Jean is the corporate credit manager for a mid-size
company responsible for an account portfolio totaling a little over $90
million. She has no staff and reports to the company controller. Her
responsibilities include new account set-up, credit investigation, credit
approval, collections and deduction resolution. She travels visiting key
accounts an average of seven days a month. Alice is a regional credit
manager also for a mid-size firm. Aliceísí
account portfolio is just under $25 million and she shares an administrative
assistant and file clerk with two other regional credit managers who all
report to the division credit manager. She performs the same job functions
as Jean with the exception of new account set-up, handled by the
administrative assistant, and also travels to visit her accounts.
Although Jean and Alice are not degreed both have
attended college. They are both active members of their credit association
and attend job related seminars and workshops as often as they can. For the
most part Jean and Alice have similar backgrounds and work experience.
Except for their job title and amount of their account portfolio their jobs
are similar. And yes, there is one other difference. Aliceís base salary
is three times that of Jean even though she has one-fourth the amount of
account receivable and is a regional whereas Jean is a corporate credit
There are thousands of credit professionals who share
the dilemma of Alice and Jean. Unequal compensation for similar job
responsibilities regardless of job title, size of the account receivable or
There are many reasons this occurs.
One has to do with job titles and the responsibility
tied to those titles. We have within the credit profession the following
titles that may or may not reflect the position of the title holder:
Account Receivable Manager
Credit Sales Representative
Credit & Collection Manager
Customer Service & Collections
Customer Service & Credit
Director of ________________
Manager of ________________
Not to mention regional, division, section, corporate,
vice-president and we just met an individual with the title President, of
Worldwide Credit Operations.
Many of these job titles perform the same functions but
for many the job title is a perk.
Another has to do with the perception of what exactly
credit professionals do and their importance to the organization. The fact
is credit-operations are more important today to the organization than it
has ever been in the history of business and credit sales. This is
attributed to the simple fact that we are, globally, a society dependant on
credit. More and more B2B organizations are accepting credit cards from
their business customers.
In the United States the average worker spends 108% of
their gross income. How? Credit cards. On average we carry no less than four
bank credit cards with an average balance of $11,464.00 according to
Bankrate, a leading company who compiles statistics on bank related services
Still today many organizations still look upon credit
and collection departments as an extension of the accounting department.
CREDIT PROFESSIONALS ARE NOT ACCOUNTANTS
In the beginning it was a common practice for the
accounting department to handle the credit function due to the fact that
credit was only granted to those customers who demonstrated character,
capacity and capital, the three Cís of credit. Thus, the credit department
was primarily concerned with the correct posting of credit sales to the
income statement and the corresponding account receivable and cash to the
balance sheet, an accounting function.
As credit has evolved through the years to where we are
today, the credit professional has shed his accounting mantle. Todayís
credit professional is not unlike the utility player on a baseball team. He
can and has to be able to field every position. Todayís credit
professional is a salesperson, negotiator, confessor, rabbi, analyst,
forgiver of past discretions, legal consultant, businessperson and yes,
Credit is no longer debits and credits. Itís a
combination of salesmanship, customer service and the ability to judge
character and negotiate. It involves innovation and creativity that when
usually utilized in the accounting field leads to involuntary confinement.
And we, credit professionals, do a very poor job of
explaining what our function is to both our organization and ourselves. We
often hear complaints from credit professionals that they feel their role is
misunderstood or they are not appreciated for what they accomplish. However,
one only has to look at their resume or job postings to see that we still
think of ourselves as accounting professionals. Do our resumes highlight our
success in increasing sales, our ability to negotiate or providing customer
service? More often they point to reduction of DSO and bad debt and where
does the organization reflect those numbers? On the balance sheet,
If we are going to successfully promote ourselves, we
need to reflect our achievements by highlighting the statement of cash
flows. How much cash did we bring into the organization from operations?
What contribution did we make to reduce the necessity of our company having
to borrow money to finance operations? How did our efforts assist in
increasing annual sales? What actions on our part contributed to the
organizations net profit?
We are not the only ones at fault. Many of us belong to
credit associations and they, too, have done a terrible job promoting our
profession. Generally, they send us, the member representative, a monthly
magazine telling us how vital we are. Thatís nothing more than singing to
the choir. They should be telling business professionals outside the credit
community how important and vital we are to the organizations success. How
recently have you read an article in Forbes, Fortune, Business Week, The
Wall Street Journal, Barronís, Investor Weekly, about how the role of the
credit department contributed to a companyís success? When was the last
time you saw an article on a credit professional in one of these
Professional employment agencies and headhunters are
our worst detractors. They still lump us under accounting in their databases
and online sites. So how do they calculate our base compensation? Usually
less than that of a controller or CFO.
The reality is that in most organizations today, the
customer no-service managers make more than corporate credit managers.
Customer no-service reps make more then credit professionals and yet who
truly provides the customer with service in our organizations? Who returns
the customers phone calls? Who answers the customersí questions? Who
satisfies the customer sufficiently that they place the next order even
after stating ďIíll never do business with your %$@#$&* company
againĒ? And who may I ask
gets the credit for the order?
In our opinion a credit professionals base salary
should be no less than their sales counterpart. However, this will never be
realized until we, the credit professionals, speak up and begin to promote
ourselves to our organization and others. If we belong to a credit
association we need to communicate our displeasure in their squandering our
annual dues in useless self-promotion rather than promoting us, not to our
peers, but to our superiors and the public at large. If we use placement
agencies to assist us in recruiting employees we need to educate them on the
function of the credit professional and insist that they address the
compensation for these positions and not take the easy way out and include
the position under accounting. If they can quantify customer no-service they
can certainly quantify credit and collections.
Only than will Alice, Jean and the rest of our
profession realize parity.
I wish you well.
The information provided above is for
educational purposes only and not provided as legal advice. Legal advice
should be obtained from a licensed attorney in good standing with the Bar
Association and preferably Board Certified in either Creditor Rights or