Does your company offer lines of credit to customers? Being able to conduct business by providing customers with credit options opens your company to important opportunities for better business relationships, cash flow, and growth. But that’s only if your credit accounts stay in good standing. If they don’t, your business could experience major financial turmoil. Having a trusted and reliable credit management partner assisting with your credit portfolio can help.

What is a credit management partner?

A credit management partner works alongside credit managers to complement and assist with the tasks and services that credit managers provide for their company’s credit department. A credit management partner can provide expertise and training on commercial credit management best practices, as well as valuable knowledge about credit risk management and related resources and tools.

Credit management partners can also offer objective insights for improving the credit management department’s performance. They have extensive knowledge about the credit industry in general and experience working with a variety of businesses and their credit departments.

A credit management partner can review your company’s credit policy to ensure that it’s up to date and covers the necessary components. A partner can help the credit manager analyze credit applications, review your credit portfolio, and assist your debt recovery efforts.

Finally, a credit management partner can help free up the credit manager to focus on core business processes, including managing the credit department staff. By off-loading some of the credit analysis tasks and collections functions, the credit manager can spend more time interacting with senior management, reviewing performance metrics, and maintaining relationships with customers, reporting agencies, and credit insurance providers.

What to look for in a credit management partner

Based on the role a credit management partner plays for the credit manager’s business — and the ramifications on the business — the partner should have the following qualities and skills:

  • Good negotiating skills for setting credit terms and resolving bad debt
  • Knowledge of credit law to comply with credit regulations and keep a company out of legal trouble
  • Integrity, with no involvement in shady lending or collections processes that could tarnish a company’s reputation
  • Rational thinking when making tough credit decisions or reviewing past-due accounts
  • A data-driven and analytical mind, which is essential when analyzing credit history, evaluating industry and economic trends, and managing a company’s credit risk portfolio

It’s important to research potential partners to ensure that they possess the qualities you require. Use business reviews/ratings, references, testimonials, and in-person or phone interviews to ensure they’re a good fit.

When bad debt happens

Despite due diligence and careful, research-based credit decisions, even a great financial professional can’t prevent bad situations from occurring. That’s why having a credit management partner is a good idea.

A credit partner can provide guidance with setting a company’s credit policies to reduce the likelihood of incurring bad debt, and they can take proactive measures to enhance the chances of debt recovery. When a business relationship goes south, the credit manager can focus on their own core duties of managing the credit team and rely on their credit management partner as a resource to handle bad debt collection activities such as:

  • Overdue payments
  • Delinquent accounts
  • Credit policy changes
  • Cash flow issues

When looking for a commercial credit management firm to partner with, it’s important to assess your primary needs and any skills or staffing gaps and find a company that can fill those needs. Mountain States Commercial Credit Management has a broad range of services, including contract review support, best-practices training and insight, and industry credit information for front-end decision-making and bad debt collection activities.

Credit managers play a vital role in ensuring a business’s financial well-being. By working with a credit management partner, credit managers can perform their roles even more effectively.

Need help managing your commercial credit risk? MSCCM financial experts can assist you. Contact us today.