July marks more than just the start of the second half of the year, it’s also a critical checkpoint for credit professionals. Are your credit goals for 2025 on track? Or have they quietly drifted off course while you were juggling approvals, collections, lack of staff, and customer complaints?
Midyear is the perfect time to pause, evaluate, and recalibrate. And for many credit teams, the story is more complex than a simple “yes” or “no.” When goals like reducing DSO, improving current ratio metrics, or limiting write-offs fall short, the causes are often a combination of external economic stress and internal execution gaps.
Externally, the economic and geopolitical environment is doing few favors for credit departments this year. Global instability, from regional conflicts to volatile oil prices, has kept costs unpredictable and supplier relationships strained. Some customers are battling delayed inventory, reduced production runs, or overseas payment bottlenecks, all of which can slow their own revenue and prompt slower payments to you. Add to that the lingering effects of inflation and possible rising interest rates, and even the most well-intentioned customers may be stretching terms or pushing back on credit limits. If your customer base includes importers, manufacturers, or contractors, it’s very likely that their ability to pay has been compromised by forces far beyond their control.
But while it’s easy to blame the macro environment, it’s the internal factors that often go unnoticed until DSO starts creeping up or aging reports begin to flash red. One common culprit is the routine override of credit decisions. In pursuit of top-line growth, many credit teams face pressure to approve marginal customers or grant higher limits without updated financials or supporting data. While these overrides may be justified on a case-by-case basis, they become problematic when they occur frequently without proper documentation or review.
Another internal factor is rushed or incomplete credit evaluations. When sales volumes pick up or new customers are onboarded quickly, credit assessments sometimes get fast-tracked or even skipped altogether. If your team is relying on outdated trade references, incomplete financials, or gut instincts to approve accounts, you’re essentially building a portfolio on sand. These shortcuts often feel necessary in the moment but can lead to painful consequences later in the year when receivables begin aging beyond terms and collection efforts become more time-consuming and costly.
Insufficient monitoring of past-due accounts can also sabotage progress. A credit policy may look strong on paper, but if collection activity doesn’t kick in promptly, or if disputes and short pays aren’t resolved quickly, accounts slip through the cracks. This is particularly common during the summer months, when team capacity is stretched thin and routine follow-up gets delayed. A few key accounts past due by 15 to 30 days can distort DSO targets and jeopardize monthly cash flow. And if collection escalations aren’t happening according to policy, the likelihood of write-offs or referrals increases by the end of Q3.
To get back on track reaffirm your internal processes, update your risk monitoring tools, and re-engage with sales leadership to ensure alignment on who gets credit, how much, and under what terms. Goals don’t drift off track overnight, and they don’t get fixed in a day. But with a clear-eyed midyear review and a willingness to act, credit professionals can reset the course and finish the year with confidence and control.
Your thoughts and comments (nseiverd@cmiweb.com) are most welcome!
Nancy Seiverd, President
CMI Credit Mediators, Inc.
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