The SME credit manager

For businesses that don't have a specific person with responsibility for credit and cash flow management, the reality is that everyone ends up being involved in the process at some stage. Whether it is signing up a new customer and negotiating payment terms or answering a call from a late payer everyone is likely to have a role in communicating and managing your policy.

In this environment it is critical that you have a policy that is simple and understood. If your policy is payment in 30 days then every sales person needs to know that this is non-negotiable in every contract.

If late payments are dealt with immediately then your front office people need to know that customers who call with explanations about late payments must get a consistent message about how late payments will be dealt with. A front desk person simply saying, "Thanks for letting us know" and ending the call can cost you money.

There are a number of ways you can communicate your policies to your staff. They include:

  • re-stating the policy at regular meetings
  • putting it in writing and making it visible in common areas of
    the business.

You should also take the time to explain to your staff why these policies exist. Help them understand that late payment places enormous pressure on cash flow, which reduces your ability to pay your bills on time, including wages and salaries.

Make credit and collections a key part of your business

All too often the people involved in your credit and collections policies are seen as people in the back room who have nothing to do with the real issues in the business. If you allow this impression to form, the real message you are sending is that credit management and cash flow aren't core issues for your business and are a low priority.

Make sure that your credit and collections staff are active members in your business and help everyone understand how their role improves your business cash flow and ultimately business strength. Communicate the reality, which is that if these people can't do their job properly then the business can't function. Remember, a sale isn't a sale until your invoice is paid.


You can't expect your staff responsible for credit and collections to be good at their job if you don't focus on education. This is particularly the case for staff who perform the credit and collections duties as part of a broader role. If you want them to be responsible for these duties it's critical that you equip them to succeed.

There are lots of sources of information including in magazines, journals and websites. Organisations like Dun & Bradstreet provide a wealth of information that small business can access free, helping them to develop policies and teach staff how to implement those policies.

In addition, there are a range of courses and seminars that staff can attend to learn more about being an effective credit and collections officer. Once again Dun & Bradstreet runs many seminars for small businesses but other organisations do as well like local government authorities and small business councils. Check them out for a course in your area that meets your needs.

If you want your staff to become experts in this field then there are two other great options. First, get in touch with the Australian Institute of Credit Management (AICM) and discuss becoming a member or attending one of their courses at non-member rates. The AICM have a range of courses which will allow your staff to become accredited in key areas of the credit and collections process.

Second, TAFE colleges run a range of formal training courses that can greatly assist with credit and cash flow management. Contact a TAFE near you to find out what courses might be able to assist you and your staff.

More than just books

It's important to remember that learning is more than just reading a book or attending a course. There is no substitute for real life experience and discussing your experiences with other professionals. Join an industry association like the AICM or seek out networking opportunities in your area to discuss credit and cash flow issues. Local government authorities are a great source of information for small businesses and run a range of networking events. Visit your local government authority to find out what events may be of benefit to you.

Give incentives for best practice

Your sales people probably get paid a commission or bonus based on sales but which in no way are related to actual payment for your goods or services. A sale is critically important for every business but so is getting paid. Why not establish incentives for your credit and collections manager?

Imagine if customers went from paying your bills at 35 days to paying at 25 days. This would have a significant impact on your cash flow, profitability and business strength. Given the value to your business from improved payments and consequently cash flow why not send a clear message about the importance of managing this process by establishing incentives to drive this behaviour. These incentives could be very informal like a dinner of thanks or quite formal such as a bonus payment for months when cash meets certain targets.

Be professional in everything you do

At the end of the day your team will respond to professional leadership and behaviour. Don't allow credit and collections to be an after-thought or even excluded from your business. Make sure you invest the time in setting policies, training staff and communicating the importance to everyone's job of effective credit assessment and cash flow management. 

All your staff including your credit and collections team will take their lead from you. Send a clear message about the importance of credit management and cash flow and your staff will follow.

This article was taken from D&B's Guide to Cash Flow and Credit Risk. Click here to find out more>>

D&B Guide to Cash Flow and Credit Risk.bmp


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