The Credit Department's Role in Customer Retention

By Dorothy Siegel
Source: www.coveringcredit.com


Establishing a customer relationship is a huge challenge, and so is retaining customer goodwill once a business relationship has been established. Customers require a high level of after-sale service and support in addition to quality products at competitive prices delivered on time. Companies now realize that it is far more expensive to find, contact, pre-qualify and establish a relationship with the potential new customer than it is to find ways to keep existing customers happy. As a result, maintaining customer goodwill is important in every department in the company - including the credit department.

Arguably, the credit department's biggest challenge is maintain the integrity of the credit decision making process and the safety of the company's investment in accounts receivable while doing as little damage to the business relationship between the company and its customers as possible – especially when one considers some of the tools credit managers use including:

• Credit holds

• Reducing credit limits

• Shortening credit terms

• Withdrawing open account terms

• Demanding some form of security or the pledge of collateral

• Requiring customers to send their financial statements for evaluation