Minimum vs. Great Expectations

Minimum expectations:
The collectors are charged with “cleaning up” the ninety days past due and older balances.
When the customers’ account reaches ninety days past due, the collectors make a demand for payment, suggesting that no more orders will be processed until payment is received. The customers, on cue, agree to send the ninety days past due balance. When the check arrives, the collector has done a good job.

Great Expectations:
The collectors are charged with reducing delinquency and increasing the level of over all collections. The initial collection calls are made soon after the account becomes past due. If, somehow an accounts slips over ninety days, a payment schedule is negotiated that will ensure payment of not only the most past due amounts, but other delinquent balances as well, payable over a reasonable amount of time; a schedule set not by the customer but by the creditor.

Minimum expectations:
When a customer sends in a credit application, an account is immediately established with terms that state C.O.D. This is to facilitate the customer’s first order while the application is “processed.” Usually, because the duration of such processing is indefinite, the account remains on C.O.D terms until the customer begins to complain. Then, a credit line, matching the initial order and with no correlation to the customer’s potential volume, may be granted.

Great Expectations:
When a customer sends in a credit application it is immediately processed and a credit line, corresponding to known factors, such as experience with other like vendors, or a credit report score, is established. The credit line is communicated with the customer and if it is not enough, more information is obtained. Additionally, the customer is informed of the condition and payment terms and the customer’s acceptance is recorded.

Minimum expectations:
Sales reps are considered by the credit department as villains, willing to sell “anyone” regardless of the risk or the ultimate cost to the company. They are seen as greedy, sloppy and unreliable. There is no negotiating with them. If there is a dispute, they can take it up with senior management. Sales views credit as arbitrary and inflexible intent on thawarting sales. Arbitration between the sales and credit departments becomes a regular and wearisome task of the CEO.

Great Expectations:
Sales and credit are a team, each appreciating the importance of the other. Credit has credibility with sales. If there is an account that is too risky to take on, sales will pass, but not before exploring every alternative approach. Credit extends the largest possible credit line making sales aware of the customer’s potential. They communicate well because they understand each other.

Minimum Expectations:
May be what you have with your present credit department. It may be this way, because these are the normal management expectations. This is how it has always been and you expect, sadly, that it will always be this way.

Great Expectations:
Is what you could have with CreditPowers. We know what makes a credit department function with better than expected results. Contact us at patrickpowers@sbcglobal.net.
Your comments are welcome.