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Fort Worth, Texas
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Getting Credit Analysts to Work on Their Own
How much responsibility do you give credit analysts? Do you encourage them to find new ways to handle the same old issues? Do you urge them to contact other departments without talking to you first? And, do you encourage managers to approach analysts directly without coming to you? If not, you're probably wasting valuable time handling issues the analysts should be resolving themselves.
"We challenge credit analysts to become more entrepreneurial," says John Larson, general credit manager for Cooper Power Systems Inc. (Waukesha, Wisc.). "I encourage the analysts to find different ways to resolve problems. If something is always done in the same manner, we become complacent and tend to miss things.
"We try to get people to take their blinders off and look at things a little differently. All through business careers, people are forced into parameters and they don't go beyond their job definition. That's a built-in inefficiency. It's not taking advantage of people's abilities and it short-changes the company."
Key aspects of Larson's approach to managing include:
Encouraging analysts to take the initiative. Analysts are encouraged to resolve issues on their own. According to Larson, in most companies analysts are required to bring issues to their manager who then contacts either the customer or another manager.
In contrast, Larson's credit analysts contact whomever they need to in order to resolve a particular problem. For example, they may call the customer directly without checking beforehand with Larson. If they don't get an adequate response from the first person they contact, they're encouraged to take additional steps.
"The only parameters," says Larson, "are don't get the company in trouble and don't get the credit department in trouble. Otherwise, it's carte blanche. Get the problem resolved.
"I've taken away any excuse for not getting the job done. The analysts can always say, 'This person didn't respond, "but I tell them, 'Move up the ladder and talk to the person's boss and then the person's boss's boss.'
"If the analysts feel they've hit a brick wall and they want me to get involved, I'm happy to do so."
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In addition, if analysts need assistance from employees in other departments, they're instructed to contact these individuals directly.
"If there's an invoicing problem," Larson continues, "I say, 'Go right to the person who enters invoices, look at the problem, and get it corrected.'
"I've told the analysts, 'If you have to talk to manufacturers or the marketing department, make an appointment, leave the office, go visit these people and talk this over.'Analysts are not tied to their desks. They can drive to the various plants and meet with the controller or other people and talk with them to resolve an issue."
Achieving greater efficiency. Having analysts solve problems offers several benefits:
Saving time. Problems are no longer passed from manager to manager before reaching the people who can actually solve them.
Making the analysts' job easier. Accounts involve a variety of issues, such as deductions, invoicing, debits, and unapplied cash that must be addressed quickly and easily. If analysts contact a manager for each problem, they can't do their job efficiently. They may also feel frustrated since issues are not resolved as quickly.
Allowing Larson to focus on other priorities. "I can expand this department to other areas if I can get out of the routine of credit and collections," he says. "I want to go into more cash management, forecasting, and looking at the macro side of improving certain procedures. But if I'm tied down to the micromanagement of accounts, I'm less effective for the company and less efficient. It makes sense to have analysts manage their accounts as much as possible on their own.
Fostering communication Larson has introduced the analysts to the appropriate people in Marketing and other departments. When he meets with Manufacturing, the analysts are also invited.
"We try to enhance the lines of communication so managers and people in other departments feel comfortable calling an analyst," he says. "The analysts are well apprised and can handle specific account issues better than I can.
"People come to me when they want to talk to an analyst, and that to me is a waste of company time. They should go directly to an analyst because the analyst can answer their questions.
"I also have the analysts talk to my boss directly as often as possible, and I encourage my boss to call them directly about issues."
Sharing information. Larson keeps analysts informed with periodic breakfast meetings. In addition, if an analyst's solution could benefit others, he makes sure the analysts meet to discuss the matter.
"They get together and talk about the resolution, and I'm not even part of the process," he says. "At the next breakfast meeting, they tell me what they discussed."
Reviewing analysts' performance. Notescreen capability enables Larson to check each analyst's performance on a monthly basis. A review of what steps they've taken on their accounts helps to determine which analysts are comfortable handling issues on their own. It also helps him address issues concerning what analysts should have done in specific situations.
Steady progress
Larson has encouraged analysts to resolve issues on their own since he joined the company about 5 years ago. Analysts were uncomfortable at first, and managers were sometimes miffed when they were contacted by analysts instead of the credit manager.
Now, analysts are more comfortable with the added responsibility, and managers are becoming accustomed to having analysts call for information. If they're resistant, Larson steps in.
The best indication of how well the concept is working is how knowledgeable analysts are regarding their accounts.
"If I can go to analysts with specific questions about their accounts and they have a complete understanding of the situation, I know it's working," he says. "There will always be issues where somebody irritates somebody else and we address that. But for the most part, it's working quite well."
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.
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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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