SALES V CREDIT Part 2: From Discord to Accord

From Discord to Accord

Previously we looked at three main causes of friction between the Sales team and the Credit Control Department and now we shall discuss ways of helping them overcome this and to work together for the benefit of the business.

In essence, these also come under three main categories of mutual understanding, co-operation and communication but we need to drill down further to understand more about how we can introduce processes to build the relationship.

You may remember, I highlighted the personnel in the two departments often believe they have different objectives. However, if you think about it, if both the financial and commercial departments sat down together, I am sure you would find there are common aims of developing and achieving profitable business, maintaining that business and being successful.

Cultivating the relationship between Sales and Credit can start at the earliest possible stage.

For all new recruits to either the department, part of their induction should involve spending at least half a day meeting with their colleagues from Sales and Credit to find out what goes on, what the constraints may be and gain a clear insight into ways the sales team can help the credit controller and vice versa.

Thereafter, regular formal meetings of not more than an hour every four to six weeks should be arranged and given the credence they deserve.

This should involve sharing positive as well as negative information on customers, sales drives and target markets as well as information on late and non-paying customers, accounts nearing their credit limit and, of course, disputes.

At this point, it should be stressed that issues of a serious nature should not be saved up for these meetings but that a system for disseminating the information as quickly as possible should be devised.

In a previous company where I was a Credit Manager we even produced Aged Debt analyses for each sales person together with their own DSO figures, which provided some good banter and healthy competition amongst Sales as well as helping Credit Control in its cash collections.

Join visits between the sales person and Credit Control to potential, new and existing customers should also be encouraged, where possible, especially for key accounts.

This not only enables the credit control representative to meet their counterpart in the customer’s Accounts Payable team but demonstrates professionalism on the part of your company. It will also serve as a very useful insight for Credit Control in to the daily challenges of Sales and help cement the relationship between the two.

Credit Control could demonstrate flexibility in its approach of assessing the creditworthiness of customers by classifying the current portfolio of accounts by risks and opportunities in order to give Sales more guidance.

Also, rather than making a prompt decision not to sell to a customer because they are deemed creditworthy enough, the Credit Manager should look to accept business on a different basis.

For example, it might be possible to obtain guarantees, trade on a cash basis or even offer credit terms lower than the standard terms.

For Sales, when they are visiting potential customers they could spend some time talking about the standard payment terms and the importance of the customer adhering to them.

They could also pass over documents to Credit Control such as a company letterhead or business card so that the process of credit checking can start straight away.

Communication channels should be kept open between Credit Control and Sales and each should know who is the assigned salesperson and credit controller for each customer.

From experience, it would be very helpful if Sales could provide a list of their planned movements or locations in advance each week to Credit Control to see if there is a customer who is in arrears that a sales person could call on to collect payment or to ascertain the situation at short notice.

These suggestions for improving, building and maintaining a good relationship between Sales and Credit are by no means exhaustive. However, we should accept that we cannot do without each other and we should respect and understand the vital role each department plays and why it is essential that we work together.