Credit, Shared Services, Outsourcing

Credit management group: Yes to shared services, no to outsourcing

05 Sep 2005 | (News)

According to Business Credit Management, the UK's leading resource for businesses and credit professionals, Shared Services Centres and Business Process Outsourcing are influencing their so much beloved Credit Services Manager. At a speed that is only resembled in the fashion-industry, companies and industries are using these methods to “optimize” their processes. But why do top managers choose this method of application? What are the advantages for the credit manager and more important the disadvantages?

Integrating the various company functions originated in IT. Managers suddenly realized that if they put all IT services under one roof; they could put the responsibility on the IT managers head. In case of failure it was them to blame. Nowadays separate IT departments are part of everyday life: Advantages lie in better integration, easy maintenance and improved servicing of the IT functions.

In the future more and more businesses will outsource their IT department.
Read recent developments at ABN Amro.

This trend continues in other lines of business; suddenly various secondary business functions such as HR, utilities, maintenance are either centralized or outsourced.

And now it is our turn. The invention of the Shared Service Centre! Services like credit control, credit risk and accounts payable are put under one roof to make integration easier. In itself not such a bad idea because: For credit people the easy access of resources and information as well as the dedication in these centres proves to be advantageous.

So far nothing to worry for us; our work is still being appreciated, our systems are still working and our resources are still available.

It is the next step that is more worrying; the outsourcing of the credit department. After centralization, managers now rush to completely get rid of credit control by either completely outsourcing it to outside businesses or to other countries. By doing the that, managers acknowledge credit control only as a secondary business function (just as IT)- and they are wrong.

Credit control should be observed as an extension of your customer relationship policy and is therefore a primary business function. The way a company treats their customers in credit control should be a reflection of how they treat them in sales. Lots of effort is spent at the beginning of a customer relationship, why not continue until the end of the process? Professional, up-to-date and dedicated credit management is therefore top priority. The new term should become Credit Relationship Management.

In order to reach these goals the credit managers, needs to have sufficient resources and tools. Resources and tools to help them score and monitor as individual credit managers and as a credit control department. And these tools can be provided by IT namely: software. Software (integrated or not) is viable to automate our basic processes and lets the credit manager focus on the exemptions in credit control.

These tools enable the credit manager to focus upon their core task and easily report results.

These results serve as prove of the viability of the credit manager and credit management team. Structure is another advantage, structuring your processes via the use of a system makes your team work more efficient and results in better planning, better follow and in an improved customer relationship.

The Shared Service Centre is not a bad thing. As discussed the advantages can be big for both company managers and credit people. It is the view upon credit management as a non-primary business process combined with the outsourcing trend, which is threatening. Completely outsourcing our Credit Control can only be done when all the processes are really well defined, well set out and well tested. Something which is almost never the case!

Source: Business Credit Management UK

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