Unfortunately, the Credit Manger’s role is often misperceived by the sales team. The Credit Manager may be seen as an obstacle to closing the deals needed to make a quarter or year-end revenue goal. The Department may be seen as a cost drain on the company. A properly run Credit Department is a profit center, not a cost drain. This can be measured and proven.

Here are ten ideas to help you get there:

1. Be there at the beginning: The widely used term “Order to Cash” has meaning. By being involved at the beginning of the sales process you will gain valuable insight into new business opportunities with a voice in the risk the company will take. By knowing the deal requirements upfront any administrative or process issues can be dealt with before downstream problems arise.
2. Provide choices: Define the criteria for credit decisions and the use of alternative risk mitigation tools. Every Credit Manager should have “on the shelf” solutions to meet business needs. 
3. Allow for policy discretion: Empower the Credit Analyst and Credit Manager to override the credit policy up to a defined limit if they feel additional credit is a good business decision. 
4. Be prepared for exceptions: Don’t consider a credit policy override a defeat. Provide a quick escalation approval process when credit cannot be approved at the desired level. A good credit, 
5. Be the “Go-To” person: Leverage your expertise to help other stakeholders. The Credit Department is has a unique knowledge of your company’s internal workings and your customer’s business and trends.
6. Be Seen as an Ally to Your Sales Team: Salespeople do not like surprises. They want a credit policy that is fair, consistent, and therefore predictable. The policy should be sensitive to Sales’ needs, the company’s overall business strategy and be in line with the company’s financial objectives.
7. Report the results and issues effectively: Provide Sales and Senior Management with “actionable” and timely information. If the reported information is too late, or not relevant to what the target audience wants and needs, it will not be read.
8. Consider Sales and Profit Objectives: A good credit policy is not a revenue-limiting document. It is a blueprint of how to maximize profits and manage acceptable risk. There is a great quote for all credit professionals to memorize and follow: “We never say no, We say yes, but how?” The “how” may not win high fives but it will offer the customer alternatives. It is the customer’s choice to say yes or no.
9. Remember collection risk all boils down to two critical concerns: The risk of payment delay beyond the stated terms or the risk the balance will never be paid. It is important to remember, not every credit decision involves the latter. Examining the true risk leads you to how to approach an issue and the tools you can use to get make the sale.
10. Think about the impact your decision has on cash flow and profit: A higher profit potential justifies the greater risk. Let’s face it; in most cases extending the right amount of credit is a balancing act. Ask, “Over the next ninety days, what is my risk of loss or payment delay?” What profits can I generate during that time period? How much can I leave on the table and still make a profit if the customer never pays? Set a credit policy that addresses the actual situation, delayed payment, or risk of loss.

Conclusion:

An effective Credit Department is a profit center adding valuable self-funded liquidity, improving the company’s cash flow. You can be a hero by helping close profitable sales with a proactive approach and credit policies offering on-the-shelf alternatives supplementing your company’s products or services.