May 16, 2024

Spearheading daily challenges and taking on the unexpected is expected. But let’s face it—no leader can do everything by themselves.

Why it matters: Delegation is one of the most essential skills of management. It not only takes some of the workload off the shoulders of a leader, but it gives your team the opportunity to grow and learn in the process.

A delegation of authority is a document that identifies the most effective model of distributing responsibilities and power to those involved in certain decisions. The best example is how those at the entry level handle more routine responsibilities while senior management focuses on strategic tasks.

Yes, but: The concept of delegation is often misunderstood, with some leaders mistakenly viewing it as simply a means of offloading tasks onto others. A fine line is drawn between delegating tasks and simply dumping unwanted tasks onto others.

To delegate means to trust and assign a task to someone, usually letting them complete the task in their own way to cultivate growth.

• When you dump tasks on others, you usually are having someone do the work you do not feel like doing (even if you have the time).
• For example, giving a team member a task and telling them there’s no need to follow up with you on it while showing little to no interest in ever coming back to the task.

By the numbers: One in every four credit managers say they struggle to properly delegate tasks to their team, according to an eNews poll.

Some leaders may stay away from delegating because they:

• Feel guilty for adding extra work to their team’s to-do list.
• Want to complete the task themselves, feeling the need to micromanage and have it done their way.
• Think it will take longer to explain the task than to finish it themselves.
• Lack confidence in who they need to delegate the task to.

Regardless of the reason, not knowing how to delegate properly can lead to negative consequences. Overloading your calendar and to-do list can lead to burnout, and dumping tasks meaninglessly onto your team creates a hostile work environment. So, here are a few ways to delegate effectively.

Know What to Delegate

To avoid dumping, you have to know exactly what tasks you want your team to complete.

• “Our supervisors and I ensure a thorough identification of which people on our team can be stretched by taking on additional assignments,” said Chris Montross, CCE, manager of credit services at W.W. Grainger, Inc. (Charlotte, NC).
• “We know who we can delegate to and who we cannot. Of course, bandwidth may vary from day to day, so we always need to check in with the team member to ensure they can and want to take on the additional work before we assign it.”

Credit professionals often assign specific credit tasks to their team, like making collection calls or conducting preliminary credit review investigations. The key is to balance task assignments and tap into each team member's strengths.

“I am a manager who likes to keep my team challenged and keep them on their toes,” said Terri Eggebeen, assistant manager, credit/collection specialist at Fechheimer Brothers Company (Cincinnati, OH). “Being in credit and collections can sometimes get a bit tedious and monotonous, so when I’m delegating tasks, I am looking for what will help my team grow. Sometimes, if I have a lot on my plate and something comes up, then it’s easy to ask a team member to help me out with something.”

Allow Room for Failure

Always remember, a delegated task might fail, but with consistent practice, success is achievable. Discover your team’s professional growth areas before you delegate tasks. This proactive approach significantly lowers the risk of tasks being done incorrectly.

“When we have high-level, high-visibility work that has a tight deadline, we give it to those who have more expertise,” said Montross. “When it is more exploratory work or work that has a longer lead time, we may assign that to the team member who wants to develop. Oftentimes, we may even pair the person who has the strength with the person who is developing together to ensure quality work is being done while providing the mentorship.”

Delegation requires a balance of trust, communication and strategic oversight. Leaders must foster a culture of accountability in order for delegation to thrive. Empower your team members while ensuring tasks are completed to the highest standards.

It begins with explaining the tasks to them, then letting them do it once or twice alone as I give my feedback and corrections to them,” said Ramez Kasbah, head of accounts receivable at Sallaum Lines SA (Beirut, Lebanon). “Once they receive the feedback, I will transfer the task for them to do on a weekly or daily basis. The process is organized, so I make sure there is not much trouble with balancing delegation versus dumping tasks.”

Open Communication

It is important to find the balance of not micromanaging while still making sure progress is being made on the assigned task. Regular check-ins and follow-ups on how they are doing can help communication flow so that the team member is comfortable and you, as the manager, can breathe.

Eggebeen said she is a hands-on manager but knows when to back out so that she does not micromanage. “I don’t believe that you can be an effective manager without being a part of your team, so, I integrate myself into the team and don’t hide away in my office waiting for them to come to me,” she said. “I believe that knowledge is power, and if you don’t give your team the power and tools to be effective, then when you are not around when an executive decision needs to be made, they will not be able to feel comfortable being there without you. If I do not communicate how things are done and what I expect in certain situations, I’m not empowering them to make the right decisions.”

