Kinetic Consulting

There is no doubt that Credit Professionals have a new found confidence, not least as a profession (at last gaining the recognition of becoming a Chartered Institute in the UK) but let's not forget the cross-roads we have encountered at times, namely in 2008 and previous to that during the ‘Dotcom Crash’.

The credit management professionals that took advantage of these momentous events have prospered and developed, demonstrating to their businesses the value that a professional credit manager can bring. Speaking at an institute conference some years ago I mentioned that the credit crunch was an opportunity not to be missed. There is another major event looming too...

The foundations of this event were set between 1946 and 1964, an inevitable occurrence that will start to impact everyone in Europe in around 5 years. The ‘Baby Boomers’ (born between 1946 and 1964) have already started to retire and as we progress to 2030 the global workforce shortage will really start to bite. For the UK we will see the people of working age reduce, but by 2030 it isn’t the UK that will be hit the worst. In Germany there will be an 8m shortage of people of working age impacting economic growth, reducing tax revenue and increasing pension and health care costs. In this global economy this will impact everyone, not least in staff retention as our highly skilled people will be in demand elsewhere and we must start to think about this now if Credit Management is to continue to develop as a profession.

This leads us into understanding the first of ‘3 key elements’ that we need to develop, not only to create a high performing credit management team but also one which will be seen as a function which helps set the agenda in the business rather than a back office function, or as Credit Management is often wrongly tagged as Finance’s poor relation.

1st – ‘High performing teams have strategies to manage, reward, recognise and develop their people.’

There is a common thread running through all ‘Best Practice’ and high performing credit management teams, the level of ‘active’ staff development in these credit teams is very high. When I say ‘active’ I mean companies that actively drive staff development, not just publish a list of training courses on their intranet and say ‘…the staff are responsible for their own development…’. As part of the Chartered Institute’s Quality Accreditation Programme (CICMQ) many accredited organisations have a people policy for their credit teams, a great example, and one of the first we saw, was developed by one client that this has been shared with many organisations as part of the CICM’s Best Practice Network. Credit organisations need to be able to forecast the staffing requirements, attract the right people with the right attitude and skill, educate and develop their teams and finally retain them through recognition and reward. There was a survey of 200,000 employees worldwide and the top 4 things people look for in their jobs are ALL culture related with recognition number one and the others being working in a great team, getting on with the boss and a good working environment. Salary came 8th so proof, if we needed it, that money isn’t everything! Competency frameworks for substitution and succession planning are crucial in a busy operational environment and these are gaining greater priority in credit management teams.

2nd – ‘High performing teams have a Roadmap for improvement and development’.

Many organisations and credit managers have plans, but surprisingly not all of them are written down. If a business has a plan why not the credit team, writing this down will help the manager and the team develop a common purpose. It will also provide the team and your boss with confidence that as a manager you know what you are doing and what you are planning to achieve. Not all plans are approved so give yourself a head start, link every action and activity to one or more of your company values. Company values are many and varied but usually comprise of People, Teamwork, Customer Service, Efficiency and Profitability, linking your planned actions and activities to each of these will ensure Senior Management buy-in, a simple strategy, but one which works every time as failure to agree with your plan will mean failure to commit to the company values, and no senior manager will go against these, not least as they probably helped write them! A ‘Roadmap’ will make credit management teams consider continuous improvement, common purpose and start to develop confidence in the business of what the credit team will do in the hope that – with the agreement of the senior managers – they will be left to get on with it.

3rd – ‘High performing teams manage upwards and across their organisations.’

It is a fact that relying just on the credit department to deliver improved performance will not give the best result and we as credit professionals need to do more to manage stakeholders if we are to improve performance. Managing down into the team with the objective to gain buy-in to plans will ensure that as a manager you will bring the team with you. Managing across the organisations to peers will ensure that you gain help, and assistance from them to resolve issues queries and implement changes. Managing up will generate support from your boss and senior management. Understanding what drives and motivates people in each of these categories will help you get the best result, finding the right button to press. A great example of this is at environmental services client where the Credit Management team equate cash collection and debt reduction to new refuse trucks, at a telecoms client we converted suspense files into revenue, with a finance Director who thought 95% billing accuracy was good, we converted this into revenue saying ‘…you are happy then that 5% of revenue is billed incorrectly…’ needless to say as FD in a major global company he decided to take action. Finding the right button! Managing up is simple, understanding what the boss wants, helping to enable their success and linking your actions to the values of the company will ensure support.

These 3 elements, People Strategy, Roadmap and Stakeholder Management are what high performing teams do well, some do them exceptionally well. We all know that the credit management teams touch every part of the organisations we work within, so as credit professionals we have a great opportunity to influence the companies we work for and have even proven to help our organisations come through a significant economic crisis. Some credit managers, the ‘Thought Leaders’ in our profession, have started to expand the scope of their roles to meet the demands of a changing business environment, taking responsibility for billing, accounts receivable, order to cash, our profession is changing and we must change and develop.

So we have to ask ourselves should we be satisfied to coast along just doing the job or do we want to be ready for the next phase in the development of our profession? Do we want our credit management teams to come ‘out of the back office shadows’, do we want a high performing team, do we want to demonstrate our value to the business and develop our teams?

The only person stopping your personal development and that of the credit function in your business is…?
Yes you guessed it!