201503 CM March

FASTER CASH
• CUSTOMER RELATIONSHIP •
HAPPY DAYS
Three experts argue that effective credit management is a matter of financial Customer
Relationship Management. Adapted from their book Happy Customers Faster Cash.
OVER the years much has been
written about credit management,
but what is striking is that topics
such as effective communication
and relationship management are hardly
discussed by our profession. We often
seem to take communication skills for
granted but is that wise?
We would like to emphasise the
importance of communication and
what we have termed ‘financial
Customer Relationship Management’
(fCRM) in helping organisations have
less interdepartmental stress, whilst
maintaining and growing more productive
relationships that in turn lead to better and
more sustainable results.
In ‘traditional’ CRM, companies strive
to find a balance between the value of
the customer (profitability) and the value
for the customer (customer satisfaction).
Similarly we try to find that same balance
in fCRM, but with a focus on the financial
aspects of the customer relationship. In
fCRM it is not just about the relationship
with the customer, but also the relationship
with your colleagues from marketing, sales
and service.
In B2B credit management, trust and
performance play a vital role on both
sides of the equation. As a supplier, we
trust that once we have evaluated and
validated the credit risk, the customer will
pay the invoice on time. The customer,
on the other hand, trusts that the supplier
will deliver the ordered goods at the right
time and at the agreed upon price and
conditions. As such trust and performance
reinforce each other, where communication
stands in the middle (see figure 1).
Communication can be seen as a
lubricant, to smooth the relationship.
After all communication makes or breaks
success in credit management. So
how do you become a more effective
communicator in credit management?
Listening skill
The first and most important skill for a
credit manager is listening. This may
seem obvious, but just like in sales, good
listeners are better able to identify what is
really going on with the customer. When
you take more time to listen to what your
customer has to say, you will also be able
to ask better questions and ultimately
come up with solutions that make sense
for both sides. Good listening may seem
easy, but for many to become good at it
takes a lot of practice.
The second important skills are
honesty, sincerity and taking responsibility.
In credit management we often have to
deal with excuses. But the best way to
counter them is by being honest and
sincere. By setting a good example,
others will sooner or later change their
own attitude, which is especially important
when you have to deal with irrelevant
excuses. Being honest and sincere is
fundamental for your reputation and how
you will be perceived, not just by your
customers, but also by your colleagues.
It will not only help you make better and
more profound decisions, but in the long
term it is the basis of building a solid
relationship
The third essential skill is friendliness.
We found that friendliness should be the
default way of thinking. Being friendly has
numerous benefits. Not only will it help
you to improve communication, it will also
significantly help you to grow productive
relationships. By acting in a friendly way
it has a huge positive impact on your
own stress level and last but not least,
by being friendly you will achieve better
results. Friendliness is something that to
some extent can be learned, but most
importantly friendliness must come from
within. Among others, empathy and being
interested in the other person are essential
elements for making an effective call. Once
you try it in practice, you will be surprised
how it will impact your results.
Most of us learn the ‘tricks’ of
good communication by trial and error,
but we could learn them a great deal
faster if we know at an early stage how
communication, relationships and getting
paid on time relate to one another.
Ultimately, good communication skills
benefit the relationship, which is the key
element for a sustained and productive
partnership.
Customer issues
The credit team is often at the end of the
supply chain. Sooner or later, however,
many customer issues land on the table
of the credit team. Though credit is often
perceived as a tough environment, it
opens a wealth of opportunities. Let us
take a practical case. Customers of a
company can also be suppliers on different
contracts, e.g. marketing services.
Payables to them are managed by
accounts payable team, which is usually
separated from the credit team.
One of the biggest customers of
company X used to pay their invoices
on time, but they were a bit concerned
about the fact that the company paid
their own invoices with a small delay.
Since the customer was very important
and risk of failure was very high no one
within company X wanted to deal with
the issue. However, the matter had to be
solved quickly and the customer’s CFO
was expecting a clarification by phone.
Although everyone seemed to be afraid
to make this call, the credit manager of
company X took the phone and started to
talk.
The credit manager personally
promised to take care of the payment
to this customer and in one week the
customer started to receive payments on
time. All the credit manager did was to
‘simply’ maintain good relations with its
biggest customer. However, since that time
60 March 2015 www.cicm.com The recognised standard in credit management