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Published Articles by David Balovich

Title: Parity
Published in: Creditworthy News
Date: 10/20/06

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.  Alice’s’ 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. Alice’s 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 manager.

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 support staff.

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 Administrator

Credit Analyst

Credit Clerk

Credit Manager

Credit Representative

Credit Sales Representative

Credit & Collection Manager


Collection Manager

Customer Service & Collections

Customer Service & Credit

Risk Administrator

Risk Manager

Receivables Manager

Asset Manager

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 and products.

Still today many organizations still look upon credit and collection departments as an extension of the accounting department.


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 C’s 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. Today’s credit professional is not unlike the utility player on a baseball team. He can and has to be able to field every position. Today’s credit professional is a salesperson, negotiator, confessor, rabbi, analyst, forgiver of past discretions, legal consultant, businessperson and yes, accountant.

Credit is no longer debits and credits. It’s 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, accounting.

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. That’s 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, Barron’s, Investor Weekly, about how the role of the credit department contributed to a company’s success? When was the last time you saw an article on a credit professional in one of these publications?

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 customers’ questions? Who satisfies the customer sufficiently that they place the next order even after stating “I’ll never do business with your %$@#$&* company again”?  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 Bankruptcy.  

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