JOB DESCRIPTION AND RESPONSIBILITY
KEY RESULT AREA(KRA) & KEY PERFORMANCE INDICATOR(KPI)

finance

How to Become a Credit Manager – Career Path

Introduction

The credit manager is the one responsible for overseeing and managing the credit granting process for a company. Protecting the company’s assets is an important part of the job, which they do by investigating and assessing the “credit worthiness” of potential customers. The credit managers will be assigned to do credit reviews of existing customers, assess the credit worthiness of potential customers, and work on the application of credit policies in the organisation. In any organisation, bad debts are one of the biggest reasons for company losses and eventual fall, the job of a credit manager is to reduce bad debt losses by maintaining the credit policy and optimising company sales by giving credit to worthy customers.

It is an important job role that requires dedication and focus and helps the company in a long run as a result there is a high demand for Credit Managers in corporate organisations or even mid-level businesses. The potential for this career is now at all time high.

Do You Want to be a Credit Manager?

To build a career as a Credit Manager you need to first understand the Job profile and responsibility of the job

This blog gives you a detailed idea of what it is to become a Credit Manager in the Finance Industry of India.

Skills Abilities

Analytical skills:

Analytical skills are very much important for a credit manager in order to analyse the credit score and data of different customers in order to decide whether to give loans and advances to them or not

2. Planning Skills:

The credit managers are tasked with planning the credit lending plans for the organisation based on data of the company, the clients and market conditions. Such plans should help the company minimise bad debts.

3. Interpersonal and Communication Skills:

The Credit manager works in a high paced environment where they have to talk to potential customers, debtors etc. by this virtue of communication they should be able to understand the mentality of the customers and decide on giving them loans or not.

4. Math and Accounting Skills:

Math and Accounting skills are basic requirements for a credit manager. They need to have good math and accountancy skills in order to analyse the data, create policies, and decide whether the customer is worthy of giving credit based on credit score.

Job Description

The credit manager is tasked with overseeing the company’s lending process. The Credit manager has to perform a long list of duties and responsibilities. The tasks are divided into 2 categories, management and credit operations tasks. The Management tasks include maintaining the organizational structure of the department in order to meet the set of objectives and goals, and facilitating relations with collection agencies, the credit manager also needs to foster a good relationship with insurance providers, credit reporting agencies, and the sales department.

On the other hand, the Credit Manager’s Credit Responsibilities the core task that they have to perform is to work on the corporate credit policy to be imposed. Other, credit related tasks of credit managers include working on customer credit files, monitoring credit granting and ensuring customer satisfaction.

To be successful in your career as a credit manager, you should have extensive experience with credit analysis, proficiency with accounting software, and high-level analytical skills. The best credit managers in the business add value to a company by optimizing the mix of sales to bad debt losses.

Job Role & Responsibilities

The Credit Manager is tasked with evaluating the creditworthiness of potential customers
They need to create credit scoring models and analyse them for risk assessments
Approving and rejecting loans based on available credit score data
Calculating and setting loan interest rates on the given loan
Negotiating the terms of the loan with new loan applicants or clients
Ensuring all loans and lending procedures comply with the government as well as the company’s rules and regulations
Maintaining proper records of all company loans
Monitoring loan payments, credits and bad debts
Reviewing and updating the company’s credit policy according to the changing economy and government rules and regulations.

Eligibility

The Credit Manager must be educated and have a high school pass out, in addition, the Credit Manager should have completed a Three year college degree with majoring in business, economics, accounting or finance preferred, such as a Bachelor of Commerce (B Com), Bachelor of Business Administration in finance (BBA Finance), Bachelor of Business Management (BBM) etc.

If you want to have a good chance of working in a reputed organisation, A master’s degree is recommendable, such as a Master of Commerce (M. Com) or MBA in Economics, Finance or anything of that sort. It will also help to have at least 5 to 7 years of working experience in the field to get a job opportunity in a reputed company or organisation.

Key Result Areas

Create Credit Policies:

The Credit Manager has is required to create credit policies for the organisation to follow

Conduct research about the clients:

They need to conduct research about the credit score and financial background of the clients

Maintain Proper records:

The Credit Managers are required to maintain proper records of their clients and the amount of loan given and its interest.

Key Performance Indicators

Minimising Bad Debts:

The Credit managers have to decide whom to give loans to and whom to reject. minimising Bad Debts means more profit for the company.

Monthly sales figures:

A higher sales month figure typically means credit professional metrics perform at the top of their game.

Net cash flow:

Net cash flow is the amount of cash generated or lost over a period. The Cash Flow must never be negative.

Current ratios:

The credit manager’s efforts in collecting funds directly affect cash flow and hence Current ratios

Work Environment

The Credit manager mostly works in an office environment. However, it is also a requirement for the job to travel when necessary in order to attend meetings and conduct research about certain clients. It is a high pressure job and most credit managers work under intense stress as a result of their financial duties.

The Job hours may vary depending on the organisation they work for but usually they work around 40 to 45 hours a week.

Salary Package

The Average Salary for a Credit Manager in India can range somewhere between 5 Lakh to 11 lakh INR per annum.

The Amount may vary through different banks, and cities depending on workflow and workload.

Conclusion

The work of a credit manager is filled with challenges and can be very stressful at times, however, these challenges can prove to improve your decision making and analysing skills. Other than that it is also a lucrative job role. Anyone with a passion for accounting, math and taking money decisions has a good scope of building a perfect career out of This Job role.

FAQs

Q1. What skills and abilities are required to become a credit manager?

A1. To become a credit manager, you need strong analytical skills, attention to detail, financial acumen, decision-making abilities, and excellent communication and interpersonal skills.

Q2. Can you describe the job description of a credit manager?

A2. The job of a credit manager involves assessing the creditworthiness of individuals or businesses, setting credit limits, managing credit risk, negotiating payment terms, and ensuring compliance with financial regulations.

Q3. What are the key eligibility criteria to become a credit manager in India?

A3. Typically, to become a credit manager in India, you need a bachelor's degree in finance, accounting, business administration, or a related field. Some employers may also require relevant work experience.

Q4. What are the key result areas and performance indicators for a credit manager?

A4. Key result areas for a credit manager include minimizing bad debts, optimizing credit policies, improving cash flow, and maintaining healthy relationships with customers and stakeholders. Performance indicators may include days sales outstanding (DSO) and credit utilization ratios.

Q5. What is the average salary package for credit managers in India?

A5. The salary package for credit managers in India varies based on factors such as experience, location, and employer. However, on average, credit managers in India can expect a competitive salary ranging from ₹500,000 to ₹1,500,000 per annum.