As a Credit Manager your customers fall into a number of categories, you should develop and delegate systems to deal with the low value and low risk accounts. You should concern yourself with the key customers and the high risk accounts with significant balances.
I would suggest you spend time getting to know the key people and building relationships with them. The more I get to understand business, the more important it is to develop strong relationships at the highest possible level, and with the relevant people in every organisation.
Your Key Customers
You should be on first name terms with at least two people in every one of your top 10 customers. Even if you simply call to make sure everything is ok and they are happy with the service you are offering and make sure your invoices are easy to understand and process at their end.
If you have a build up of queries sometimes the simplest way to resolve them is to meet your customer contact with your account manager and their purchasing people, that way you can resolve all the issues on the spot and agree a means of communication and who should be in the loop on both sides going forward. For this meeting to be successful you should document everything that was said and agreed and put through the required adjustments, credit notes etc immediately on your return. You should also prepare minutes of the meeting stating clearly who is to do what when and circulate it to all present, this too should be completed and circulated on the day after the meeting to ensure you get the required action.
You should endeavour to get direct dial numbers and mobile numbers for everyone present when you are there.
I found it to be a good idea to collect the cheque at a set time every month from my top 10 customers – this creates certainty around collections and helps build the relationship.
Your High Risk Customers
You should identify your high risk customers with significant balances and make a point of performing a financial/ business review as appropriate. You should visit them at least once a year as soon as their final accounts are ready for inspection. For very high risk customers or start ups you may need to visit twice a year or even quarterly. The purpose of the meeting is to satisfy yourself they are on the right track and will still be there when you come back. This information combined with your impression of the business on each visit will reduce the number of surprises you will experience in the long term.
Depending on your workload and the geographical location of your key customers you could spend three or four days a month in the field gathering live data to update your own records. All these meetings should be documented and filed so you can chart the progress from visit to visit. In today’s climate, the financials are important but their cash flow forecasts are more important. Your first job each time is to check the real cash flow situation against their previous projections. If these are a close match or better than forecast that tells you one story, if the position is worse than forecast that tells you another.
Vigilance and consistency are key factors in the ongoing management of your credit function.