses and employees.

Why it matters: Whether your accounting period ends in December, March or another month, having a strategic plan in place can help you navigate even the busiest of times. 

By the numbers: A recent eNews poll revealed that most credit professionals (67%) work at companies with fiscal years ending in December, followed by September (14%), March (11%) and June (8%).

The holidays: A crunch time for businesses 

It’s no secret that the “most wonderful time of the year” is one of the busiest periods across industries. From late November to December, this timeframe brings a perfect storm of gift shopping, promotions and clearance sales. With increased consumer demand, retailers and manufacturers face heightened pressure to meet orders. Shipping and logistics companies work harder than ever to fulfill massive volumes of orders in anticipation of the holidays. 

During these busy periods, customers may pay more slowly, stop paying altogether or become unresponsive. This can make it harder for credit professionals who are managing receivables. “Many larger companies stop paying invoices mid-December or hold onto their funds until the new year begins,” said Jim Dennison, CCE, credit manager at Skyworks LLC (Buffalo, NY). “For many customers, the main reason for delaying payment is that the general contractor isn’t paying them and since we’re the supplier, we’re usually the last one to get paid.” 

As staff take time off to be with loved ones or partake in various celebrations, credit teams can be short-staffed, making it more challenging to meet quotas. “It’s important to make sure you have that support and coverage during this time, but you should also allow time for a healthy work-life balance,” said Jessica Kinney, CBA, director of credit and collections at Soligent Distribution (Dallas, TX). “I make the effort to ask my team about time off ahead of time so I can manage workload when they’re out.” 

Beat the rush: Proactive strategies to meet department goals 

Navigating these peaks takes careful planning and coordination. Credit teams that anticipate delays, maintain communication with customers and adjust strategies can help ensure the company meets its objectives. “We try to get ahead by addressing unpaid invoices from October through mid-December,” said Dennison. “We work closely with our accounts payable team to verify job information on projects and to provide extra support when team members are traveling or taking time off. Most importantly, we focus on building relationships with key stakeholders who make payment decisions, whether it’s the owner or the CFO. By having these conversations early and setting clear expectations, they’re more likely to help us get paid sooner.” 

Credit professionals who are proactive are able to efficiently meet goals and minimize stress during periods of high demand. “To prepare myself, I work on audits early and anticipate which customers may delay or stop payments in the future,” Kinney said. “I stay ahead of the sales strategy by asking about promotions or spikes in demand so I can prepare to support it.” 

The bottom line: Although the holidays can increase strain for businesses, a proactive approach allows credit professionals to turn the season into one of accomplishment and celebration, closing out the year with confidence and grace.