By George Portanier

Regardless of the industry in which we operate, we face a challenging business environment. It is well known that in some industries supply is outstripping demand and customers are becoming more knowledgeable and powerful.

The western world is also finding it more difficult to compete with Asian producers. Countries such as China, India, Vietnam, Thailand, the Philippines, Bangladesh and others all have one thing in common – a very low labour cost base, which makes their output very competitive globally.  Manufacturers in Europe find it very difficult to produce at such low unit costs and therefore to compete on product features and quality.  It is easy to see why so many multinationals have set up production facilities in China and other low-cost countries. 

Technological developments are shortening the life cycle of many products, while e-commerce platforms have broken down the traditional barriers that may have existed in international trade in the past. From the comfort of your office or living room, it is now commonplace to browse suppliers’ websites and shop online around the world, comparing product features, warranties, and prices. You can then place an order, pay for the goods using a debit or credit card, or make the payment using your bank’s internet banking facilities.  It is extremely easy to complete transactions online.  The buyer would then receive the goods at their doorstep in no time.  Competition is now a global phenomenon with little or no trade barriers.

In today’s aggressive business environment, companies must strive to gain and maintain a competitive advantage in the marketplace. But what does this mean?

Companies need to convince their customers that they offer the better, if not the best, solutions available in the market. Firms should invest in their customers and adopt a customer-centric attitude by:

  • Understanding customers’ needs and expectations – the maxim ‘know your customer’ is always commendable.
  • Communicating with customers – this includes listening to customers to better understand their preferences; and
  • Striving to meet, if not exceed, customer expectations.

As you can see, the credit function has an important role to play in gaining and maintaining a competitive advantage in the marketplace. The people in a company’s credit function are the ones who are in direct contact with customers at every stage of the transaction.  They are ideally placed to build strong relationships with customers.  They are the people who can foster trust between customers and the company.  As a result, the credit team can play a key role in enhancing the company’s reputation in the marketplace.  The credit function is a people function. The way they communicate and deal with customers is different from their competitors.  And that is a powerful differentiator in today’s business.

Therefore, credit professionals should be well trained and have honed skills to know how to be flexible in meeting customer needs and expectations.  They should deliver a good customer experience and help the company to create a relevant image and reputation in the eyes of its customers. This is what branding is all about! It is people and people-driven processes that are the real source of sustainable competitive advantage – which is why the credit function, and the people who work within it, are so important in today’s business world.

Investing in the credit function is a worthwhile investment and is vital to maintaining a competitive edge over the multitude of competitors selling similar products.

vital to maintaining a competitive edge over the multitude of competitors selling similar products.