As a credit risk management professional, aligning your credit and collection goals with the objectives of your organization is essential for a cohesive and effective approach. Depending on the company size and leadership hierarchy, here’s a general outline of the individuals or departments you may need to involve in establishing and executing your annual credit and collection goals.
The CFO – This individual is usually responsible for setting the overall financial management strategies for the company. By discussing your goals with this person, you can ensure that your credit and collection objectives align with the company’s broader financial targets, such as revenue growth, profitability, and risk tolerance. The CFO can also provide insights into potential challenges or opportunities in the industry that may affect your department’s focus.
Sales Team – Next, since credit and collection professionals often interact with the sales team, collaborating with sales will help ensure your goals support the company’s growth ambitions without jeopardizing customer relationships. For example, sales managers can share insights on expected sales trends, target markets, and potential risks associated with specific customer segments, enabling you to set realistic credit terms and collection strategies.
Supply Chain Team– If your organization deals with complex supply chains, engaging with the operations or supply chain management team is vital. Delays or inefficiencies in supply chains can impact a customer’s ability or intention to pay. Aligning your credit and collection goals with the operational realities of the supply chain ensures a more integrated approach to managing risks associated with cash flow disruptions.
Legal Team – Finally, your credit and collection goals must comply with relevant legal and regulatory frameworks. Engaging with the legal and compliance teams ensures that your strategies adhere to industry regulations, such as Fair Debt Collection Practices, credit reporting laws, and anti-discrimination policies. Their input will also help you mitigate legal risks that may arise from aggressive collection practices or inadequate due diligence during credit evaluations.
In summary, your credit and collection goals should be a product of cross-functional collaboration and strategic alignment with the company’s broader objectives. Engaging with key individuals, departments, and teams will ensure that your efforts support sustainable growth, maintain healthy customer relationships, and effectively manage credit, collection, and financial risks.
Your thoughts and comments (nseiverd@cmiweb.com) are most welcome!
Nancy Seiverd, President
CMI Credit Mediators, Inc.
All Rights Reserved
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