The bottom line: Delegation is not just about mindlessly assigning tasks but also about empowering team members to take ownership and grow professionally, ultimately leading to a more efficient and effective work environment.

As the volume of accessible data grows, it may be time to rethink approaches to customer research. Gone are the days of relying solely on traditional data sources to paint a financial picture of customers.

Why it matters: Social media can enrich research efforts and add depth to your understanding of customers, helping you make more informed decisions.

Each social media platform has its own personality. From the casual banter of X (formerly Twitter) to the polished professionalism of LinkedIn, understanding the nuances of each platform is essential for effectively navigating the sea of information they offer.

Facebook, for example, is a platform known for its emphasis on personal connections and community engagement. If you're looking for insights into customer preferences, opinions, and behaviors, Facebook's rich tapestry of social interactions provides a valuable window into their lives. Facebook also can be used to search for business reviews.

On X, conversations unfold in real-time. X is the go-to platform for breaking news and trending topics.

LinkedIn is the professional networking powerhouse beloved by professionals and businesses alike. From job postings and company profiles to industry groups and thought leadership articles, LinkedIn serves as a hub for professional networking, knowledge sharing, and business development.

By understanding the unique personalities of each platform, you'll be better equipped to leverage their strengths to gather valuable information.

By the numbers: A recent eNews poll revealed that 81% of credit professionals use social media to research customers.

What they’re saying: Chris Mortenson, credit and collections manager at Kirby Corporation (Houston, TX), uses LinkedIn to search companies, confirm legal names, addresses and look up employees to validate titles. He even validates the CFO of a company using the “people” tab on LinkedIn and sorts it by sales or finance.

“We research on LinkedIn daily since we are reviewing several applications each day,” Mortenson said. “I follow key accounts on LinkedIn so that I can keep up with their posts. I also like to follow certain companies on X for my own development and learning.”

Credit professionals may not all use social media daily, but it can empower their research on smaller, elusive companies, enabling them to identify potential red flags.

“If there's limited information available, such as few trade references, and you're questioning a business's legitimacy, a complete lack of web and social media presence could indicate a potential issue,” said Jonah Bartholomew, CBA, credit analyst at Mansfield Service Partners South, LLC (Gainesville, GA).

Credit professionals can look at different social media posts that either the owners themselves posted or the business posted online. “I would say Facebook and LinkedIn are the two most popular ones that I would go to, especially for your smaller mom-and-pop shops that you could be selling to,” Bartholomew said.

Amy Williams, VP of customer financial services at Rocky Brands, Inc. (Nelsonville, OH), googles the customer name/owner name online for further customer research. “Sometimes, among various search results, we might click on a LinkedIn profile or other surfaced social media,” she said. “But we don’t log into platforms specifically to research customers. We particularly view and look for customer websites.”

• Google Search and Google Maps can help credit professionals find out more information about their customers and verify locations.
• While Google or Yelp reviews can tell you a lot about how a business is performing, the ratings can help you decipher that further.

Posting activity can provide credit professionals with an idea of how well a company is performing. For instance, a business account on Instagram can show you how they run their business, who their clientele is and their targeted audience (aka followers).

Yes, but: Social media can assist credit professionals, but shouldn't be the only customer research tool due to possible inaccuracies and unconfirmed data.

For example, companies may appear prosperous but could be financially unstable, only becoming apparent when they declare bankruptcy or delay bill payments. “Reach out to the salespeople working with the applicant because they may have some helpful knowledge or perhaps, they can do a drive-by of their location to confirm this business is real,” Williams said. “And, of course, directly reach out to the owner or applicant regarding any concerns.”

Mortenson's credit department does not have any formal policies on using social media but they’re aware that relying on social media for information should always be weighed and balanced. “It is more of a confirmation tool for us rather than a source of new information.”

For some credit professionals, social media is the last resort in credit investigations. “We use social media on the rare occasion that the customer is unresponsive to our attempts to resolve past due(s) as well as ignoring our front-line sales staff,” said Russell Campise, corporate credit manager at Lactalis American Group, Inc. (Buffalo, NY).

Campise would use LinkedIn to search for VPs or directors with the debtor company. “Out of the three or four times I’ve done this, it has been successful and has received immediate responses from those who pay the bills,” he said. “We also have a pretty good screening process and have been successful staying out of bad debt trouble.”

The bottom line: Social media has become a significant tool in B2B credit management for customer research, though their use should be balanced with other methods due to potential inaccuracies.

In an era where digital transactions reign supreme, customer payment portals have emerged as a convenient and efficient way for businesses to manage receivables and streamline payment processes.

However, while the benefits of customer payment portals are undeniable, their implementation and maintenance come with their own set of costs and considerations for credit departments.

