Two weeks ago we discussed
the need to review and update operational procedures. The role of management is to Plan,
Organize, Control and Report.
Without current procedures in place it is difficult for management to carry
out its role. In addition to operational procedures that deal with the extension and
maintenance of credit, we should also include in our planning those procedures that affect
our overall performance within the organization.
There should exist a current organization chart that defines the position of
each member of the credit department and their responsibility and authority.
Additional procedures should include but are not limited to:
Recruiting & Hiring Guidelines Education by position Experience by
position Training & Development Performance review criteria Progression requirements
Workshop & tuition reimbursement Promotion & termination guidelines
There should be reporting requirements which may include reports on:
Accounts over credit limit Open items by age & category Highly leveraged
transactions Accounts placed with collection agencies Accounts in litigation Reserve for
bad debts Accounts written off to bad debt Unapplied cash Unauthorized deductions &
reasons Collections to beginning a/r Accounts in bankruptcy Credit department overrides
Travel & entertainment expenses
Finally, we should have budget categories to track those expenses related to
the operation of our department. These may include:
Salary - overtime Space - equipment Supplies - software Training - education
Travel - entertainment Collection- investigation
Maintaining current procedures and reports provides us the ability to control
the activities we are responsible for and accomplish our goals and objectives.
I wish you well