Credit management is the process of controlling and collecting payments from customers. This is the function within a bank or company to control credit policies that will improve revenues and reduce financial risks. A credit manager is a person employed by an organization to manage the credit department and make decisions concerning credit limits, acceptable levels of risk and terms of payment to their customers. In companies, the role of credit manager is variable in its scope. Credit managers are responsible for:
- Controlling bad debt exposure and expenses, through the direct management of credit terms on the company's ledgers.
- Maintaining strong cash flows through efficient collections. The efficiency of cash flow is measured using various methods, most common of which is Days Sales Outstanding (DSO).
- Ensuring an adequate Allowance for Doubtful Accounts is kept by the company.
- Monitoring the Accounts Receivable portfolio for trends and warning signs.
- Enforcing the "stop list" of supply of goods and services to customers.
- Setting credit limits.
- Setting credit terms beyond those within credit analysts' authority.
- Setting credit-rating criteria.
- Troubleshooting problem accounts.
- Setting and ensuring compliance with a corporate credit policy.
- Obtaining security interests where necessary. Common examples of this could be PPSA's, letters of credit or personal guarantees.
- Initiating legal or other recovery actions against customers who are delinquent.
Credit managers tend to fall into one of two groups due to the differing specialty legal and jurisdictional knowledge required:
- Commercial Credit Managers
- Consumer Credit Managers
Companies which sell to both markets will require a credit manager familiar with both aspects of credit management.
Usage examples of "credit manager".
Ravel, the Karg replied, as solemnly as a credit manager looking over your list of references.
Foster sat looking at me, wearing an expression between a frown and a smile, like a credit manager turning down an application.
Despite the grimy cold-water apartment in the shadow and roar of the flyover, despite his nagging wife and their sick child, and the endless altercations with the landlord and the supermarket credit manager, Hathaway still retained his freedom intact.