March 14, 2024

 


Make customers more comfortable with technology through education

Kendall Payton, editorial associate

The adoption of new technology is no longer a choice but a necessity for staying competitive in business. Despite the undeniable benefits these advancements bring, getting customers comfortable with change remains a significant challenge.

Why it matters: The key to shifting customers’ mindset to embrace change lies in trust and clear communication when undergoing any user-faced automation transformations.

Several financial institutions, both large and small, have undergone digital transformations in recent years, notably incorporating AI to simplify everyday functions. This widespread adoption of new technologies is being used to cut costs, increase convenience and deepen customer relationships. Even with the many benefits to a digital world, some customers can be reluctant to change their ways.

Get internal teams on board with the change first. Think of a trust fall. If others see one person falling into the other without dropping onto the ground, they’ll be much more comfortable in trying it out themselves. It’s the same with introducing your customer to a new system or process.

Nate Yagle, vice president of credit at Premier Companies (Seymour, IN), said his company took a united front when adopting automation and discussing the change with customers. As a result, his company has seen a quick adoption from its customer base.

“We got our internal team comfortable with seeing changes first, then moved onto influencing top customers and then rolled it out to the masses,” Yagle explained. “When we rolled the technology out for the first wave of customers, it allowed them to get comfortable with it for a couple weeks. Being proactive also allowed us to fix some of the bugs, too.”

Some credit professionals use marketing strategies, such as online campaigns, to advertise their changes. Try using multiple communication outlets to notify customers about new opportunities.

“We usually start off with an email blast about the changes and then we'll take our top-tier customers and do a more personalized reach out,” said Tracy Mitchell, AR senior team lead at Trinity Logistics (Seaford, DE). “That way we are making sure that our top customers are well-informed and have the opportunity to ask any questions they want before the product is officially rolled out.”

Create a user-friendly interface. Learning a new software system can be hard enough for those who are not technically savvy. Creating a simplified interface makes it easier for customers to navigate through the new process with minimal confusion. Before considering any digital channels, customers also need to understand how the new tech will benefit them.

A great example is how technology opens communication. Customers no longer have the limited window of business hours to ask questions or receive help. It’s right at their fingertips through portals or other communication channels. “We make sure to explain the benefits for customers because it's so much easier to get them on board when they're aware of what benefits they're going to get from utilizing the new technology,” Mitchell said.

Don’t overlook planning. Build a step-by-step guide to complete a project successfully. Undergoing any change requires clear communication on new information—especially about the security measures in place to protect customer data and transactions.

Communication is the foundation of a successful implementation plan. “We had a mass invite we recently sent out for our new app and communicated ahead of time that this change was coming and to look for it,” said Yagle. “If they had questions, they could call us. The account managers and various customer-facing people inside of our company also knew about it and were able to talk to customers with a unified message.”

Reassure and support your customer. Give your customers a detailed step-by-step guide. “For anyone who needs it, they’ll do a basic user guide for something like a sign on in a customer portal or there's a new type of bill pay platform,” said Mitchell. “We make sure that they have instructions on how to use it and that they know who to go to if they have any questions on what's coming up or how to use it once it's unavailable.”

Provide a responsive customer support channel through email and phone for any inquiries or needed assistance. “We like to assure our customers that their personal and financial information is kept confidential and will not be shared with third parties without their consent,” said Merry Duan, senior strategic account analyst at Bayer Corporation (Saint Louis, MO). “It’s very important to do so because it’s professional and helps garner trust.”

Be open to feedback. Not everyone likes change. However, listening to the customer’s concern can help you both reach an agreement. If you’re teaching them how to use the new technology through a Teams call, for example, maybe show instructions through the screen. Understand how your customer likes to learn.

Some customers may still be apprehensive to adopt digitization, so patience is important. “We try to offer a variety of solutions for any kind of problem to provide the best service that we can,” Mitchell said. “The most important things are selling the value and making sure it's not complicated for the people that you want to be the end-user for the product. Those two things will get you the least amount of pushback and the most amount of buy in.”

