We Need to Negotiate

A necessary component of management is authority. Yet many companies are loath to give it to their credit manager. Most commonly, credit managers are restricted in the authority to put delinquent customers on hold. This is like disallowing sales reps the authority to quote prices. It effectively makes the credit manager impotent, relegating the position to some sort of advisor. Management, particularly sale management is convinced that any action by the credit department will permanently scare the customer away. What senior management misses is the need to allow credit people the authority to negotiate. If they do not give this tool to the collectors, they are left with a room full of clerks. Then to make matters worse, the collectors and credit managers are then blamed for the delinquency levels and the sluggish DSO.

Credit managers must have the authority to set terms and restrict credit sales, just like sales reps negotiate prices. A customer can choose to buy or reject a price and walk away. Customers who owe money are also given a choice. They can pay and continue to charge their purchases, or they can walk away. The fall back for the credit manager is to either file suit or turn the account over to a collection agency. Customers know this and they usually come to the table to work out a payment plan.

Without the authority, collectors are reduced to begging and if that doesn’t work eventually management will insist the past due customers be place on C.O.D. and when that doesn’t work then they finally consent to suing the bastard. See? Without the authority to negotiate, management misses out on a revenue possibility.

Credit managers are denied authority to negotiate because management fears they won’t negotiate. Strict and arbitrary credit managers operate on the belief that rules are rules and when a customer breaks a rule, that’s it, he is shut off. Period.
Here’s where Strategic Credit Management Solutions can help. We can help train your credit people to think like sales people and we can teach them viable negotiation techniques that will not only help them collect money, but also work with other departments in the company. See our website at http://powerscredit.com/. You can e-mail us at patrickpowers@sbcglobal.net. Your comments are welcome.