My niece recently graduated from a local college with a Business Degree. Since I have been in this business for more than 25 years, she asked me if I thought that credit management might be the kind of career she would enjoy. Here are some of the things I told her:

1. Over the last ten years, I have seen credit managers lose their jobs because of...

• Mergers

• Acquisitions

• Budget cuts

• Too many bad debt losses... or too few bad debt losses [meaning they were too risk averse]

• They held orders too often... or they didn't hold orders often enough and DSO got out of hand

• They confronted delinquent accounts about past due balances... or they were not assertive enough in dealing with past due accounts

• They allowed deductions to get out of control. They pushed other departments [such as sales] too hard and too often to stop making the kinds of mistakes that result in customer deductions.

2. I have seen the size of the average credit department shrink...

• Dramatically, reducing the chances for advancement for everyone in this profession

• Out of existence in cases where the company outsourced the credit function to a third party service provider

• When automation [in particular decision support software programs] began to replace people

• As companies centralized previously decentralized credit operations and found they did not need to offer relocation to everyone

• As companies continue to pressure credit managers to do more with less [specifically to handle more problems with fewer staff members]

• As a result of cross training. When people are cross trained, positions can be eliminated - and often are when there is a slowdown in business

3. I have seen the prestige and earnings power of credit professionals decrease...

• As top notch credit professionals are terminated and replaced by less experienced people for perhaps half the salary

• Because centralizing a previously decentralized function leaves highly qualified individuals scrambling for jobs - which in turn increases the bargaining power of employers looking for highly qualified credit professionals. At the same time, competition for these scarce jobs reduces the perceived value of the individuals applying for the few high end positions that become available

• As software programs make more credit decisions, and because software can provide reasonably accurate decision support

• As credit scoring software [and other high tech tools] reduces the need for professional risk managers to make the tough credit decisions.

• As employers "dump" the staff hired in the 1990s in anticipation of continued business expansion.

In summary, I told her that credit management is not for everyone. The turnover rate is high. Job related stress is high, and that given the chance to do all over again, I would have to think very, very carefully about it. Submitted by: Margaret Spencer, Irvine, California