Credit Q&A: Are my methodologies out of date?

Dear Thea,

I have been with my company for over 33 years. I started with them when I was just out of school and have maintained a traditional credit department relying on tried and true methodology to open accounts, collect money and maintain the department (we have seven people total). We rely on bank and trade references and send demand letters to past due accounts. Many of my colleagues are discussing how the role of credit is/has changed over the years and some methodologies are out of date. While I am not narrow-minded, I do not agree. The way I have been running credit at my company has worked all this time. Why mess with perfection?

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Signed,
Staying the Course in Stanton

 

Dear Staying the Course,

I like the classics, they are comforting—but even classics get updates. “Pride and Prejudice” got zombies, and vampires can sparkle in the light. My point: Change happens. Whether you want it to or acknowledge it.

You claim your department is chugging along as good as ever sticking with the “tried and true.” How can you be so sure? Have you asked anyone on your team? Have you surrounded yourself with like-minded people (and when I say “like-minded” I am really asking if you have a bunch of bobble heads). Do you have anyone on the team that challenges your thinking or are they beat down from the never-ending supply of No, nope, nada. They know you are not open to change and will shoot down any idea to update systems and processes quicker than a fat kid lands on a cupcake.

Have you really looked at your systems and processes with an open mind and used a fresh set of eyes to question how you approach things? Are you sure your way of doing things is not just you being, well, dare I say, narrow-minded, comfortable with the way things are? Or possibly…fear based??? With all the internal negative self-talk that goes with fear of change.

Change takes work, effort and an enormous amount of time. Changing the way you do things, how you look at the processes, view the team and their contributions, all much more time consuming than it seems on the surface. I equate it to any home project I have ever done. My famous words are, “It is just new flooring (or kitchen, bathroom, closet shelving system, deck-insert your experience here) how long can this possibly take?” Let’s not even talk about cost. Every project has some necessary and unanticipated additional cost associated with it (along with some new tool my husband claims he needs to finish said project).

That experience sums up what to expect as you start breaking down any process within your department. It will take more time then you expected, have some unsuspected issues, and costs on some level. But if you stick with it, it is very worth it. Just as every time you walk into that lovely new kitchen and appreciate it, wondering why you waited so long to do it, so goes the feeling with your internal processes and structure.

Leveraging technology, thorough automation or artificial intelligence allows you to create a synergy within your department, do more with the same (or less, because let’s be honest…not every employee is created equal) and support the company and its’ goals.

Leveraging tech does not mean losing relationships and firing the entire department so it runs off the push of a button (although, some days..), it is creating a balance so transactional work is done by technology and leverage your team’s individual soft skills like communication, relationship building, and intellect to help move your company ahead of the traditional credit and collection department.

I get that you’re in the OG’s club and not everyone can handle change. Do me a favor dear Staying the Course. Grab your cell phone in your hands. Now look at it. I am willing to bet you’re staring down at a smartphone, and not an early version at that. If you can learn and operate that phone, you have already accepted change and proven you can adapt to it. Do it now, before the zombies start to sparkle.

With more than 30 years of credit management experience in the LBM industry, renowned credit expert Thea Dudley consults with companies on a wide range of credit and financial management issues. Contact her at theadudley@charter.net or 864-201-5465.

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