How the Credit Department adds value to your company. (Best Article Award).(Brief Article)

To understand fully how the Credit Department adds value to your company, you must first understand what the Credit Department does. That's easy, you say--the Credit Department just processes credit applications and makes a few collection calls, right? Well, today's Credit Department has many more responsibilities than that. The Credit Department sits at the core of the business by having daily interaction with the following: Sales, customers, Customer Service and Shipping, Inventory Control, Billing and Cash Application, Accounting, and Management. The Credit Department adds value to the company through its relationship with these departments.

The relationship between the Credit Department and the Sales Department is critical: they are truly co-dependant on each other. Since most business-to-business sales are transacted on a credit basis, this creates accounts receivable that is the company's largest and most liquid asset. It is the goal of the sales staff to generate and maximize sales, and it is the goal of the Credit Department to protect the company's most valuable asset, accounts receivable.

The Credit Department has a unique relationship with the customer. While the Credit Department is often considered "The Collector", their relationship with the customer is much broader than that. If a customer is not happy with the service your company has provided, or believes that they have been billed incorrectly, they may not pay their bill. The Credit Department can usually see a problem in-the-making, and get the Sales Department involved for quicker resolution. Good communication with the sales staff and strong relationship-building with the customer leads to a better quality of accounts receivable.

Another area of focus is Customer Service and the Shipping Department. The Credit Department is more typically involved with problems that may have developed in the ordering process or shipment of material. Many customers will deduct for errors when making payments--deductions which may or may not have been authorized by a company representative. The Credit Department tracks these deductions to help make corrections in the process that may otherwise prove very costly for the company.

The relationship with Inventory Control may seem distant--however, it becomes relevant when researching payment problems or issues come up with returned materials. Inventory control can help by verifying mis-shipped orders and communicating possible shortages, problems with defective material, and errors or problems that turn up ...