Three Keys to Success

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Information on the three keys to success for any credit department. Topics include marketing, financing, and management.

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Three Keys to Success

  1. 1. Three Keys to Success For Any Credit Department
  2. 2. Author/Lecturer <ul><li>DAVID L. OSBURN </li></ul><ul><li>David is the founder and managing member of David L. Osburn & Associates LLC, a Las Vegas-based business training and contract CFO firm that provides seminar/keynote speeches for various groups including CPAs, bankers, attorneys, credit union employees, credit managers, trade groups, and businessowners. He also serves as a contract CFO for a large multi-state construction company, co-manages a bank educational program with the University of Nevada Las Vegas, and is a board member of North Star Business Services, a commercial lending company (commercial real estate and equipment financing). </li></ul><ul><li>His extensive professional background encompasses over 25 years in banking, finance, and marketing. His bank commercial lending credentials include comprehensive loan underwriting, management, customer development, and loan workout experience. </li></ul><ul><li>In addition, David is an Adjunct Professor for Regis University, an accredited MBA program and the College of Southern Nevada, a community college. He has taught college courses for over 24 years, covering Finance, Accounting, Economics, Marketing, Banking, Business Law, and Management. </li></ul><ul><li>He earned an MBA in Finance/Marketing from Utah State University and a BS in Finance from Brigham Young University. He is also a graduate of the University of Oklahoma National Commercial Lending School. </li></ul><ul><li>David L. Osburn & Associates, LLC </li></ul><ul><li>A Business Training & Contract CFO Firm </li></ul><ul><li>David L. Osburn, MBA </li></ul><ul><li>Managing Member </li></ul><ul><li>7521 Enchanted Hills Ct. </li></ul><ul><li>Las Vegas, Nevada 89129 </li></ul><ul><li>Mobile: (702) 655-1187 </li></ul><ul><li>Fax: (702) 382-2298 </li></ul><ul><li>E-Mail: [email_address] </li></ul><ul><li>Web: dlosburn.com </li></ul>
  3. 3. <ul><li>Three Keys to Success For Any Credit Department </li></ul><ul><li>I. Introduction : </li></ul><ul><li>HYPOTHESIS: TO HAVE A SUCCESSFUL CREDIT DEPARTMENT, THE FOLLOWING THREE ISSUES MUST BE SUCCESSFULLY ADDRESSED… </li></ul><ul><li> A) MARKETING </li></ul><ul><li> B) FINANCING </li></ul><ul><li> C) MANAGEMENT </li></ul><ul><li> </li></ul>
  4. 4. <ul><ul><ul><li>II. MARKETING </li></ul></ul></ul><ul><ul><ul><li>A) Marketing: Recognizing a need and then fulfilling that need (TARGET MARKETING). </li></ul></ul></ul><ul><ul><ul><li>B) Not, the traditional sales approach! If you have no customers, you have no business. </li></ul></ul></ul><ul><ul><ul><li>C) Elasticity of Demand for Product/ Service- necessity of the product/ service, availability of substitutes, proportion of income spent on product/ service, etc. </li></ul></ul></ul>
  5. 5. <ul><li>E. The Product (Industry/Company) Life Cycle </li></ul><ul><li>1. Birth </li></ul><ul><li>2. Growth </li></ul><ul><li>3. Maturity </li></ul><ul><li>4. Decline </li></ul><ul><li>5. Rebirth? </li></ul><ul><li>F. Market Structure </li></ul><ul><li>Pure Monopolistic Oligopoly Monopoly </li></ul><ul><li>Competition Competition </li></ul><ul><li>G. The “4” P’s </li></ul><ul><li>1. Product 2. Place 3. Price 4. Promotion (Advertising & </li></ul><ul><li> Personal Selling) </li></ul>
  6. 6. <ul><li>III. FINANCING </li></ul><ul><li> How does the credit department really make money for the company AKA how does the credit department contribute to the company’s “bottom line”? </li></ul><ul><li> A. Credit Underwriting </li></ul><ul><li> 1. The quantitative & qualitative skill set </li></ul><ul><li> 2. The five (5) Cs of Credit: </li></ul><ul><li>a. Capacity </li></ul><ul><li>b. Capital </li></ul><ul><li>c. Conditions </li></ul><ul><li>d. Collateral </li></ul><ul><li>e. Character </li></ul><ul><li> </li></ul>
  7. 7. <ul><li>B. Cash Collections </li></ul><ul><li> 1. How do you really collect cash? </li></ul><ul><li> 2. How hard can you push? </li></ul><ul><li> 3. Fair Debt Collection Practices Act </li></ul>
  8. 8. IV. MANAGEMENT A. Initial Assessment- Remember you are managing both people and processes ! B. Build on your existing team. Do not “kill the goose who laid the golden egg.” C. Be cautious when bringing in a new “hired gun.” D. Would some training be appropriate?
  9. 9. <ul><li>E. Management Structure : </li></ul><ul><li> What type of management structure is traditionally required to successfully operate your type/size of credit department in your </li></ul><ul><li>company/industry/segment of the market? </li></ul><ul><li>F. Change : What changes need to be made? </li></ul><ul><li> 1. Change is inevitable- “The times they are a changin!” </li></ul><ul><li> 2, Technology will dictate certain changes </li></ul><ul><li> 3. People and personalities will also dictate certain changes </li></ul><ul><li> G. Delegation vs. Control </li></ul><ul><li> </li></ul>
  10. 10. <ul><li>V. Conclusion : </li></ul><ul><li> The use of a clear, concise “mission statement” to guide the </li></ul><ul><li>credit department – different than the company’s mission </li></ul><ul><li>statement! </li></ul><ul><li> The department’s mission statement should “touch” on each </li></ul><ul><li>of the following: </li></ul><ul><li> Marketing Financing Management </li></ul><ul><li>EXAMPLES: </li></ul><ul><li>1) &quot;We provide effective credit underwriting and collection service to support positive company cash flow!&quot; 2) &quot;We provide effective credit underwriting and collection service to support positive company cash flow through a dynamic team of credit professionals!&quot; 3) &quot;We provide effective credit underwriting and collection service to support positive company cash flow, we have a dynamic team of credit professionals who care about the customer, and we believe in constantly promoting an effective image for our department and company!&quot; </li></ul>

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