Help! I need a good credit manager!
This article first appeared in the NBR in March 2009
But what exactly does "a good credit manager" look like?
When I was 26, I met the owner of a debt collection agency socially. He offered me a job running a collection business he was buying. As I had suspected, I enjoyed managing staff, improving systems, and dealing with debtors a lot more than I enjoyed being a lawyer. A couple of years later, still young and foolish, but full of confidence, I went to Telecom as a credit manager. Luckily, Telecom was a monopoly at that point, so I couldn't do the business too much harm while I learned that debt collection and credit management are only loosely related. (Ultimately it turned out OK.)
Credit management isn't sexy; it hasn't, to date, been a recognised stepping stone to the top in business (though we live in changing times). In many credit seminars, over many years, in both Australia and New Zealand, I've asked the attendees how many of them left school dreaming of working in the field of credit management. No-one has ever raised their hand. There is no university degree in credit management. Most fall into credit by mistake, when someone else leaves and they're asked to fill in, or when a job includes a bit of collecting overdues. If they're good, they rise through the ranks.
This can be a problem for a business which wants a star credit manager for a bigger credit role. You may find plenty who have learned at the school of life, but if your industry or the role you offer is outside of that life experience, they will have some more on-the-job learning to do.
Here are my three key attributes the ideal candidate should have. The first is a good understanding of law, because credit management generally involves lots of law. Your ideal person needs enough to be able to negotiate confidently with business owners, insolvency practitioners, and fast-talking lawyers.
The second is people skills, which of course cover a great many things. Good credit managers are regularly telling customers (and often colleagues) things they don't want to hear and asking questions they don't want to answer. And even though they're saying hard things, they still want their business. The easy option is not to ask that hard question, and many credit managers don't. Your ideal candidate must be tough enough, brave enough, and also charming enough to say these difficult things.
They need to be able to earn and wield influence in their own business, building bridges with and giving feedback to senior managers. They need to be able to persuade people to do the credit-related things that they should be doing but don't enjoy.
Also under the heading of "people skills" comes "managing staff" (assuming there are some). Skills for managing debtors don't necessarily transfer to running a team.
The third attribute (and there is some overlap between the three) is "business nouse". They have to understand where the best interests of the business lie - the profit margins which apply, and the appetite for risk which is appropriate - in order to be able to train their colleagues and staff in what is required for business success, as opposed to good-figures-this-month. And of course, they have to make good decisions about who will pay their debts.
In general, broad experience seems to help, both general life experience, and things like time spent working in sales, or owning a business, but practical credit experience is also crucial.
Of course, this paragon has to have built up those skills over a period when bad debt was generally very low, and credit management roles generally underpaid, undervalued, and small in scope. They now have to apply them in a time of economic crisis. I anticipate head-hunters hammering on the doors of a very small number of possible candidates.
Peter Hattaway is a director of Hattaway & Associates Ltd, Credit Consultants, www.hattawaysconsulting.com.