Business Practices Archive

In an ever-evolving global marketplace, outsourcing has emerged as a strategic tool that businesses of all sizes leverage to enhance efficiency, reduce costs and remain competitive. Credit departments may choose to outsource certain credit tasks on a permanent or temporary basis depending on the needs of the company.

Relationships are at the crux of what it means to be human. But not everyone is skilled at building strong, authentic relationships. Credit professionals, however, have no choice but to become the best relationship managers in the financial world. No matter how long the relationship with a customer or how much product that customer buys from your company, each one should be treated as your number one customer and feel special.

Deciding whether to separate or combine credit and collection functions requires careful evaluation. A recent eNews poll revealed that 34% of departments separate credit and collection functions while 66% mix the two.

In 2022, six out of 10 companies were targeted by fraud attempts in the U.S., according to data from TrustPair. 55% of companies targeted by fraud attempts indicated changes in supplier information on legitimate payment as how the fraud was perpetrated. Fraudsters send an email impersonating a supplier and asking to change their bank account information for example.

Key performance indicators (KPIs) are a set of quantifiable measurements used to gauge a company’s overall long-term performance. KPIs help determine a company’s strategic, financial and operational achievements, especially compared to those of other businesses within the same sector. With the various forms of KPIs available, companies can improve their performance and meet long-term goals. A wide range of formulas exist to measure the ever-expanding list of tasks that fall under the responsibility of credit departments.

In-person customer visits have existed since the birth of credit management as a method of gathering information, collecting payment and building customer relationships. But with the advances in technology and a global pandemic, in-person customer visits may become a thing of the past.

A company’s success is measured by its sustainability. With several environmental, economic and social challenges today, companies have to consider what steps to take now in order to prepare for the future—which is where ESG standards fit in.

Rebuilding a credit department or becoming credit manager at a new company is no easy task. Where do you start in addressing issues and improving efficiency? Do you hire internally or externally? How do you improve department culture? Start with these seven steps to get your credit department on the right track.