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Open Account Sales In order to maximize (or more precisely to optimize) sales and profits, most companies have no choice but to accept a certain amount of risk by offering open account terms to customers that would be considered marginal credit risks. A competent and qualified credit manager and a well-trained and managed credit and collection department can significantly increase the likelihood that a creditor company will receive payment sooner rather than later. The risk management and collection functions are essential to the success of any business that offers open account credit terms to marginal customers. Contrary to popular opinion, the duties and responsibilities of a credit manager and the collection department are not limited to chasing past due balances. In fact, the most important work performed by the credit department is done before orders are released. It can be argued that the most important work done is the decision about what terms to offer to a marginal account, and that the second most important task is to ensure that credit terms and credit limits are adjusted as the risk associated with doing business with a particular customer increases or decreases over time. Source: Michael Dennis, author of "Credit and Collection Handbook" available at the NACM Bookstore. |
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