The bottom line: Adopting new technology in business is essential for maintaining competitiveness, and its successful implementation hinges on building trust with customers through clear communication, preparing internal teams first, creating user-friendly interfaces, planning meticulously with a focus on data security, providing responsive customer support channels and being open to feedback.

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The pitfalls of rushed credit decisions

Jamilex Gotay, editorial associate

The pressure to make quick decisions can often compromise the integrity of due diligence processes. When faced with tight deadlines and mounting expectations, credit managers may find themselves forced to cut corners and make rushed decisions.

Why it matters: Maintaining a balance between efficiency and thoroughness is crucial to ensuring accurate risk assessments and protecting the company's interests when financial stakes are high.

By the numbers: According to a recent eNews poll, 79% of credit professionals said that their companies have experienced adverse consequences due to a lack of due diligence.

It is important to maintain due diligence standards, even in the face of intense pressure. “In my early career at a different company, we faced C-Suite pressure to onboard a Turkish company without adequate data,” said Annette Hagemann, ICCE, CPC, CCP, director of global credit at APL Logistics North America (Scottsdale, AZ). “This decision not only caused issues but also resulted in unpaid invoices. And in another previous position, we had a customer in Mexico whom we met with and got payment assurances for, but we couldn't get its financials and had already made this company a distributor. My mistake was not pushing harder to get that information.”

Whether a buyer is local or international, due diligence is essential. Hagemann, serving customers across six regions, has developed a comprehensive credit policy and a customer onboarding ‘cheat sheet’ detailing necessary criteria and information from customers in each region. “We also have credit insurance in place which triggers reporting within 60 days of being past due and creates an email trail of information,” she said. “If we’re not able to get that information we escalate the situation to senior management so that it can be resolved, and they are aware that we are doing our due diligence.”

The process of due diligence will vary depending on the company, industry and customer. Hard due diligence primarily focuses on concrete aspects such as financial statements, market data, legal documentation, physical assets and operational processes. Soft due diligence considers factors such as management team competence, corporate culture, brand reputation, customer relationships and industry trends.

“Hard due diligence concerning the numbers and data in B2B credit is often a labor-intensive investment to even gather the appropriate financial records, much less properly analyze them to ascertain risk,” said Steven Prensner, CBA, senior credit analyst at MasterBrand Cabinets, Inc. (Jasper, IN). “Soft due diligence is often equally important but even harder to evaluate as credit professionals are not always the primary customer relationship contact. There are many factors for business success that the numbers cannot capture, like quality of management, company culture, customer base loyalty, manufacturing flexibility and similar elements.”

It's not only the credit team that needs to do due diligence, but also the entire company, said Gary Juliano, CCE, credit manager at ATI Specialty Materials (Monroe, NC). “There has to be good synergy between finance, operations and credit so that everybody's aware of the situation.”

Maintain regular communication with the sales department and consider participating in their conference calls to enhance collaboration and insight. “Make sure you have a pulse on what's going on in the market and make sure to talk to your customers or your partners,” Juliano said. “Build relationships through customer visits or conference calls. This will aid in your due diligence and provide insights about your business, customer and product.”

Developing a checklist or questionnaires for onboarding customers will help you stay organized and collect meaningful information. “This helps me track the various elements critical to assess and score the risk in your specific industry,” Prensner said. “As the relationship progresses, your team can cross-reference back to past and current scores to help spot trends and hedge against increased risk exposure in the future.”

Hagemann rates her customers on a one-to-five scale, one being the most critical because they’re slow payers or they’re a brand-new company that we're closely watching. “We also take a look at outside credit reporting for financial information and input into an SAP database,” she said. “That way, we can easily evaluate our customers on a daily basis in addition to having guidelines in place.”

