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Goals of International Credit Management
By Robert Paisola, Western Capital International Inc.

The goals of receivables management must adapt to growing international markets, and credit professionals must adapt to meet these challenges. While the end result is that credit managers must do their best to know their customers and specific market conditions wherever they conduct business, there are specific goals and objectives which those involved in international credit may wish to review:

  • Maintain financial flexibility. Review your banking arrangements. Use banks and financiers (either in your own country or foreign) with proven export finance operations and the best options to achieve your financial objectives.

  • Minimize accounts receivable outstanding by increasing liquidity in order to correspondingly decrease country or account exposures.

  • Optimize the mix of company assets. Learn about the laws and regulations in your foreign market in order to provide credit or new payment mechanisms to a broader range of customers. Spread your receivables risk.

  • Convert receivables to cash on a timely basis. Learn and understand the options available to your company. Price receivables or financing to accommodate the sale or conversion of receivables. Meet and work with sales and marketing to understand how financing can be a component of sales and pricing.

  • Analyze customer credit risk. Use new risk management techniques to mange company and country portfolios, minimize payment risk, and sell off assets. Use analytical procedures appropriate to the foreign market. Use credit reports and established international standards for quoting terms of sale and arbitration provisions in all quotations and contracts.

  • Be responsive to individual customer needs. Every country has a different inventory-to-cash cycle. Learn the characteristics of each of your foreign markets and establish management practices to accommodate t hose features.

  • Support the goals of the sales force whenever possible. Sales must work with you on this: in foreign markets, credit and customer finance are often the key to market entry and long-term success.

  • Respect overall corporate financial constraints. A proactive international credit and sales finance posture does not have to violate the cash management limitations imposed be executive management. It may be necessary to educate those managers on the benefits of this informed and active position.

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