Just like with every other department in a company, the credit department’s structure must be defined. This includes both the structure of the department itself, in terms of who has final control (CFO, VP Finance, VP Sales(?)), as well as setting up a decision making structure.

This may seem like overkill, and, in all honesty, the usefulness and applicability of a tiered credit department is directly tied to the size of the company as a whole. If the company is small enough that the business owner makes every credit decision, creating departmental organizational tiers is probably only theoretically useful. However, it can’t hurt to have a plan already in place for when the business expands. The ability to seamlessly expand the credit department in concert with the growing business is a luxury – and having a plan already in place ensures that the growing pains are minimal. Plus, even if the business never grows to the point that an entirely separate “credit department” is warranted, the business owner may still want to eventually delegate some duties. By following a pre-set plan, the delegation process can be…

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