Is "Credit Management" still the same?

Prior to the "credit crunch" Credit Management was mostly controlled by the Sales Director in order to grow market share. This led to fuel the fire between the Credit and Sales Departments. Credit staff tried their best to manage and collect the outstanding dues and reduce DSO's - Sales staff did their best to "do the deal at all cost" and grow the sales.

Then came the "credit crunch" and some economists believe that the coming of the NCA was the salvation of South Africa ..... they claim SA did not go through a "credit crunch" as the NCA was seen as the umbrella against the hail storm.

How wrong can you be?

The NCA did some good but the real "umbrella" was the fact that Financial Directors took the Credit Departments under their wing and managed the granting and collection of dues. They managed the impact of Credit on Cash Flow and Balance Sheets quite differently than a Sales Director.

In staring into the "crystal ball" of 2020 we see a lot of things coming and happening:

AI - Big Data - PoPIA - Debt Relief - Debt Rescue - to name a few ....

But let me rather tell you the story of the UNDERDOG and his/her evolution during all the challenges:

Most people love the story of an “underdog” - a journey that captures relatable challenges and seemingly insurmountable odds, only to be overcome by the "little guy" in the face of adversity. There’s something intrinsically human about the tale of an underdog, and it taps into our capacity to hope for the future and dream big. It also teaches us about disrupting common beliefs and overcoming and confronting society’s stigmas.

Arguably, most businesses begin in underdog mode and start their path to success with lots of obstacles. Pulling your business up from the bottom through sheer grit and determination is a story that can connect and resonate with any person, regardless of their background. During this underdog, mode businesses realise that cash flow is the lifeblood of the business and employ a Credit Controller to manage the credit. The Credit Controller is just there to “collect the dues” from the customers, a typical underdog job. As the business grows and becomes more reliant on extending credit to customers, the role of the underdog Credit Controller changes to the top dog, now called the Credit Manager because now credit management involves much more than phoning the customer to collect outstanding dues. Senior management now starts looking up to the Credit Manager as a strategic manager and applauds his/her role in growing the business and extending the customer base with a well thought out credit policy and credit management workflow.

Then in times, such as we are experiencing currently, times of credit and economic crisis, where companies more and more experience difficulties in granting, managing and recovering credit extended, also getting credit lines from their banks, the top dog becomes the underdog again. Suddenly the Credit Manager is judged to not be suitably qualified to manage the daily business credit operations, improving cash flow, working capital needs or finally profitability. Now we need an HR Executive, Financial Executive, Sales Executive and Strategic Business Development Executive to do the job of the previous top dog. Business not realising the underdog is the one who fulfilled all these roles as the previous top dog.

Before we “down- or upgrade” the role of the Credit Manager, we should take a closer look at what, in its most extensive form, Credit Management means:  

• Analysing, managing and optimising the financial risks of doing business. Doing business is only useful when invoices will and can be paid by your customers.

• Optimising customer value by focusing on the strategic and commercial value of the customer for an organisation in terms of revenues and profitability. 

• Applying financial relations management in line with customer relations management and company objectives. In general, a good relationship with a customer will have a positive impact on his payment behaviour and finally customer loyalty.

• Aligning of people, processes and systems into the organisation by means of communication and cooperation throughout the whole financial and physical supply chain. The integrated approach includes queries as customer relations management. 

• The use of integrated automated solutions is essential to disclose relevant information throughout the organisation. Dedicated software solutions will enable your company to automate your processes in an efficient and centralized way.

Now to the crux of my story - what if I were to tell you that being the underdog would give you more power than you could ever dream of, would you think I was crazy? Maybe so, but the moral of the story is that if you feel like an underdog somewhere in life, you actually have a massive competitive advantage if you play your cards right. While others spend their lives sulking because the business didn’t spoil them relentlessly, you know better. You know that being an underdog in life can prepare you for greatness.

Here are 3 reasons why the company should see the underdog can actually be their winning ticket:

1. History proves underdogs come out on top

From David & Goliath to Donald Trump, history has shown us that being an outsider can prove to be your secret weapon. In the tale of David & Goliath, David was so much smaller than any sane person would’ve projected him to get clobbered by his gigantic opponent. 

That’s just physics, right? - Wrong. You see David was far smaller, but he also had one heck of a swing. So much so, that when he threw a rock at his target, Goliath was so thrown off that he couldn’t even see straight. The enemy was down for the count. In our own lives, we must remember that, just because the cards may appear stacked against us, the game is not necessarily over. Don’t give up too soon. Just because you might not look like those who have succeeded in the past, realise that your unique set of capabilities could help you win in the end.

“I’m very competitive by nature. And I like to be the underdog – It’s the best way to win. To come from behind and win is a great feeling!” – Zac Efron.

2. Underdogs don’t play by the rules

If weaker opponents always played by the rules of the game, they would, of course, lose a majority of the time. The competition is naturally stacked against them with a list of assets they are lacking. However, when a hypothetical long shot decides to bypass the rules, he or she unlocks more power than can be imagined.

