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Our Subscribers Say...
Credit Today's Resource Directory and their online e-mail forum (ListServ) provide information on almost any credit-related topic you can think of. It is a great way to exchange information with other credit professionals. As the saying goes, "You don't know what you don't know."
- Scott Goen,
Credit Manager, Big Lots Stores, Inc., Wholesale Division
"We've recently started using the ListServ tool within Credit Today. This is phenomenal and powerful forum for gaining immediate feedback, ideas, and suggestions, relative to any credit topic under the sun, all in a real-time e-mail format."
-Javier Vela, Senior Credit Manager, Global Credit Services, JDA Software Group Inc.
"Being a part of the Credit Today online community is like having the expertise of hundreds of credit managers at your fingertips. These credit execs are willing to help you solve topical business issues as they arise. In the current environment of ever increasing competing priorities which reduce our opportunities to meet peers out of the office face-to-face, this is the most valuable tool you can have on your desktop! It's important that we have a mechanism to reach out to our counterparts quickly to exchange knowledge as well as to stay on top of industry trends."
- Victoria Artis, Director of Customer Financial Services, Pfizer, Inc.
"Over the last 10 years I've seen Credit Today evolve from a monthly credit publication into a quality source of information and guidance for the B2B credit community. The website, with its user friendly form downloads, will take you from examples of new account credit applications to bankruptcy forms and everything in between.
The Credit Today ListServ has become the pre-imminent online forum, providing an opportunity for discussion and comments (and occasional humor) from an impressive list of credit professionals."
David Dungan, Director of Credit
Justin Brands, Inc. (A Berkshire Hathaway company)
Fort Worth, Texas
"There are numerous credit periodicals available to the credit professional today. How good is Credit Today? Is it relevant? I always have to read it late, or online because my credit analysts want to read it the minute it comes in. When my staff wants to read a publication before I have a chance to read it then something is working in that publication. We have cancelled our other subscriptions. When you have the best you do not need the rest."
Ron Woods
Corporate Credit Manager-World Wide
Thales Navigation, Inc.
"The newsletter, coupled with the website and the ListServ, are to us, more valuable than any other credit publication, bar none. I try to use at least one article out of each newsletter for departmental training/discussion sessions."
D. Mark Constantine
Corporate Credit Mgr
Fulton Paper Company
"I love Credit Today and read every issue cover to cover. For me, the greatest perk of a subscription is ListServ. I believe Credit Today's ListServ members may be the most knowledgeable Credit brain trust in existence today. I have saved and categorized hundreds of contributions on a wide variety of topics which I refer to often. It's an easy and cost effective way to network and learn."
Doug M. Thomas
Kimberly-Clark Customer Financial Services |
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The Incredible Shrinking Credit Departments!
Are there incredible stresses on today's credit departments? Most definitely. Read on to find out what's happening and why.... Probably the biggest overall finding from our just-completed 2010 Credit, Collection, and A/R Staff Benchmarking Survey is a quantification of just how much credit staffs have been shrinking over the past five years.
Approximately 400 credit execs from every size and type of company participated in the study, in which we made detailed comparisons of credit, collection, and A/R staffing levels.
Our primary goal was to enable credit execs to benchmark their staffing levels against those of their peers, using the most important metrics (sales volume, business type, # of invoices processed, A/R size, among others).
But the survey also generated some important "big picture" data, particularly in comparison to a similar study we conducted in 2005. As a result of that study, we were able to compare overall staff sizes now with those in place back then. And the numbers are staggering. Here are just a few to chew on:
| The Incredible Shrinking Credit Departments! |
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Staff Size in 2005 (in FTEs) |
Staff Size in 2010 (in FTEs) |
| Industrial Manufacturing |
12.1 |
5.9 |
| Wholesale/Distribution |
13.1 |
9.5 |
| Consumer Products Manufacturing |
13.4 |
11.9 |
| Collection Staffs (all industries) |
5.9 |
3.7 |
These are numbers for some broad industries and categories and they certainly tell a story that many in our profession already know "in their bones."
However, it's important to look at a couple of factors in the "big picture."
First, we're in an extraordinary time, an exciting time, really. We are in a cycle of continuous productivity growth that started roughly 25 years ago with PCs and microchips, and their ever increasing power. That is now being further enhanced by the Internet. We see that productivity trend continuing as far as the eye can see.
We are also in an era of unprecedented global competitive pressures to cut the fat and be as ruthlessly efficient as possible. This mentality is necessary to compete in today's world economy. No company will survive if they are operating in an envirnoment that allows a credit department to function with old technology and a staff of 40 when a staff of 12 is sufficient!
But does that "cut-cut-cut" mentality ever go too far?
Is management ever wrong in its efforts to make these cuts?
They certainly are.
And here again, our research in this survey offers some important insights.
More than one out of four (26.6%) of today's credit departments are understaffed. Within that group, the estimated number of staffers needed to get up to speed is 1.7.
"So what," you might say. Management has to do what it has to do to make the bottom line. And credit should be forced to "feel the pain" just like every other part of the company, right? Or at least that's what management must be thinking.
But that rationale only makes sense if you consider credit an expense, rather than an extremely important investment.
We, of course, consider it an investment that must be nurtured intelligently, not arbitrarily cut.
The Consequences of Understaffing
Right. You're a trade publication focusing on credit. Just a little bias, perhaps? Well, we'll admit to some. But it's a bias based on hard data.
The DSO for the universe of companies who believe they are fully staffed is 41.7, while the DSO for those who are understaffed is 50.7. It's important to keep in mind that understaffing may not be the cause of the underperformance. But let's put it this way: if I were a betting man, I'd certainly bet that it was a significant part of the cause.
After all, if you're not fully staffed, you can't:
- follow-up on collections properly
- keep up with the continuous evaluation of the creditworthiness of your customer base
- keep up with the monitoring and follow-up on customer deductions.
Being "less than stellar" in any of these areas will of course have a significant negative impact on DSO. So, any staff cuts beyond what's needed to do the job are likely to cost companies far more than the savings generated from the staffing cuts. A good credit staffer is worth his weight in gold!
We don't normally make a blatant self promotion in our weekly letter, but if you really want to know where you stand relative to your peers, this is a great report, and it's available now for immediate download. If you're a member of Credit Today Online, you're entitled to a special discount of less than half the "sticker price" of $275. Please click here to order!
And if you're not a member, that's all the more reason to join our other satisfied members!
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This month's topic: Extended Terms Requests
Click here to participate!
We're examining:
- Whether there has been an increase or decrease in requests for extended terms recently
- Whether or not credit departments have policies relative to extended terms requests
- Whether or not extended terms impact sales commissions
- What the primary factors are when considering extended terms requests
- Who is ultimately responsible for approving extended terms
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July 2010
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