Credits Influence on Business

It has long been envisaged that the credit functionality in a B2B environment was ‘needed’ as opposed to ‘required’, to ensure companies collected on their provision of products/services exchanged through credit transaction. I contend that the credit function within a business has evolved to an extent that it is imperative to the livelihood of businesses alike in modern day trading. 

Let’s consider today’s business activities where a large percentage of trade in the exchange of products/services is done on credit. In an ideal world an organisation would expect payment for these goods within the agreed time and seemingly put very little assertiveness to ensuring receipt, and to be fair most debtors make payments as required. However looking back to such a time when cash was not as fundamental a component for survival as it is now, it has become imperative that a business has it’s liquid cash on hand in order to survive. The process of ensuring this fundamental “life blood” is achieved for any business has landed squarely on the shoulders of the credit functionality within a business.

For the credit function to achieve cash liquidity for the business, it has become apparent over recent times that it is necessary to grant accessibility, within the different organs of a business, to the credit function to enable it’s effectiveness. I shall explain. In more cases the not, the reason for the lack of an inflow of cash into a business is due to a large extent, on errors generated within the organisation and frankly no customer will want to part with their money if certain criteria’s have not been met in the supply of their product/service. Now in these cases, these errors will mostly come to light at the point where the business is expecting payment for the supply of goods/services or when the payment is held back from the supplier. This in many organisations is usually communicated to the business through the credit/accounts receivable department by the customers and it is at this point that the organisation becomes fully aware of the reasons behind their lack of cash from their customers

“Speed here is everything”, lack of which would inevitably mean lack of cash, with further repercussions within the organisations which we are all too familiar. Having the ability to promptly address the short comings of non- payment, requires, 1) internally establishing the cause, and rectifying, 2) ensuring the customer is addressed promptly with the necessary adjustments and receipts payment . These actions are best served by the credit functionality as it encompasses both fronts of internal and external stakeholders.

I therefore conclude that in today’s business environment the credit functionality in a business has to be at the forefront of any strategic planning, that are aimed at improving and managing the cash flow stemming from goods/services provided through credit and that the credit functionality should be incorporated as one of the “Monitors-In-Chief” in any business.