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Credit Department Organization The requirements
of the business determine the size and type of credit department. Unlike
most other company operations, the credit department tends to remain fairly
constant in size and scope of activities during periods of changing business
conditions. A credit department may face a greater number of collection
problems in a depressed economy when inflation is rising and the money
supply is tighter than during a period of general prosperity when inflation
is low. Consequently, the organization of the department is particularly important; a measure of permanence and stability must be achieved that will assure that the department functions under all conditions. Although the organization should not remain static, it is highly desirable to have experienced and capable employees always available within the department. Today, alternatives exist to accommodate extra heavy workloads. Today's business environment allows for the cross-training of personnel which allows for more flexibility. Perhaps accounting department personnel can be trained to perform routine tasks and called upon as necessary. Alternatively, temporary staff can be hired or work can be outsourced to companies specializing in credit-related work such as cash application and dispute resolution. One frequent decision that is made by a credit department involves Centralization and/or Decentralization. The question of whether to centralize or decentralize the credit function is faced by large companies with geographically diverse operating units. It has become more important recently as many corporations are reengineering their business processes to take advantage of automation and electronic commerce.
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