Use your resources. Hagemann uses NACM and FCIB as sources for information such as monthly country risk analysis. “I also make sure to use Know Your Customer (KYC) practices to truly understand a business and gather all the information that we need to make a credit decision.”

The bottom line: To mitigate the risks associated with rushed decisions in credit management due diligence, organizations must prioritize a culture of thoroughness, diligence, and integrity.

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Are you “credit”-able?

Kendall Payton, editorial associate

In an industry where decisions can have significant financial implications, mere competence is often not enough to inspire confidence. Credit managers must strive to cultivate a unique brand of “credit”-ability—a combination of expertise, integrity and professionalism that sets them apart as trusted partners in risk management.

Why it matters: Credibility (or “credit”-ability for credit managers) helps establish trust and confidence with your customers, colleagues and upper management.

Selling a product, getting a promotion or even getting others to believe in your business decisions without trust is unlikely. So, here are a few ways credit professionals can build their credibility:

Establish rapport. Finding ways to relate to your peers, customers or other key people in your company is key to establishing rapport with them. Whether it’s getting a report to someone on time or putting time aside to help others, people will feel more comfortable in trusting you will do what you say. “A good way to build your credibility among others is through honest and fair reporting of customer’s payment habits to reporting agencies and trade reference requests,” said Kyle King, CCE, regional credit manager at Joseph T Ryerson & Son, Inc. (Little Rock, AR). “Participating in credit groups, sharing information and attending group meetings while building long-lasting relationships plays a role too.”

Strong communication is an essential part of establishing a rapport with others. You must learn how to communicate effectively based on factors including your relationship with the person, the point you want to get across and the other person’s communication style. Many times, the message can get lost in translation, especially through email or text. “Face-to-face communication goes a long way,” said Joy Conrad, CICP, global credit analyst at Franklin Electric Co. Inc. (Fort Wayne, IN). “Being approachable in the office and able to talk to upper management is important to build the relationships needed for credibility.”

Never stop learning. Learning is an indefinite practice. Whether 40 days or 40 years into your career, education never stops. Some professionals go above and beyond by becoming certified. NACM's Professional Certification Program gives credit professionals the opportunity to gain expertise and build credibility in the credit field. “It demonstrates the dedication to the credit profession and continued education that comes with having the designations,” said King. “Those around you are more likely to have a sense of trust when you are well versed in the subject matter.”

Break through barriers with other teams. It’s easy to stick to your own team and not feel the need to venture out to build relationships with others. But building credibility with other teams can lead to an overall competitive advantage for the company. Being in a crowded marketplace where several companies offer similar products or services, credibility can make one company stand out drastically from another. A reputable and credible company will attract customers over its competitors.

Janet Elliott, financial services manager at Werner Electric Supply Company (Appleton, WI), said she thinks about sales when building credibility. “One requirement of my credit analysts is having a monthly or bi-monthly meeting depending on the level of volume with their managers,” explained Elliott. “We’re doing check-ins with sales, setting up recurring meetings and asking what accounts they’re trying to grow. We want to make sure we can be proactive and approve the account for growth now instead of backpedaling later. It’s good to know what’s going on and how we can support the business.”

Don’t be afraid to make mistakes. Acknowledging your mistakes in the work world can seem daunting—especially when you may have let others down. However, it’s inevitable. Whether small or large, mistakes play a part in how others perceive your credibility. “How you handle your mistakes says a lot,” said Conrad. “If you are open to feedback you get from other people, that helps the other person see you can take constructive criticism and are able to admit you’ve done something wrong.”

The bottom line: Credibility in the business world is vital for building trust and confidence, which can be achieved through effective communication, continuous education and establishing rapport with colleagues and customers.

