What Is a Credit Manager?

What is a credit manager? A credit manager is the person who heads a credit department at a financial institution who is in charge of determining credit limits for customers as well a litany of other issues. This person may also work within a private company or possibly a nonprofit organization if that organization makes loans.

This Person Determines If a Borrower Gets Credit

When a borrower submits a request for credit, the application goes to the lender for review. The lender will review that person’s job history, income and other factors to determine if that applicant is a good credit risk. The credit manager will put parameters in place to make it fast and easy to decide whether or not to loan money or offer credit.

What Are the Payment Terms?

A credit manager will decide on the proper loan terms to offer if an application for credit is approved. Generally, those who have a credit score of over 700 and no other red flags on their credit report will get the best interest rates. However, a credit manager for a company that makes loans to those with bad credit can make his or her own determination as to what interest rate to set for a borrower or what other conditions are put upon a borrower.

Do Offers of Credit Conform to Company Standards?

While the credit manager has a lot of leeway when it comes to determining who gets credit and who does not, that person does not make those decisions in a vacuum, according to the National Careers Center. Instead, the credit manager will most likely work with the CFO and the CEO to come up with a lending policy that fits with corporate values. For example, if lending to minorities or others who may not have access to credit is a priority, the credit manager will set policies that make it easier for those people to get credit because it is what top leadership wants.

The Credit Manager Makes Sure That Timely Payments Are Made

A company could stand to lose a lot of money if credit payments are not made on a timely basis. This means that the credit manager needs to ensure that collections are made on time. In some cases, this could mean enforcing late penalties, enlisting outside collection companies to take action against a debtor or taking action in court if necessary.

Related Resource: Certified Financial Planner

Keep Bad Debt to a Minimum

The credit manager is responsible for ensuring that bad debt is kept to a minimum. In addition, a credit manager is also responsible for keeping enough money on hand to cover the cost of that bad debt. This ensures that a business will not go under due to lack of revenue coming in.

If you are wondering what does a credit manager do, you can now appreciate all of the things that they are responsible for. They must make sure that a fair lending policy is created, make sure that lending standards comply with government and company policies and ensure that the company does not go broke due to too much bad debt.