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May 01 2015
Credit . . . No Clear Black or White Solution
Samantha Gross, Intermountain Wood Products

Prior to my career in credit management, I worked as a drafter for a company that created roller coasters. Day in and day out I would help with the design and blueprinting of roller coasters and their parts. Whenever someone finds out what I used to do for a living, they wonder why I would ever leave because roller coasters are fun! And, well, credit management doesn't exactly have the same razzmatazz curb appeal that accompanies the amusement industry. 


Being a credit manager is not a glamorous position, and it is hard work that many, including some credit managers, see as undesirable. The hardest part of the job is making decisions that do not have a clear black or white solution. What we do greatly affects our customers, their credit scores and their ability to continue doing business so these decisions should not be taken lightly. Recently, I have been faced with many difficult decisions and many difficult phone calls where I have had to have the insight and courage to do what needed to be done. I would like to share a thing or two about what I have learned when faced with the more uncomfortable facets of credit management.

Each January our company holds its annual upper management meetings. In those meetings each member of the management group discusses his or her area of expertise and gives a recap of what occurred in the prior year. The president goes over the statistics and how the company did as a whole. This past year the president was discussing bad debt and pointed out that we were within our goal and congratulated us on a job well done. After the congratulatory remarks concluded, he went on to state that the goal isn't to be at 0% bad debt because if we are at 0%, that means that we are not taking enough risk and a company that doesn't take at least a few risks will not be able to progress and grow. When I find myself being too hard on a customer or on a credit application, I take a step back and ask myself whether or not this is a customer I should take a risk on, or if this is a path that should not be pursued. Deciding whether or not to take a risk must be a decision that is made wisely. You will not grow based on risk decisions made willy-nilly with only the hope that they will pan out. Be smart and calculate what you have to win and what you have to lose from your decision.

I have found in dealing with customers that credit management is much like parenting; you desire so greatly to be their best friend and you want them to succeed, but they require boundaries and rules in order to attain this success. Those boundaries and rules aren't easily enforced and require dedication and stamina to maintain. I have a customer that, from the very beginning, I knew would be consistently 60 days late, but decided that they were worth the risk and opened them anyway. Instead of fighting them about being late all of the time, I set up an agreement wherein they can charge as much as they like (even if they are past due) so long as it doesn't exceed their credit limit. They feel like they're in control because they aren't necessarily required to pay on time, but I also have control because I have the ability to stop orders if things go south, and I keep our exposure within reason. When they ask me for an account update, I give them a time frame on when I need money, and it just works. That's not to say that we haven't had our disagreements. A few times they have asked me to bump their credit limit to accommodate more sales without payment, but as I have stood my ground, that conversation has become obsolete, and they work within the restrictions I originally gave them. There is mutual respect and understanding because of the boundaries I have put in place and unwaveringly kept in place.

Even when we do our best to reach a conclusive decision about how to handle a specific customer, there still may not be a clear resolution. It is in these times that the best we can do is go with our gut. Our feelings are surprisingly intuitive and can lead us down the best path when logic cannot find its place.  


Credit management is a balancing act that sometimes tries to get the best of credit managers. However, through courage, risk taking, boundaries and intuition, it is a game where your strategy can win if you but do your part to be the best you can be.