The eternal battle: Sales vs Collectoins
Experience has taught us that there is often tension in organizations between sales managers and their colleagues from credit & collection. This sometimes makes for difficult cooperation. Where are the interests and are they really conflicting? Below we zoom in on this further.
The interests: Can sales and collections go through one door?
For the sales team, the interests are usually very clear: winning deals, selling, achieving targets, building a customer relationship, etc. Every salesperson has his or her sales targets and sometimes commissions or bonus schemes are involved.
The credit & collections team, in turn, is responsible for converting those closed deals into money. In essence: they have to ensure that the invoices are paid. The deal is not complete until it has actually delivered something.
There’s where the nuance is. For the seller, a file is complete when the customer agrees to the deal, for the credit professional only when the correct amount is on the account for.
Credit management in the sales process
There is a lot of credit management within the sales process. A prospect usually goes through marketing principles. The approached clients are ideally capable of actually paying the invoices.
This process is usually described within the so-called credit policy. A document that assumes the department credit & collection runs through the entire organization. In this policy, the client’s debt is stated amongst other things. How you can prevent unpaid invoices and how to handle this if it does happen.
The same policy may contain rules regarding a screening or assessment. A credit analysis may take place to see if the prospect – or customer – is financially stable enough to do business with. Are there any doubts about stability? Should additional securities such as a guarantee or advance payment be required? Is there a need for certain credit limits? And who determines those limits, a credit analyst or an external partner, such as the credit insurer?
In addition, the cooperation conditions or general terms and conditions are a fixed part of the credit policy. Naturally, they have a strong impact on the sales process.
Credit issues within sales
For obvious reasons, a seller generally does not like working with a credit limit. This stands in the way of possible additional or larger deals. When the customer wants to order more and encounters a ‘njet’ because of the credit limit, this creates a possible stumbling block in the customer relationship. The seller misses out on that deal and may have lost a customer.
In addition, an organization can block a customer because they have accumulated too many overdue payments. This is the order block. In this case, too, the deal will not go through, unless the seller can work out a solution with all parties, of course. In both cases, sales must play an important role and communicate about it very well, clearly and unambiguously.
Different approach for the departments, but collaboration is key
Sales & Collections therefore have a lot in common. It is therefore essential that these two departments work closely together. As in any relationship or marriage, it comes down to clear communication and very concrete agreements.
In many cases, the seller has a more personal relationship with the customer. This enables him or her to detect a lot of things. Sales can take on a preventive role and detect risks. For example, does the account manager notice that there is less and less activity at his customer, or does he notice through his network that many complaints are coming in? These are signs on the wall that the sales department can pass on to credit & collections. For example, they can take measures to prevent late payment.
In addition, the seller also has a curative function. The credit & collection department can inform the sales person when the customer does not pay his invoices. The seller may be able to appeal to his personal relationship with the customer and raise this issue. In this case, Sales assumes its responsibility as part of the collection process. Due to this interaction, the customer relationship comes under much less pressure. In this way, both departments create a win-win for the organization. Nice is not it?
Would you like to know more about sales & collections? Optimize the cooperation between the departments?
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