Establishing your game plan: improve profit without increasing exposure.(International feature)

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The word "security" is bandied around quite frequently in the world of credit.

It's a good thing ... something credit and financial managers strive for in all their transactions and in all their decisions to offer goods without immediate, instant payment like the kind found in so many retail stores around the world. It's about mitigating risk and, ultimately, about keeping a company above water, safe from the financial trouble that may await companies who sell indiscriminately.

At its base though, the quest for security is motivated by a very basic and instinctive impulse.

"Fear," said Narciso Munoz, CICP, credit manager at Cooper Tire & Rubber Co. "Why do people buy life insurance? Health insurance?" he asked. "We want to make sure we're taken care of. Same thing with credit."

Taking financial risks in the global economy presents credit professionals with both the opportunity for lucrative increases in business and also for spectacular failures. It's no wonder then, that a credit manager, fearing the potential damage done to their performance record or to their company's financial standing, would seek out ways to ensure their transactions and give themselves the most opportunity for legal recourse in the instance of slow payment, default, bankruptcy and many other disruptive occurrences. However, large and small customers might not be willing to accept the level of security that would allow many credit managers to sleep better, no matter how much the customer's unworthy or how much of a gift it is that they're even getting any sort of financing.

"Sometimes, with a lot of customers, you cannot get the deal done if you're going to go with a letter of credit or some sort of secured transaction," said Munoz. "They'll find it offensive."