You see, the projected winner knows what it takes to master the game. They have the tried and true skills that it takes to succeed. When an underdog is compared to these standards, he or she will always come up short. Yet, when they decide to play unconventionally, a whole new world of possibilities opens up. By forgoing the rules of the game, the dark horses of this world can spot holes in the competition.

3. Underdogs have nothing to lose

When you start from the bottom, you don’t have much to lose. While the company has everything to lose including their reputation, assets and power, outsiders can play by whatever means they wish. They are not held to any standard. This is power, in itself. If you’re an underdog somewhere in life, realise that this could give you power in that you’re not held to the same constraints as others who have been playing the game for years.

You don’t have to wait on anyone’s approval to get started. You don’t need to ask anyone for permission; you can instead map out plans for getting to your goal in whatever way you see fit. For instance, if you’re operating on a shoestring budget instead of pulling from a pool of money, see this as a chance to get creative and do things your own way. This could be your key to success in the end.

“The fact of being an underdog changes people in ways that we often fail to appreciate. It opens doors and creates opportunities and enlightens and permits things that might otherwise have seemed unthinkable.” – Malcolm Gladwell

To be an underdog is often to go up against the “establishment.” If you learn to spot holes in the system, you’ll undoubtedly come out victorious. While others waste time trying to master the game, underdogs see hidden opportunities. Being an underdog can at times be frustrating because many people do not believe that you will succeed.

The truth of the matter is if you are an underdog, you are in a prime position to prove the doubters wrong. Those same people who are saying negative comments about your dreams might believe that you don’t have all the resources or skills to succeed, and at times, you might believe the naysayers about not having the necessary resources to succeed.

The truth of the matter is that if you are a large or small business, a solo-entrepreneur, the overlooked employee, etc, you really don’t need a lot of resources or skills to be successful because you have two important things that many corporations do not have: A Loyal Following And Tenacity

1. They Have Built A Loyal Following

A small business owner or solopreneur can interact with their fans or customers through social media and build genuine relationships with them.

They do not have to worry about getting approval from the top-tier executives to tell their story of how they overcame their struggles to be successful and also share their “secrets” with their audience.

Newsflash:   IF YOU ARE AUTHENTIC WITH YOUR AUDIENCE, THE COMPETITION WILL NOT BE ABLE TO COPY YOU.

2. They Have Tenacity

Sure you had the drive to be successful before you heard the naysayers said that you could not succeed in your career, business, etc. However, those negative comments gave you the extra motivation to work towards being successful.

But what you should consider is how much of your precious time, energy, and attention are spent feeding the story of you being an underdog? How much head-trash, psych-outs, and lost opportunities will you endure at the hands of this self-fulfilling prophecy you’re creating and perpetuating?

To move from underdog to top dog you should first understand that the fundamentals of best practice in credit management are the maintenance of high standards of professional conduct and competence, underpinned by the principles of honesty and integrity. These standards apply equally to the personal behaviour of an individual, the working relationships within a team and other colleagues, any activities are undertaken on behalf of a member’s employing organisation, clients or customers, and actions which have an impact on society at large. 

The principles of credit managers and their staff to uphold: 

1. maintain an impeccable standard of integrity in all their business relationships both inside and outside the organisation in which they are employed; 

2. never improperly use their authority for personal gain and to uphold and enhance the standing of the credit management profession; 

3. foster the highest possible standards of professional competence amongst those for whom they are responsible; 

4. make the best possible use of the people and finance for which they are responsible so as to provide the maximum benefit to their organisation; 

5. comply with the letter and the spirit of the law of the country in which they practise and contractual obligations; 

6. reject any business practice, the propriety of which might be open to doubt. 

7. ensure a duty of care to any and all customers or clients with whom they are dealing by: 

i. fulfilling the commitments that they undertake 

ii. accepting responsibility and accountability for issues resulting from their own errors and/or omissions and for any resulting consequences 

iii. communicating clearly and resolving issues promptly 

iv. accepting only those assignments that are consistent with their background, experience, skills and qualifications 

v. protecting propriety or confidentiality of information which is entrusted to them and never using it for personal gain 

vi. respecting resources entrusted to them, including people, monies, and/or reputation 

8. use due diligence and exercise high standards of timeliness, appropriateness and accuracy in any information and advice they provide. 

9. refrain from any illegal activity, including but not limited to theft, fraud, corruption, embezzlement, or bribery.

10. refuse to accept, condone or assist others in engaging in illegal behaviour. 

11. report any illegal or unethical conduct. 

12. declare any real or potential conflict of interest that might arise and refrain from engaging in any matter which may impinge on their impartiality 

13. avoid any arrangement which might prevent the effective operation of fair competition. 

14. refuse to accept gifts or hospitality which might or which might be deemed to compromise their business decisions. 

15. hold, and account for, money or fees received from clients or customers in such a way that the funds are safeguarded, identifiable and protected.

To move from top dog to underdog to top dog rest on your belief that there’s something intrinsically human about the tale of an underdog versus the top dog. This move teaches us about disrupting common beliefs and overcoming and confronting society’s stigmas.