Credit manager

A credit manager

Description

Credit managers oversee the application of credit policy in the bank. They decide the credit limits to be imposed, the reasonable levels of risk accepted and the conditions and terms of payment made to the customers. They control the collection of payments from their customers and manage the credit department of a bank.

Credit managers typically do the following:

  • check customer credit ratings with banks and credit reference agencies
  • decide whether to offer credit
  • set up terms of credit and make sure the customer pays on time
  • manage a team of credit controllers or accounting technicians
  • negotiate repayment plans
  • stop supplies of goods to late-paying business customers
  • start legal action to recover debts if necessary
  • communicate with creditors and arrange for goods to be recovered by bailiffs

Other titles

The following job titles also refer to credit manager:

senior credit officer
credit administration manager
credit control supervisor
consumer credit manager
branch credit administrator
credit controller
credit policy manager
credit department manager
credit control manager
credit and collection manager
loan and credit manager

Working conditions

Consumer credit managers spend their working time in the office. Commercial credit managers who service commercial accounts may visit business offices or plants to interview current and prospective clients.

Credit managers must have good judgment and consideration. Because the financial responsibilities are significant, they often work under pressure.

Credit managers typically work forty hours per week. Commercial credit managers usually work longer and less regular hours than consumer credit managers.

Minimum qualifications

Educational requirements for a credit manager position vary, based on the needs of the financial institution and the type of credit accounts the institution manages.

A bachelor’s degree in finance is generally preferred, and an MBA is frequently required for high-level banking institutions in which in-depth financial analysis and a good deal of experience are required to handle large-scale client needs adequately. In short, a credit manager at a rural bank who mainly processes credit card applications for lines of credit totaling $2,000 will require less education and experience than a multi-national banking conglomerate that handles multi-million-dollar accounts for international companies.

ISCO skill level

ISCO skill level is defined as a function of the complexity and range of tasks and duties to be performed in an occupation. It is measured on a scale from 1 to 4, with 1 the lowest level and 4 the highest, by considering:

  • the nature of the work performed in an occupation in relation to the characteristic tasks and duties
  • the level of formal education required for competent performance of the tasks and duties involved and
  • the amount of informal on-the-job training and/or previous experience in a related occupation required for competent performance of these tasks and duties.

Credit manager is a Skill level 3 occupation.

Credit manager career path

Similar occupations

These occupations, although different, require a lot of knowledge and skills similar to credit manager.

credit adviser
bank account manager
asset manager
credit analyst
mortgage loan underwriter

Long term prospects

These occupations require some skills and knowledge of credit manager. They also require other skills and knowledge, but at a higher ISCO skill level, meaning these occupations are accessible from a position of credit manager with a significant experience and/or extensive training.

credit union manager
bankruptcy trustee
investment manager
investment fund manager
insurance rating analyst

Essential knowledge and skills

Essential knowledge

This knowledge should be acquired through learning to fulfill the role of credit manager.

  • Debt collection techniques: The techniques and principles used to collect overdue debt from customers.
  • Financial statements: The set of financial records disclosing the financial position of a company at the end of a set period or of the accounting year. The financial statements consisting of five parts which are the statement of financial position, the statement of comprehensive income, the statement of changes in equity (SOCE), the statement of cash flows and notes.
  • Financial management: The field of finance that concerns the practical process analysis and tools for designating financial resources. It encompasses the structure of businesses, the investment sources, and the value increase of corporations due to managerial decision-making.
  • Corporate social responsibility: The handling or managing of business processes in a responsible and ethical manner considering the economic responsibility towards shareholders as equally important as the responsibility towards environmental and social stakeholders.
  • Insolvency law: The legal rules regulating the incapacity to pay debts when they fall due.
  • Financial analysis: The process of assessing the financial possibilities, means, and status of an organisation or individual by analysing financial statements and reports in order to make well informed business or financial decisions.
  • Debt systems: The processes needed to obtain goods or services before payment and when a sum of money is owed or overdue.
  • Credit control processes: The various techniques and procedures applied to ensure that credit is given to the suitable customers and that they pay on time.

Essential skills and competences

These skills are necessary for the role of credit manager.

