4 Steps to Developing an Outstanding Credit Staff

Progress Software Corp. (Bedford, Massachusetts) engaged in active collections but did little in the way of credit investigations.

"Because of the high margins, the company tended to ship to almost anyone," explains Corporate Credit Manager Paul M. Tourtellot, CCE. Tourtellot, a 20-year credit management veteran was given responsibility for creating a "full-fledged" credit and collections department.

In this era of outsourcing credit and collections and downsizing credit departments or merging credit departments with Customer Service, how has Tourtellot been able to create and build a credit and collections department? He lists four strategies, all of which revolve around the employees in the department.

1. Hiring: While Tourtellot may hire an employee with credit and collections experience, he prefers to hire graduates fresh out of college and looks for

• • a desire and commitment to gain a strong foundation in the business world,
  • an outgoing personality,
  • involvement in extracurricular activities in college,
  • community involvement,
  • the ability to handle multiple projects in college, and
  • a history of not conforming to college peer pressure.

Tourtellot also asks applicants to provide details on at least one major college project. "I want to know why they selected the project in the first place, how they accomplished it, what the results were, whether they achieved the results they expected, or whether they had to revise something along the way," he says. This discussion and demonstration help him judge the applicant's creativity and persistence.

2. Training: Once on board, new employees go through a three-month training program. A documented training manual provides specific and detailed information on credit extension, financial statement analysis, and collection calls.

Collection call training is handled both through employees making actual calls to customers and through role-playing with other employees, with situations ranging from "easy" to "difficult" (e.g., irate customers).

3. Managing: Tourtellot considers himself more of a mentor to his employees than a manager. "I try to help them build enthusiasm for the credit profession and for achieving success in it," he explains.

He has found that many of today's younger employees are short on patience. "They want to become president tomorrow," he says with a laugh. "I try to help them develop realistic career paths so that they can either expand further into credit and collections or, if they desire, develop a background that will eventually allow them to move into other departments."

4. Adding Value: The hiring, training, and mentoring efforts eventually lead to the development of employees who can truly add value to the company. So Tourtellot is diligent in identifying this value and publicizing it.

"This is especially important in these days of downsizing and outsourcing," he says. "In most credit departments where downsizing and outsourcing are going on, it's usually the result of the department not identifying and promoting the value they provide. In our department, we make sure that we're very visible."

For example, Tourtellot is also doing work with the company's subsidiary financial managers. (The company has 19 international subsidiaries around the world, each of which has a financial manager responsible primarily for accounts payable, payroll, taxes, and local credit and collections.

Tourtellot, as corporate credit manager, has primary responsibility for all domestic credit and collections, as well as credit and collections with the company's international distributors, which are set up in countries where the company does not have subsidiaries.)

"I've been working with these financial managers to help them be able to take on more credit risk by utilizing proper credit extension techniques," he says. "As they learn how to do this, they'll be able to begin doing business with more marginal customers."

He is also helping them learn how to turn the cash over more quickly, which will allow the company to reinvest it, use it for R&D, or have it available for acquisitions.

Tourtellot shares the results and benefits of this international endeavor with members of senior management.

When Tourtellot began with Progress Software, the company was doing $110 million a year in sales. "Today," he reports, "we're doing $200 million."