Embracing Change in Credit: Is Your Credit Department Standing Still?
Today’s article is from guest author and credit management expert, Ms. Thea Dudley
If you are still thinking of your back office credit process as individual departments and not as the global order to cashflow function it actually is, you are standing in a puddle of primordial goo waiting to sink down to the final countdown of your career.
I once read that Alan Alda was told he had three minutes to give a speech to the audience. He wanted to say something that would have an impact, something worth listening to, something the audience would remember.
“I only have three minutes, so I’m going to give you the secret to life. Adapt, adjust, revise. Because the only thing you can be sure of is that everything is going to change.”
That was his speech. It was brilliant. Short. Sweet. Totally on point. Which brings me back to the story.
If you are approaching your credit processes the way you did twenty years ago, even five years ago, then you are the Fred Flintstone of our time, watching the George Jetsons of the credit world fly by you.
Your OTC Is a Wealth of Information – If Used Right
The digital era we are in represents the largest economic change since the industrial revolution. Digital data is driving every aspect of business and life, and the role of the credit department must change with it. Credit encompasses the entire Order to Cash (OTC) process. Any point in the OTC process that causes pain, from invoicing, delivery of invoicing, to application of payment, jams up your cashflow and lands smack in the middle of your accounts receivable. A giant eyesore on the otherwise calm landscape that is your credit department.
Remove those organizational silos with cross organizational collaboration. Look at the entire OTC process and ask yourself:
- What it is now?
- What it ought to be?
- What it could be?
Your OTC is a wealth of information if it is used right. Let’s face it, transactional work is going away and being replaced by AI or automation. The changes in technology with automation, artificial intelligence and analytics all overlap, allowing you to create a synergy that makes your processes more efficient and it frees up your team to focus on the work that needs a brain. Computers can’t build relationships, you need your people doing that.
Is Techno-Fear Holding Your Department Back?
In the new world of OTC, no single department “owns” the customer. Leveraging technology allows you to look at your customer holistically – sales, invoicing, collections – a bizarre love triangle. (Would we really be complete without a throwback reference of an 80’s New Order song?) Take a paper littered, cumbersome, labor intensive process and capitalize on the technology which many industries currently leverage and enjoy.
If techno-fear is holding you (and consequently, your department) back, you have to ask yourself why. The looming shadow of fear. Fear of losing your job? Fear of team member eliminations? Fear of technology? Fear you aren’t smart enough to grasp it? Or the ultimate fear: making yourself obsolete.
Reality (Credit) Check
I was at a conference, sitting with a group of fellow credit managers and the conversation turned to how our departments were structured, how we were streamlining, and what were we doing to leverage technology. What ideas could we share? What ideas could we borrow?
While a few of us had a very lively conversation on what we had tried, what worked, what efforts came off like a flat line on a cardio gram, and what other adventures we were going try to “adapt, adjust and revise”, there were stoic members of the group that were not impressed. A few were quite vocal about it. As one credit manager grumped
“I have done credit for 30+ years the same way and feel no need to make a change. Stick with what works, that’s my motto.”
She then sat back and looked very self-satisfied, arms folded over her chest and a don’t-even-think-about-challenging-me look on her face.
“I see your point” I told her. “The CEO of 20th century Fox back in the 40’s thought television wouldn’t take off. That after six months the fad would be over. He believed people would get tired of staring at a little plywood box every night.”
“Oh, and Henry Ford” I went on to add “who is considered one of America’s leading businessmen was so set against change he actually hindered the future of his company. A man who once started out as a dynamic, forward thinking business leader grow into a paranoid, narrow thinker who was finally convince by his son to discontinue the model T and let the company evolve and thrive. So yeah, sister, you hold on tight to the tried and true.”
All of which I said with a smile.
As my smile settled, the room was deathly quiet. The very pregnant, very awkward silence that followed lasted a handful of seconds but felt like hours as it hung there. She was not enamored with my recounting of random and obscure information (that makes me a sought after trivial pursuit player but not generally appreciated by co-workers at large.)
As she stared at me, I asked her
“What is your fear?”
“What is your fear? Providing a central place to house and share data? Having virtual filing cabinets that allow invoices, customer credit files and other information to be accessed by the person who needs it, when they need it, wherever they are as long as they have access to a laptop, smartphone or iPad without having interrupt anyone else’s day? Elimination of useless or non-value contributing work? Getting back time that was previously spent on transactional work? Gaining the ability to repurpose and challenge members of your team with customer connection and use of their intellect? Yes, I can see where that would send fear up the spine.”
I bet is she is still rocking a fax machine and a flip phone. She never did come up with an actual reason for the lack of an open mind and embracing the conversation. I will agree there is comfort in a routine, knowing exactly how to do something, much like driving your car the same route to work every day, you can put yourself and auto pilot and breeze through it.
To quote a mentor of mine “You are either growing or dying – you can’t do both.” What about standing still? “Still dying.” You can’t have it both ways.
Is that why it seems so difficult to attract the less-age-advantaged to the role of credit management? The utter lack of enthusiasm for change or desire to embrace technology? That thought train is a ride for another day. Meanwhile, back at the ranch we are still on the discussion credit encompassing the OTC process, technology and how to leverage.
Where to Start?
If you have the desire to change but no idea how or where to start, start where you live in this process. Start with what you can control. If you run credit, start there. What parts of the process are transactional? What can be done by your ERP system? What software programs are available that you can add to streamline the adventure? What associations do you belong to that offer services that can assist you?
This breakdown of processes is a piece by piece, department by department breakdown in the OTC process – beginning with order entry and ending with application of payment. Once you get the pieces broken down you can start looking at global solutions for resolutions.
Utopia is just around the corner. Now, you just have to figure out how to pay for it. While ROI breakdowns are a giant pain in the posterior, they can be quickly done with the value of customer satisfaction and positive interaction added. Can you really put a price on that? (I have been assured you can, but I persist anyway.)
To put a fine point on our story, television is still going strong and has evolved to a handheld device that can be watched anywhere, anytime. Imagine what it will look like in another 10 years — and where will your credit department be, Dino?
Thea has over 30 years of credit and collection management experience. With expertise in the development of shared services processes and assessment of back office needs to improve efficiencies, Thea’s communication and negotiation skills have made her a valuable partner for manufacturers, dealers, general contractors and subcontractors, throughout the construction industry.
The author of Thea’s Mailbag for ProSales Magazine, Thea has recently joined LBM Journal for her new column Credit Q&A with Thea Dudley. Thea is a frequent speaker for industry organizations such as Insulation Contractors Association of America, Western States Roofing Contractors Association Expo, Nice Insulation Contractors Exchange, International Builders Show, International Roofing Expo, JLC live! Remodelers/JLC/Deckmasters, Guardian Building Products Trade Shows and National Women in Roofing.
Email Thea Dudley at firstname.lastname@example.org or click here to connect with her via LinkedIn.