Why it matters: Customer payment portals are here to stay, so credit departments must create a strategy to best approach each portal.

Some credit managers approach payment portals by assigning one credit manager to those special accounts so they can become an expert. But each portal also requires a specialized strategy depending on how they operate.

Here are the top four most-used customer payment portals and tips to navigate each:

#1 SAP - Ariba

System Applications and Products in Data Processing (SAP) Ariba is a cloud-based solution that allows suppliers and buyers to connect and do business on a single platform. It aims to improve an organization's vendor management system by providing less costly ways of procurement and making business simple.

“Every one of our customers sets up Ariba differently for just what they need and what they want to pay for,” said Christian Pedersen, CCE, corporate credit manager at Emcor Services Aircond (Smyrna, GA). “It is the most flexible in set-up and if everybody uses it correctly, it's a very strong system.”

For some credit professionals, Ariba is their number one preference for customer portals. With several features created to simplify invoice processes, Ariba makes it easy for credit managers to favor.

“It allows you to upload invoices via a CSV template, which reduces the need for manual data entry and enhances the accuracy of submissions,” said Yenny Garcia, senior billing manager at The Imagine Group LLC (Grayslake, IL). “It also provides excellent reporting tools to track the status of invoices and payments and detailed insights into invoice rejections. The portal is a user-friendly interface, and I highly recommend leveraging its available widgets that track invoicing cycle times, on-time payment rates, and invoice volumes.”

#2 Coupa

Coupa is an AI-driven, cloud-based spend management platform developed to meet all business needs across procurement, supply chain, finance, and more. It also offers numerous options for streamlining processes. For instance, you can upload invoices via cXML, and your ordering system can be integrated with the portal, facilitating order processing for your company.

“Coupa is very easy to use because of its format,” said Sondra Thornhill, CBA, national account credit manager at H&E Equipment Services, Inc. (Baton Rouge, LA). “You can see all invoices along with the dollar amount and all information on the front-end. Though we also use Ariba, if we have too many customers using it all at once, we venture out to a third party. However, Coupa is the most user-friendly.”

Garcia said she recommends participating in the onboarding process between the customer and your company to understand the invoice submission requirements thoroughly. “Customers may have varying needs,” she said. “Some may require extensive information like a copy of the invoice and ASN (tracking) details, while others may only require basic information like invoice numbers and the billed amount, which will ensure smooth payment processing for your organization without any delays.”

#3 Corrigo

Corrigo allows its users to stay connected to their customers and team, including techs and subcontractors, all in one place. Credit professionals who use Corrigo as a payment portal say that the system provides an easy way to collaborate with the option of having small chats on the side.

“If there's something going on with a particular invoice, the billing agent can see what’s going on with the customer and chat back and forth until it's resolved,” said Pedersen. “We have very few disputes or problems with the Corrigo portal, but other portals offer less automatic communication. If someone on the customer's end wants to communicate, it can happen, but it's not automatically part of the workflow.”

Pedersen also said many banks and retailers use the type of software needed for Corrigo. “They’ll submit the order to us, then we complete the order and upload the invoice, and then later on, the collection department looks at the progress to see when the payments are going to be issued,” he said. “I think the best part is that there's a workflow and if you don't answer your group chat, there's a reminder and vice versa—the other side gets that same type of reminder. It's very effective, and that communication flow helps reduce bottlenecks and delayed invoices.”

#4 Taulia

Taulia is a financial technology business that provides supply chain finance and discounting services. Taulia is also part of SAP, which is the world’s largest B2B network. It provides a complete working capital solution for forward-thinking operations. The biggest benefit of any portal is the amount of visibility.

“We can see exactly what's going on with invoices at any given time from the time they are uploaded into the portal until the time it is paid,” one credit manager said. “Taulia is one we use a lot to see a kind of forecast of what dollars will be coming in and when. Invoices on our side go in, the customer's orders on their side also go in, they pair up, they match and that's how they get processed. So, at the end of the day, most portals all provide the same function.”

Yes, but: The integration of automation varies across each portal—and catering to all of those differences across all platforms can be difficult for credit managers. “For anyone who is using portals, I would say start to look at and take into account what the invoice status is and then focus your time and energy that way,” said one NACM member.

For those who are new to exploring portals, it may seem intimidating at first. However, once becoming acquainted with the functionalities available, it can be a seamless process. One of the most important takeaways is building a strong foundation with the customer to understand the different functions and capabilities offered through the portals they use. “The customer will feel validated and that you are using the portal to its fullest potential,” said Garcia. “This will result in improved accuracy, time savings, and, ultimately, a reduction in your DSO.”

