Beyond the Credit Department: Making Business Decisions Is a Team Effort

The best credit decisions are made in a team environment and several different departments can provide input. A recent?eNews?poll revealed 97% of credit teams involve upper management in credit decisions, along with the sales team (26%), treasury (9%) and customer service (3%).

Standard procedures for credit decisions usually start with a customer who requests terms with the sales department, leading the sales team to provide the credit department with a background on the customer along with their projected sales. Because of the risk involved in making credit decisions, credit professionals usually have a helping hand or two in making decisions.

The customer service, sales and the credit departments are all involved in credit making decisions, said Natalie Pearson , CBA, regional credit analyst at TTI, Inc. (Fort Worth, TX). “Very rarely is the decision making strictly credit based,” Pearson said. “We always like to involve the sales teams so they are aware of what is going on, and often they have information that we may not as they have the closest relationships with customers.”

Before creating a decision-making process, it is key to first determine what the end goal is. Some credit professionals work directly with other departments, but others make the final say themselves. “For our foreign division, I do all the research and get the customer’s credit reports, review them and make a recommendation while the CFO does the final approval,” said Faith Padgett, CICP , credit manager at Farm Direct Supply, LLC (Fort Lauderdale, FL). “But to get to that point, it is pretty interactive. I’m always talking to the team and trying to help them visualize the customer and what their goal is when we’re making a credit decision.”

Other departments, such as sales, can provide an extensive history of customers down to their payment patterns and intangibles you may not see in a traditional credit report. The involvement of several departments in making credit decisions reinforces a teamwork mindset and even builds a sense of trust in the workplace. It allows for checks and balances to be in place, said Pearson. “The common goal for us is profitability,” Pearson added. “We always involve other teams to see if it will be worth it in the end to extend terms to any prospective customers that may want a credit term with us.”

Working with others to come to a decision also provides timeliness. It is overall more effective to gather information with everyone’s input rather than all data being gathered by just one department or person. Some credit departments may not have the time to thoroughly review every single customer without help. “We depend on sales for company reviews and that is also their expertise,” said Justin Cowart , credit supervisor at Nucor Yamato Steel Co. (Armorel, AR). “It prevents us from spending time on credit analyses for a customer that we would not want to sell to, to begin with. It keeps us focused on the customers and the applications that have the most potential—ensuring the best use of our time.”

Cowart also said one of the credit analysts on his team sends a recommendation and the trust built over time allows him to be confident in their decisions. “99% of the time, I’m going with my credit analysts’ recommendations,” Cowart said. “Having that trust built up with the folks you’re working with and knowing they’re making sound decisions moves everything along a lot better.”