can lead to financial strain. For lending institutions, managing credit risk is not just a necessity, it is the foundation for sustainable profitability. A credit manager needs to have understanding of effective credit risk management systems that identifies high-risk borrowers early, which reduces defaults and ensures a healthier loan book, robust assessment framework ensures lending to borrowers who enhance revenue instead of becoming liabilities, develop proactive systems that minimize recovery efforts and redirect resources toward more productive initiatives.
Understanding credit risk prevents capital from being tied up in defaults, which keeps enough liquid cash for new loans or investments. Embracing strong credit risk practices earns trust from regulators, investors, and customers, positioning their organisations as reliable lenders and by managing risks effectively, credit managers can grow their loan portfolio without eroding profit margins due to non-performing loans. The key issue is that credit risk management is not just about defense, it is a tool for profitability, resilience, and long-term success. The credit manager therefore, should dedicate a little time each month to watching webinars, reading industry articles, or attending workshops.
Purpose to sharpen your communication skills as this is key in credit department, keep in mind that every communication channel is different. For debt collection, some may work better for agencies just getting started with digital tools. Some are more useful for younger generations. Other tools can help capture payments where you may otherwise be losing revenue. For a credit manager failing to adapt will soon impact how much money one can bring in because it follows the company won’ t be able to effectively connect with people. For example, if you are not emailing today, you are not texting today you are better off rethinking your strategy because there’ s a way to do it compliantly and if you’ re not doing it, you’ re probably going to limit the amount of money you are able to collect.
Kind and clear communication can transform interactions with consumers. When people feel respected, they are more likely to work with you toward a solution. Consider training your staff on customer service and communication skills as they are incredibly important and being able to conduct yourself in a professional manner when in difficult conversations will go a long way in improving your organisation. No matter how you tailor your message, you need to be sure you coordinate what you are saying across channels. Don’ t give a certain offer in one place while giving conflicting information elsewhere.
Hand in hand with improving communication it is wise to strengthen client connections, no doubt good relationships with clients are the foundation of a successful business as open communication and consistent results go a long way in building trust. When most people think of debt collection in the negative light, professional credit controllers know that company processes need not threaten customers. Building a positive relationship and clear channels of communication with your clients is the best way to ensure an effective credit control process. One of the best ways of achieving this is by making courtesy calls to confirm receipt of paperwork or in advance of the invoice due date.
This kind of courtesy in your procedure not only helps you to show that your business is friendly and professional, but it also gives your customers plenty of opportunities to explain their situation. Credit managers ought to come up with scheduled regular check-ins with their clients. These conversations can uncover opportunities to improve and show them they are invested in their success.
A more important habit to be adapted should be about making workflows that are efficient. No one likes feeling bogged down by inefficient processes. Simplifying workflow can free up time and energy for what really matters. Take the example of order volumes and the imperative to fulfill orders quickly increase, approving orders becomes more crucial. If the expectation is to supply within 24 hours or less of receipt, the process for making sure the order is within credit approval parameters must necessarily be executed in a timely manner. Any orders that still cannot be released necessitates communication with your salesperson and customer contact concerning the requirements to get the credit hold lifted.
There is a complementary relationship between credit and collections and the other functions of sales, customer service, fulfillment, logistics, and accounting, all of which contribute to turning an order into cash. An effective credit and collection function, therefore, plays a dynamic and collaborative role with regard to the process that requires critical factors to be addressed. As the credit manager, take a fresh look at your software and tools. Are they truly making your life easier? If not, it might be time for an upgrade.
Building good habits does not have to feel daunting. By focusing on small, intentional changes, you can set yourself up for a year full of growth, success, and positivity. So, take a deep breath, prioritize what matters, and let us make 2025 a year to remember together. Only then will you achieve a friendly start to your credit management journey.
Wasilwa Miriongi is a Certified Credit Professional currently working as the Managing Director, Del Creder Credit Management Limited. You can engage him on this or related matters via email at: WMiriongi @ gmail. com.