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The ‘new’ credit manager is the financial disruptor


Vijay Gangadin, partner at AethiQs strategic consultancy, was a guest speaker at one of the latest event organized by the Nederlandse Vereniging voor Credit Management. AethiQs advises organizations on strategic decision-making and change processes. Vijay focuses on strengthening and accelerating these processes for boards of directors –  in traditional (business) areas such as financial and strategic management, as well as in newer areas such as risk management and data management. He connects old and new areas with his approach so it creates genuine value for governance. In addition, he is affiliated with a number of national and overseas universities and business schools, and he is a motivator in his field.

Cees Jansen, Chairman of the Board at Nederlandse Vereniging voor Credit Management, talks with Vijay Gangadin about changing role of the credit manager.

Cees Jansen: The theme of the Credit Summer event is T-Shaped Credit Management. The role of the credit manager is changing. The foundation of the credit manager is based on subject-matter knowledge and expertise, but supplementary competencies are necessary too. How do you see the future of the credit manager?

Vijay Gangadin: „Daddy, what is a credit manager?” That is my opening line when I advise businesses on credit management. Credit management is changing rapidly and to be successful, you must want and be able to do more than be competent in your own field. You must want to look beyond the theories and figures of the field and the role. This ‘new’ credit manager must be capable of reducing complex concepts and challenges to understandable concepts. The T-model is central to that. We refer to people who work that way as 'conceptualists’. These are professionals who are double skilled, T-shaped professionals.

CJ: Is T-Shaped the answer to innovative disruption?

VG: As far as I’m concerned, it is more about how you do things and what relevancy and or impact you want to achieve as a professional. A model is just a model and at the same time, it is about the idea and applicability of a model, in this case, the T-shape in your question. The traditional credit manager focuses on finance operations: debtors, creditors, working capital, and then the specific processes in that area as well, such as financing limits and portfolio development. There has been an additional focus on the breadth of the organization in recent years: collaboration with Sales, Operations and others. That is a positive development, but not, it is not enough. According to AethiQs’ vision, the ‘new’ credit manager must focus on creating value at board level. He must be the financial disruptor. He must demonstrate the added value of credit management to the board of directors, proactively and not just in hindsight.

If you relate that to the T-profile, you see that the vertical bar is the substantive side. The horizontal bar of the T represents the quest for connections with other worlds (other areas, other parts of the organization, and cross-sector components). This should be focused primarily on creating strategic value. That is disruption in the field. The credit manager who doesn’t move in that direction runs the risk of becoming obsolete. In a pilot study in which we were involved, it was shown that reminder strategies developed with the aid of Artificial Intelligence (AI) are more effective than processes developed by the most experienced credit managers. The results were surprizing and innovative in nature. It is not as easy as it sounds to get existing credit managers into this ‘new’ strategic position. Traditionally, the focus of their work has been on Operational Excellence. In short: ‘Lower the cost of money’. The next phase is 'Understanding the money’. Here, the credit manager must ask questions such as: what does my department contribute to the company? What are the implications for my actions? What characteristics are developing in my sector, in my client portfolio?

What is happening in sectors similar to the sector in which I am active? Where can I profit from cross-sector learning? This is an area in which data science is making huge advances and playing a major role. The AethiQs maturity model provides an insight into where organizations stand in the journey of focusing on execution of the strategy to contributing to the development of the strategy and achieving it. In that model, Understanding the money is followed by Challenging the money. Financial Excellence replaces Operational Excellence. The focus here is on risk/reward thinking. The credit manager who wants to support the board of directors at this level must let go of Operational Excellence with a focus on automation and standard processes such as the annual review of credit limits. He must speak the language of the board.

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Interested in this article?

The full text is available in the September ’21 issue of Credit Manager Magazine.

 


Authors of the article:

Cees Jansen

Cees has over 25 years experience in Credit Management in  variety of forms ranging from factoring to credit insurance to BPO and E-Commerce. He has designed specialized solutions focusing  in receivables including captive credit insurance, securitization and stand-by servicing programs and financial demand generation tools. Cees has developed Operating models for the O2C operations of global companies in Retail, Consumer Goods and Logistics which combined protecting good customer relations with the need to operate an effective and efficient delivery team. Prior to his involvement in Credit Management, Cees has worked in Banking and Finance as a Credit Officer.

Vijay Gangadin

Vijay is an enthusiastic and charismatic speaker in the field of risk management and organizational science. Vijay has been program manager for the Basic Risk Management, Register Risk Management (RRM) and Master of Risk Management (MRM) programs at The Hague University of Applied Sciences. Vijay Gangadin (1972) is the founder of the Management Business School, which offers training in Risk Management, Sales and General Management.

 

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