{"id":3440,"date":"2018-02-16T17:53:28","date_gmt":"2018-02-16T17:53:28","guid":{"rendered":"https:\/\/www.peeriosity.com\/shared-services\/articles\/?p=3440"},"modified":"2022-09-06T18:10:04","modified_gmt":"2022-09-06T18:10:04","slug":"organizational-alignment-of-the-credit-function","status":"publish","type":"post","link":"https:\/\/www.peeriosity.com\/shared-services\/articles\/2018\/02\/organizational-alignment-of-the-credit-function\/","title":{"rendered":"Organizational Alignment of the Credit Function"},"content":{"rendered":"

Introduction<\/strong><\/span><\/p>\n

With its close ties to the Sales organization at most major companies, the Credit function organizational alignment can be found aligned with a variety of organizations, including Corporate Finance, Business Unit Finance, Treasury, Sales Administration, and Shared Services, to name just a few.\u00a0 While the trend in recent years has been for Credit to be more aligned with a consolidated operation, this has been a much slower transition than for many other processes in Order-to-Cash.<\/span><\/p>\n

iPollingTM<\/sup> Results Review<\/strong><\/span><\/p>\n

Recently, a major corporation in the Consumer Goods & Services industry conducted research utilizing Peeriosity\u2019s iPollingTM<\/sup> technology and using the option to have company names masked in order to maintain confidentiality<\/a> regarding their issue.\u00a0 They were considering the re-alignment of their Credit function to a more consolidated environment<\/a> and wanted the feedback that other major corporations could provide in that area.\u00a0<\/span><\/p>\n

Looking at the results of this poll, the first question addressed the issue of what is the current functional reporting relationship of the Credit organization at the surveyed companies.\u00a0 Having it as a part of an Order-to-Cash organization within Shared Services was the most popular design, with 39% of the companies doing so.\u00a0 This was followed by 22% locating this function in Corporate Treasury and 13% utilizing a traditional Accounts Receivable operation<\/a> in a decentralized location, such as a major business unit.\u00a0<\/span><\/p>\n

\"iPolling:<\/p>\n

The second polling question addressed the level of satisfaction companies were experiencing with the current functional reporting relationship of their Credit organization.\u00a0 The vast majority (75%) are either very satisfied (42%) or satisfied (33%), with 17% being indifferent and the remaining 8% being unsatisfied.\u00a0 This is somewhat surprising considering the wide variety of designs being utilized as shown in the previous poll question, but it also points out that there isn\u2019t just one particular design that works best for all companies in this area.<\/span><\/p>\n

\"iPolling:<\/p>\n

Some of the comments made by Peeriosity members as it relates to this poll include the following:<\/span><\/p>\n

Consumer Products & Services Member –<\/strong> Our Credit Department reports to the VP, Corporate Controller & his team. We do not align with Treasury, which is under a separate structure.<\/span><\/p>\n

Manufacturing Member –<\/strong> Our Credit Department is split, reporting to Treasury & Shared Services; two separate managing areas & methods, which sometimes makes it difficult.<\/span><\/p>\n

Non-Profit Member –<\/strong> Some operational portions of the organization review credit prior to customer PO approval.
\n<\/strong><\/span><\/p>\n

Consumer Products & Services Member –<\/strong> The function is in the process of being consolidated into Shared Services, with key roles left locally for important customers.<\/span><\/p>\n

Healthcare, Pharmaceuticals, Biotech Member \u2013<\/strong> Process is under Order-to-Cash<\/a>. Execution is under Treasury.
\n<\/strong><\/span><\/p>\n

Manufacturing Member –<\/strong> We have a matrix organization with Credit reporting directly within Shared Services, but with a strong dotted line to Treasury.<\/span><\/p>\n

Healthcare, Pharmaceuticals, Biotech Member –<\/strong> Credit policy is set by Corporate Treasury, execution is performed by Shared Services Order-to-Cash.<\/span><\/p>\n

Computers & Electronics Member –<\/strong> The Credit and BTC organizations work well together and often. The model works for us.<\/span><\/p>\n

Closing Summary<\/strong><\/span><\/p>\n

While approximately 40% of companies now include Credit as part of their Shared Services operation, the remaining 60% have so far chosen to do otherwise.\u00a0 It will be interesting to see if the consolidation trend continues for this important function or if many companies will continue to operate it in a variety of other models, including as part of Corporate or within the business units.\u00a0<\/span><\/p>\n

Where does the Credit function organizational alignment currently reside at your company?\u00a0 Is it time to take another look at the organizational alignment of this critical function?<\/span><\/p>\n

Who are your<\/em> peers and how are you collaborating with them?<\/span><\/p>\n

\n

______________________________________________________________________________<\/p>\n<\/div>\n

\u00a0\u201ciPollingTM<\/sup>\u201d is available exclusively to Peeriosity member company employees, with consultants or vendors prohibited from participating or accessing content. Members have full visibility of all respondents and their comments. Using Peeriosity\u2019s integrated email system, Peer MailTM<\/sup>, members can easily communicate at any time with others who participated in iPollingTM<\/sup>.<\/span><\/p>\n

\n

Peeriosity members are invited to log into www.peeriosity.com<\/a> to join the discussion and connect with Peers.\u00a0\u00a0 Membership is for practitioners only, with no consultants or vendors permitted.\u00a0 To learn more about Peeriosity, click here<\/a>.<\/span><\/p>\n<\/div>\n

<\/span><\/span><\/span><\/p>","protected":false},"excerpt":{"rendered":"

Introduction With its close ties to the Sales organization at most major companies, the Credit function organizational alignment can be found aligned with a variety of organizations, including Corporate Finance, Business Unit Finance, Treasury, Sales Administration, and Shared Services, to name just a few.\u00a0 While the trend in recent years has been for Credit to […]<\/p>\n

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