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.
Always directly responsible for staff performing:
- Setting Credit terms on Credit accounts
Can be directly or indirectly responsible for staff performing:
- Cash collection sometimes with a Collections manager or supervisor reporting to him.
- Accounts Receivable in as much a his staff may Remit and allocate cash received from customers.
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 which is measured using 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.
- Setting and ensuring compliance with a corporate credit policy.
- Obtaining security interests where necessary, such as a Debenture or a Cross Company guarantee, against credit extended.
- Initiating legal or other recovery actions against non-payers.
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
large companies which sell to both markets will require a Credit manager familiar with both aspects of Credit management.
Credit managers in Australia obtain memberships from the Australian Institute of Credit Management (AICM). Qualifications and continuing education can also be obtained from here.
Business-to-Business Professional Credit Managers can receive a Credit Business Associate (CBA) or a Credit Business Fellow (CBF) or the Certified Credit Executive or CCE certification from the National Association of Credit Management (NACM). NACM defines its Canons of Business Credit Ethics as follows:
Credit professionals pledge to:
- Adhere to the highest standards of integrity, trust, fairness, personal and professional behavior in all business dealings.
- Negotiate verbal or written credit agreements, contracts, assignments and/or transfers with honesty, fairness and due diligence to and for the benefit of all parties.
- Render reasonable assistance, cooperating with impartiality and without bias or prejudice, to debtors, third parties and other credit professionals.
- Exchange appropriate, historical and current factual information to support the process of independent credit decisions.
- Exercise due diligence as required to prevent unlawful or improper disclosure to third parties.
- Disclose any potential conflict in all business dealings.
There are two programs offered by affiliates of the NACM.
- Credit Administration Program CAP
- Advance Credit Administration Program ACAP
The median annual salary of a credit manager was $72,328 in 2006.
Credit managers operating within the United Kingdom can obtain accreditation from the Institute of Credit Management.
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