Should the credit department issue credit memos?

Answer: I will probably be swimming upstream by responding this way, but yes I think the credit department should have or share this responsibility. I acknowledge the potential for conflict of interest, but believe this problem can be addressed. I suggest this approach:

• Management should have a serious discussion with the credit manager about the potential for conflicts of interest.
• The credit manager should be required to sign off on all credits generated and issued by the credit department
• The credit department should be required to keep detailed records of the reason for every credit issued.
• These records should be audited, looking for evidence that the credit department is 'rubber stamping' credit memos just to clear outstanding invoices and debits, and
• The Dollar Value of credit memos the credit department can issue should be limited...and credit memos over this dollar value should be referred to the Controller or CFO for approval before credit memos are processed and entered.