Many businesses understand the importance of the credit function as a vital component of a high performance business, while others are yet to unlock the potential of their Credit Department.

Credit Management teams touch every part of the organisation, this gives Credit Professionals a great opportunity to contribute to the achievement of the businesses objectives. 

By focusing on achieving a high performance culture, developing a roadmap and connections across the organisation the credit function can move from being considered a back office function to one that shapes the business agenda. 

Whether you are trying to get the credit function on the map in your business, want to improve the standing further or are looking for ways you can help the business even more, focusing on these three key areas will ensure your credit function moves from a back office function to one recognised for the value it adds to the business.

 1. Developing an active People Policy 

It is important for credit functions to develop a people policy encompassing: 

  • Forecasting staff requirements. 
  • Qualities and skills required for high performance. 
  • Values of the Credit Team. 
  • Strategies to educate, develop, retain, reward and recognise high performance. 

A thorough people policy will ensure the mechanisms and opportunities are in place necessary to achieve high performance. 

Great Credit Teams take the people policy further and create an active approach to staff and team development. An active approach is one where development of the staff is part of every day and every role. It is not just a quarterly review process or the sole responsibility of the manager. 

Simply documenting a policy and posting a list of training courses will not create an engaged and high performing team. When leaders include a focus on developing team members in all daily activities this results in a fully engaged team which consistently exceeds their job requirements and targets in a positive and supportive way. 

While a plan and policy are the foundations of a high performing team, actively living, is the most vital component. 

2. Develop a roadmap 

Your organisation is likely to have a roadmap, plan or strategy and it is important for the Credit Department to have its own roadmap. This may be as simple as documenting a currently agreed plan. Your roadmap should: 

  • Align with the organisations roadmap, plan or strategy. 
  • Be communicated with all stakeholders within and external to the credit team. 
  • Focus on a uniting common purpose for all to strive toward.

Including the team members and other divisions in the formulation of your roadmap will ensure a greater buy-in and commitment to the plan. 

Once the roadmap has been documented it is important to communicate this to each team member. Often just showing the team that there is a plan to address issues will increase job satisfaction but showing them how their roles contribute to the achievement of the plan and what this will mean once it is achieved is the foundation of a truly high performing team. 

A team that believes in the roadmap will ensure it is achieved with maximum efficiency. 

3. High Performance Teams Manage upwards and across their organisation 

It is a fact that relying solely on the Credit Department to deliver improved performance will not give the best result, and Credit Professionals need to do more to manage stakeholders if we are to improve performance. 

Once your team is engaged, actively involved in their development and understand the roadmap great results and achievements will start to flow and the Credit Team will start to be noticed. It is also likely that to achieve real change and ideal results for the business the credit team often require changes or at least assistance from other departments such as the IT department, operational areas or sales. This is where it becomes vital to manage up and across the organisation. 

Managing up or across requires developing strong working relationships and understanding of other department’s goals challenges and roadmaps. By involving peers in your roadmap you would have already started to form many of the necessary relationships, now the focus becomes more on understanding their challenges, priorities and roadmaps. 

Managing across the organisation with peers will ensure you are able to get help and assistance to resolve issues and queries. Managing up will ensure your plans are supported due to them being aligned to superiors and organisational goals. 

A good way to achieve relationships and understandings across divisions is by equating credit metrics to those more relevant to the peer you are talking to e.g.: 

  • Relate DSO reductions to financial measures such as increased cash flow and reduced borrowing costs. 
  • Bad debts to average number of sales required to recover the loss. 
  • Billing issues to number of hours of Sales representative’s time taken in resolving and how many new sales could have  been achieved in this time.

While these 3 key areas require investment of time and energy, a team with an active development culture, clear roadmap and strong relationships will see the benefits flow on and on. The leader will no longer be the sole driving force looking for improvements, the team will feel more engaged and valued hence reducing turn over, new entrants quickly adapt to the team culture and take ownership of their own induction. This all allows the leader to focus on adding more value to the credit function and business. 

By focusing and continually reviewing these three criteria you will be well on the way to ensuring the Credit Department is never considered a back office function again and is in a position to drive the performance of the organisation.

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