The bottom line: Despite the varying levels of challenges created by customer payment portals, credit managers can ease the burden by strategically approaching each platform.

Private equity (PE) refers to investments made into private companies by partnerships, which buy, manage and sell these companies. These partnerships, known as private equity firms, run these investment funds for institutional and accredited investors.

Why it matters: Understanding the role of private equity groups can help predict potential credit risks and inform investment decisions for both institutional and accredited investors.

Pros of private equity

• Access to capital: Private equity groups grant companies access to capital that it may not be able to raise on its own.
• Scaling quickly and efficiently: PE firms can help companies scale quickly and efficiently as they typically have a lot of experience growing businesses.
• Experienced partners: PE firms can provide valuable resources and advice to businesses on how to scale effectively.
• Potential for high returns: Because private equity groupstypically invest in businesses with high growth potential, it has the potential for high returns on investment.
• Improved valuation: PE firms increase the value of the company they invest in.

What they’re saying: “If you're selling to a private equity owned company, that PE sponsor gives you another level of comfort that you may not have,” said Martin Zorn, managing director, risk research and quantitative solutions at SAS Institute Inc. (Honolulu, HI). “That changes your role because you’re not only researching your customer, but you’re also researching who the private equity partner is that's backing your customer.”

Cons of private equity

• Lack of liquidity: Unlike publicly traded stocks and bonds, private equity investments are not easily converted to cash. This can make it difficult for investors to exit their position if they need to do so.
• High fees: Fees charged by PE firms can diminish returns, making profit realization challenging for investors. Moreover, the substantial initial investment needed for private equity groups may be too expensive for many, leading to significant company debt.
• Illiquid and highly risky: PE groups boost risk and illiquidity, hindering investors' return generation, even with successful underlying companies.
• Conflicts of interest: Private equity firms, due to their ownership and control over companies, may make decisions that don't serve the company or shareholders' best interests. For instance, they might sell a company below its actual worth for immediate profit.
• Concentration risk: Private equity groups, with their penchant for acquiring companies across various industries, can inadvertently increase concentration risk for credit managers. This heightened concentration can leave credit portfolios vulnerable to industry-specific downturns or economic shocks, amplifying the potential impact of credit defaults or market volatility.

What they’re saying: From a credit risk standpoint, selling to a private equity company implies credit risk on both the investment side and business side.

“Most times, they drain the cash out of the company, which leads to risk of not reinvesting,” said Narci Munoz, CICP, director, customer financial services at Carlisle Construction Materials, LLC (Carlisle, PA). “You have to look into how the company is leveraged and the amount of goodwill that goes into that leverage in exchange for owner's equity. In addition, you’re not getting financials from the PE firm, and the company doesn't really tell you whether it is owned by a private equity group or not.”

The risk of granting credit to an account owned by a private equity company depends on the ownership and structure. “I’ve seen accounts handled in several different ways,” said Sandra Logan, credit and collections manager at Stanton Carpet Corporation (Calhoun, GA). “A lot of times, the people at the stores are not aware the company they work for has been purchased. There seems to be a lack of communication throughout stores that have been purchased by a private equity group. The employees at the stores continue to order goods from vendors.”

The only way the credit departments are made aware that there’s been an ownership change is when collection issues arise, Logan said. “When calling the stores, the credit analysts are told the folks at the stores no longer handle payments to vendors."

Larry Hoo, senior credit analyst at Vinmar Chemicals and Polymers B.V. (Hoofddorp, Netherlands), says that because PE firms are reluctant to provide financials, he does additional research on them and the companies they’ve acquired. He searches for:

• How long the PE firm has been established.
• What type of companies they are buying and managing but also how much they invested in the companies, and which markets they're in.
• Cash flow from the company they own, as well as what they're looking for in return from this company and what time frame they’re expecting to get the return.
• If they have had any redundancies or if they have changed management.
• How long they intend to stay with the company. “In my experience, it generally lasts between five to seven years,” Hoo said.

According to Preqin Pro, the average holding period for buyouts among U.S. and Canadian private equity funds spiked to 7.1 years in 2023 as of Nov. 15, the longest hold since at least 2000.

What’s next: “Private equity is a fast-growing part of the alternatives market and direct lending is the fastest-growing part of that asset class,” Zorn said.

A McKinsey and Company report showed that private markets assets under management totaled $13.1 trillion as of June 30, 2023, and have grown nearly 20% per annum since 2018.

The bottom line: Private equity presents both opportunities and risks; it offers companies access to capital, potential for high returns and experienced partners while posing challenges such as lack of liquidity and transparency.