This major apparel maker chalked up its best record ever for days sales outstanding last year while increasing sales by 12% and reducing credit staff by 35%. How was this possible? The credit chief attributes much of the achievement to a network of smoothly functioning teams.

Editor's Note: This article originally appeared in the Credit & Collection Manager's Letter, which Credit Today purchased in 2006. This article was a Forum column.

Before the credit department takes any adverse action (e.g., a credit hold) against any important customer of Oshkosh B'Gosh Inc. (Oshkosh, Wisconsin), a four-member team meets to discuss the problem and vote on a recommendation. The team consists of the corporate credit director, the vice president of Sales, and the regional sales and credit or accounts receivables managers in the region where the customer is located. Team rules require that three of the four must agree for an action to be approved.

"To date, we've convened the team twice," says Credit Director Lee Teigen, CCE. "In both cases, the decisions were unanimous."

This interdepartmental team, formed to iron out issues that might arise between Credit and Sales, is just one of many--interdepartmental, intradepartmental, and multidepartmental--established since the company began moving toward a more team-based environment in the early 1990s. What has resulted is a network of teams at various levels and encompassing a number of different departments. Teigen discusses the implications of the team-based organization for the credit department.

Intradepartmental Teams

In early 1994, the credit department reorganized into three different teams:

• A transportation team (a function for which Teigen also previously had responsibility).

• Two credit teams (divided up by customer), each with six members. "Each team takes care of the total process for which we have responsibility," explains Teigen. This includes credit decision-making, cash application, return authorizations, deductions, credit memos, collections, and write-offs.

Multidepartmental Teams

In late 1995, senior management endorsed Teigen's recommendation to create a cross-functional project team to address the challenge of customer deductions. The team wanted to reduce the number and the overall cost of deductions, improve their handling, and communicate better with customers on deductions questions.

The team has nine members:

• director of Corporate Credit (Teigen), who is also the team leader

• vice president of Sales

• director of Information Service

• director of Customer Service

• Advertising manager

• Corporate Transportation manager

• Accounts Receivable manager

• HR Training manager

• a distribution center manager

Teigen explains that the team's size was carefully planned. "If you have too many people on a team, you really never accomplish anything," he says. "On the other hand, if you have too few, you don't have enough people involved in making the decision to get the support of the rest of the organization. "The director of Information Services, for example, helped the team by providing reprogramming resources in order to communicate better with salespeople about deductions. If we hadn't had IS on the team, our request would have probably sat in a pile in the IS department to be done later."

All team members were selected on the basis of their involvement in the customer deduction process and the need for their support and assistance.

In researching the source of the problem, the team targeted two areas for improvement:

1. Communicate better with the sales force. "We came up with better ways to report deduction information to salespeople," he says. "We also developed a form for sales managers to use when evaluating their salespeople related to deduction performance."

2. Train the salespeople better. "We provided salespeople with better training on how to handle deduction information when communicating with customers."

As a result of the team's efforts, the turnover rate for deductions (the total number of days required to clear up deductions) was reduced 21% to 85 days, the lowest in the history of the company. Teigen adds that virtually all accounts in the 120+ day column tend to be unresolved deductions and that "we were able to reduce this column by about 70%.

"Customers are now much happier that deductions are being resolved faster," he continues. "The improvement has also reduced the amount of travel that we must do to meet with customers to resolve deductions."

Editor's Note: The above article originally appeared in the Credit & Collection Manager's Letter, a newsletter purchased by Credit Today in 2006. This article originally appeared prior to 2000.