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In Case You Missed Our Blog Posts …

Sharpen your credit skills.
“Now, I feel like I can be successful in my current position and confident to grow within the industry,” said Lisa Ridosh, CBA, lead credit analyst at Superior Plus Propane (Rochester, NY).
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Tools for success.
“Earning the CBA has reinforced the importance of staying curious and remaining open to acquiring new knowledge and skills,” said Tina Rodgers, CBA, credit manager at Spartan Chemical Company, Inc. (Maumee, OH).
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The Key to Automation: Change Management
On the latest episode of Extra Credit … As credit departments become more modern with new automation platforms and software, credit managers must prepare to handle any challenges that come their way.
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Biden’s new budget: Grounded before takeoff

Ash Arnett, NACM’s Washington Representative, PACE Government Affairs

It’s a new month and the good news is that Congress finally passed a government funding bill that lasts through September; unfortunately, it’s only half of the government.

However, barring any new drama or developments from the Republican Congressional Retreat, Congress is on track to pass the other half of its appropriations bills next week, putting an end to the monthly shutdown watch, at least for now. We can look forward to some more economic certainty as the Presidential election begins to ramp up in earnest.

Meanwhile, despite much of the focus on both the Republican Presidential primary and Congressional dysfunction, there have been several major developments over the past month that would normally have received significantly more attention. Here are some of the highlights.

End of Mitch McConnell’s Reign over Senate Republicans

On February 28, Senate Minority Leader Mitch McConnell announced that he would retire from Republican leadership in November, setting up a contentious battle to determine who will take over his position as head of Senate Republicans, along with who will make up the 2nd, 3rd and 4th leadership slots. The November timing is noteworthy—either Donald Trump will be the President-elect and will be looking to have an ally in charge of the Senate, or President Joe Biden will be re-elected to a second term and Republicans will likely be looking to elect a leader that moves them away from the former President.

State of the Union Address

On Thursday, March 7, President Biden delivered his State of the Union address with a lot of pressure riding on his ability to portray himself as capable of being President for another four years. Like prior years, he was heckled and fired back without too much trouble, and most agree that his performance certainly didn’t hurt him, which was probably the best Democrats could hope for. From a policy perspective, the address was focused on predominantly campaign messaging: increasing taxes on corporations and the wealthy, helping our allies in Europe and the Middle East, protecting access to in vitro fertilization (IVF) and restoring Roe v. Wade. In short, it was a predictable State of the Union for the one-year of the Presidential election.

Fiscal Year 2025 Budget

Just a few days later, President Biden released his fiscal year 2025 budget outline, to which the media and Congress gave a wholehearted “shrug.” The President's budget proposal typically is either a wish list proposal that Congress ignores, or a more pragmatic one that starts negotiations for the next year’s funding levels. In this case, it was a little of both. The budget proposed significant tax increases for corporations and more modest increases for those earning more than $400,000 per year, both of which are highly unlikely to become law this year. It also proposed a few funding increases for nutrition programs and a Child Tax Credit. But aside from these and a few other ‘wish list’ proposals, the budget did not go significantly over the budget deal numbers negotiated last year. This indicates that the President wants to continue running on a platform of pragmatism and bipartisanship, but still believes and cares about progressive ideals.

Trade Sits on the Backburner

One word was conspicuously absent from both the State of the Union Address and the FY2025 budget: trade. In what has become a pattern for this Administration, the President continues to focus on building up domestic manufacturing and supporting the domestic workforce, not on new trade agreements to help open markets and lower costs for consumers. We expect this trend to continue and look forward to the Presidential debates where the candidates will likely have to field at least one direct question on trade issues.

TikTok Quasi-ban passes the House

After several failed attempts to ban TikTok because of the company’s ties to China, legislation finally passed out of the House that requires TikTok to be sold to a non-Chinese company, following a series of classified briefings for Members of Congress on how the platform had already been used to modify what content American users see on the app. This is notable for NACM members only in the fact that it establishes precedent for similarly targeted legislation in the future that Congress could use to address national security issues associated with trade or electronic commerce. The bill’s future is more uncertain in the Senate, but the strong bipartisan majority vote in the House will be hard to ignore.

 

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