Who works for me? What do they do? How should I decide how much to pay them? These are questions that credit executives increasingly struggle with as they deal with operational changes driven by the development and implementation of automated systems for data management, transaction processing and the application of sophisticated credit management tools such as credit scoring models. In addition, pressure to reduce operating expenses and improve profitability in an increasingly competitive global environment has led to the regular practice of reducing headcount, especially at corporate operating levels. This has led to greater centralization and the development of shared service centers designed to perform transactions and functions that tend to be common across different divisions within a larger business entity.

In addition to centralization and shared service centers, many companies have begun to organize workflow through the use of cross-functional teams as opposed to the more traditional "functional silo structures." Much of this reorganization has been driven by the management theories suggesting that flatter organizations in which knowledge and tasks are shared are both more efficient and more effective at serving customer needs.


The purpose of this study is to examine the impact that business process restructuring has had on the skills, responsibilities, and compensation of credit, collections, accounts receivable, and cash application (hereon referred to as "credit management" or "credit") employees at the staff and management levels. Rather than examining the change itself, this is a study of the current state of organizational structure, job functions, and compensation in the credit area resulting from the recent organizational changes that have taken place. Specifically, this study reports the results of an analysis of 122 job functions in the credit area and provides a model explaining how compensation is driven by skills and responsibilities related to each job. Other studies, namely The Future of Credit (1998) and Future Trends in Credit and Accounts Receivable Management (2005) have identified and outlined the significant organizational and process changes that have affected credit management in the past ten years.

The findings of this study reflect the impact of the general trend in business process restructuring. First, there appear to be three basic organizational structures in which credit and A/R management operates. The "functional silo" structure is still firmly in place, however, in many cases such structure has been centralized into operations referred to as "shared service centers. " The second structure observed in the study is more of a pure "cross-functional team" model. The third type might be defined as a hybrid structure, in which a company uses a combination of structures designed to fit the needs of its operation and customers. Due to the small sample size, only 12 companies, it is difficult to reach any meaningful conclusions on the impact of such structures on compensation, and as such, that will be the topic of a future study using a larger selection.

This study does provide interesting and meaningful results regarding the impact of different "compensable factors" (skills, qualifications, level of responsibility, reporting level, etc.) in determining both compensation and whether a job is classified as exempt or non-exempt from overtime and other requirements of the Fair Labor Standards Act (FLSA). Contrary to the conventional understanding that many jobs in the credit function can be performed by individuals without a college degree, a significant number of staff positions studied require either some form of post-high school degree or equivalent skill levels. The research methodology considered the impact of 20 different compensable factors on compensation. After adjusting for correlation among the factors, the salary model includes a total of nine compensable factors.

Research Methodology

Data for the project were gathered by interviewing senior credit managers at 12 participating companies. A demographic breakout of the companies is included in Exhibit 1.

Three of these companies structure their credit organization into cross-functional teams. Six companies use a shared service structure, which is typically centralized into one physical location. The remaining three use a combination of structures within the company. It is interesting to note that the three companies using cross-functional teams can also be characterized as having relatively focused product lines and both more concentration (fewer, but larger) and somewhat less diversity in their customer bases. The three using combinations of structures were among the larger companies in the group. Among the companies using shared service centers, it is interesting to note that, while such centers process transactions for multiple divisions of each business, many of the more specific customer service functions, such as deduction resolution and quality issue, are often left to the product divisions themselves.