A compendium of studies argues that repeat selling is much less expensive than selling to new customers. Hence, gaining and sustaining long-term customer relationship is important to minimise the cost of running a business. This may entail selling on credit to satisfy the needs and expectations of customers, which sequentially requires the necessary resources to manage this credit effectively in order to secure sound cash flow for the business. But resources are often limited and maximising the available limited resources is inevitably vital.
In business terms, this is usually referred to as the effectiveness and efficiency of a firm. To this effect, people employed in the credit function should be skilled and trained to strike a balance between the credit demands of the customers and the profit imperative of the firm that s/he works for. Best credit results are achieved by the credit staff who possess good interpersonal skills, complimenting their numeracy and literacy. These ingredients make a credit practitioner able to sustain long-term customer relationship while keeping the customer current and paying according to the credit sales terms.
Nevertheless, there exists no perfect world! Josef Busuttil, MBA (Henley), DipM MCIM, FICM offers suggestions in how to manage in an imperfect credit world. To read the full story click on the link.