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Apr 01 2013 The Imperative Partnership |
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The Partnership between sales and credit is imperative for success.
Why the sales driven organization must encourage partnership between sales and credit to succeed. The selling team of yesteryear would have a hard time getting along, or even understanding the business world of today. Things have changed such that a client's credit worthiness is just as, or even more important than, the gross revenue potential of that coveted client. In the old days when the "big sale" ruled all, we (the selling organization) kept the credit department quite busy cleaning up when one of those big sales turned into a big collection nightmare.
Sales people sell, it's in the job description. A motivated sales team is the engine that drives many/most organizations. This being the case, the selling organization is pressed with many demands: attaining budgets, providing income, winning contests, as well as the competitive nature of sales folks. Who wouldn't want to be among those listed in the Top 10? All of that being said, you can't discount the fact that it is a thrill to make a sale, especially after working months to overcome objections and provide solutions for a large potential customer.
In my younger selling days I remember a particular example of "the big sale" in which I learned a very valuable, very expensive lesson. All sales people have a list of "dream" accounts that they are working to attain and this is about one of those on my list. I won't name names but from my perspective this particular prospect account looked to be ideal: business was brisk, the owner looked very successful and was driving a new sports car, and all of my competitors wanted to be their supplier. Long story short I signed the account! They filled out a credit application but did not sign a personal guarantee. I pushed to get them the best credit terms using all of the good arguments, i.e. "they are super busy and have been around for years." You can guess the sad ending of this story. Not a good outcome for the organization and not good for me. Not good for the customer either.
Lessons I learned:
Our company has found these types of lessons should be put to use so the same mistakes can be avoided in the future. Training and communication must be supported by management and are key for a successful selling and credit team to thrive. It is now a requirement that every sales representative learn and pass a comprehensive credit certification test. With this new understanding of the credit world, I would say that the relationship between sales and credit at our company has never been better. Of course sales people still want to sell, and now we understand that our credit team wants us to sell!
We are now in a much better position to make decisions when bringing on new business as well as keeping our current business healthy. If I were in the same selling situation as described above, I would work directly with the credit team to help determine the health and credit worthiness as well as credit terms for the account. I am a strong believer that holding a customer accountable to the proper terms based on their situation will help them to run a better business. I have personally had customers that would not have survived without the discipline installed by practicing strong credit practices. Today my sales team is working on many "dream" accounts in which the promise of a prime vendor relationship hinges on giving long credit terms. This is great as it puts us in a position to work with the account in conjunction with the credit department. I have brought our credit manager on many sales calls to work directly with the customer in establishing a relationship and to determine credit worthiness. What a team - we have rarely lost a sale.
Best practices to ensure sales and credit partnerships on decisions and accountability:
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