  • Apply credit risk policy: Implement company policies and procedures in the credit risk management process. Permanently keep company’s credit risk at a manageable level and take measures to avoid credit failure.
  • Trace financial transactions: Observe, track and analyse financial transactions made in companies or in banks. Determine the validity of the transaction and check for suspicious or high-risk transactions in order to avoid mismanagement.
  • Enforce financial policies: Read, understand, and enforce the abidance of the financial policies of the company in regards with all the fiscal and accounting proceedings of the organisation.
  • Strive for company growth: Develop strategies and plans aiming at achieving a sustained company growth, be the company self-owned or somebody else’s. Strive with actions to increase revenues and positive cash flows.
  • Manage staff: Manage employees and subordinates, working in a team or individually, to maximise their performance and contribution. Schedule their work and activities, give instructions, motivate and direct the workers to meet the company objectives. Monitor and measure how an employee undertakes their responsibilities and how well these activities are executed. Identify areas for improvement and make suggestions to achieve this. Lead a group of people to help them achieve goals and maintain an effective working relationship among staff.
  • Create a financial plan: Develop a financial plan according to financial and client regulations, including an investor profile, financial advice, and negotiation and transaction plans.
  • Synthesise financial information: Collect, revise and put together financial information coming from different sources or departments in order to create a document with unified financial accounts or plans.
  • Create credit policy: Create guidelines for a financial institution’s procedures in supplying assets on credit, such as the contractual agreements which have to be made, the eligibility standards of prospective clients, and the procedure for collecting repayment and debt.
  • Maintain records of financial transactions: Collate all the financial transactions done in the daily operations of a business and record them in their respective accounts.
  • Obtain financial information: Gather information on securities, market conditions, governmental regulations and the financial situation, goals and needs of clients or companies.
  • Determine loan conditions: Calculate the credit limit and decide on the conditions for the repayment.
  • Advise on financial matters: Consult, advise, and propose solutions with regards to financial management such as acquiring new assets, incurring in investments, and tax efficiency methods.
  • Manage financial risk: Predict and manage financial risks, and identify procedures to avoid or minimise their impact.
  • Analyse financial performance of a company: Based on accounts, records, financial statements and external information of the market, analyse the performance of the company in financial matters in order to identify improvement actions that could increase profit.
  • Analyse the credit history of potential customers: Analyse the payment capacity and credit history of potential customers or business partners.
  • Plan health and safety procedures: Set up procedures for maintaining and improving health and safety in the workplace.
  • Analyse financial risk: Identify and analyse risks that could impact an organisation or individual financially, such as credit and market risks, and propose solutions to cover against those risks.
  • Liaise with managers: Liaise with managers of other departments ensuring effective service and communication, i.e. sales, planning, purchasing, trading, distribution and technical.
  • Follow company standards: Lead and manage according to the organisation’s code of conduct.
  • Handle financial transactions: Administer currencies, financial exchange activities, deposits as well as company and voucher payments. Prepare and manage guest accounts and take payments by cash, credit card and debit card.

Optional knowledge and skills

Optional knowledge

This knowledge is sometimes, but not always, required for the role of credit manager. However, mastering this knowledge allows you to have more opportunities for career development.

  • Banking activities: The broad and continuously growing banking activities and financial products managed by banks ranging from personal banking, corporate banking, investment banking, private banking, up to insurance, foreign exchange trading, commodity trading, trading in equities, futures and options trading.
  • Contract law: The field of legal principles that govern written agreements between parties concerning the exchange of goods or services, including contractual obligations and termination.
  • Securities: The financial instruments traded in financial markets representing both the right of property over the owner and at the same time, the obligation of payment over the issuer. The aim of securities which is raising capital and hedging risk in financial markets.
  • Mortgage loans: The financial system of acquiring money by property owners or prospective property owners, in which the loan is secured on the property itself so that the property can be repossessed by the lender in the absence of payments due by the borrower.
  • Property law: The law and legislation that regulates all the different ways to handle property, such as the types of property, how to handle property disputes and property contract rules.
  • Business loans: Loans which are intended for business purposes and which can either be secured or unsecured depending on whether a collatoral is involved. The different types of business loans such as bank loans, mezzanine finance, asset-based finance, and invoice finance.
  • Investment analysis: The methods and tools for analysis of an investment compared to its potential return. Identification and calculation of profitability ratio and financial indicators in relation to associated risks to guide decision on investment.
  • Tax legislation: Tax legislation applicable to a specific area of specialisation, such as import tax, government tax, etc.

Optional skills and competences

These skills and competences are sometimes, but not always, required for the role of credit manager. However, mastering these skills and competences allows you to have more opportunities for career development.

  • Advise on credit rating: Share your expertise in the evaluation process which assesses the debtor’s ability, be it a government institution or a business, to pay back its debt.
  • Analyse loans: Examine and analyse the loans provided to organisations and individuals through different forms of credit such as overdraft protection, export packing credit, term loan, and purchase of commercial bills.
  • Maintain client debt records: preserve a list with the debt records of clients and update it regularly
  • Analyse market financial trends: Monitor and forecast the tendencies of a financial market to move in a particular direction over time.
  • Prepare credit reports: Prepare reports which outline an organisation’s likelihood of being able to repay debts and do so in a timely manner, meeting all the legal requirements linked to the agreement.
  • Communicate with banking professionals: Communicate with professionals in the field of banking in order to obtain information on a specific financial case or project for personal or business purposes, or on behalf of a client.
  • Examine credit ratings: Investigate and look for information on the creditworthiness of companies and corporations, provided by credit rating agencies in order to determine the likelihood of default by the debtor.
  • Perform debt investigation: Use research techniques and tracing strategies to identify overdue payment arrangements and address them
  • Perform clerical duties: Perform administrative tasks such as filing, typing up reports and maintaining mail correspondence.
  • Ensure proper document management: Guarantee that the tracking and recording standards and rules for document management are followed, such as ensuring that changes are identified, that documents remain readable and that obsoleted documents are not used.
  • Consult credit score: Analyse the credit files of an individual, such as credit reports which outlines a person’s credit history, in order to assess their creditworthiness and all the risks that would be involved in granting a person a loan.
  • Budget for financial needs: Observe the status and availability of funds for the smooth running of projects or operations in order to foresee and estimate the quantity of future financial resources.
  • Assess financial viability: Revise and analyse financial information and requirements of projects such as their budget appraisal, expected turnover, and risk assessment for determining the benefits and costs of the project. Assess if the agreement or project will redeem its investment, and whether the potential profit is worth the financial risk.

ISCO group and title

3312 – Credit and loans officers


References
  1. Credit manager – ESCO
  2. Credit manager | Explore careers – National Careers Service
  3. The Role of a Credit Manager in a Bank – Chron
  4. Credit Manager Job Description – StateUniversity.com
  5. Featured image: Photo by Antoni Shkraba from Pexels
Last updated on January 29, 2023

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