How to Solve the Sales vs. Credit Control Battle
It never ceases to amaze me that many squabbling factions can still comprise a successful business. The case of sales vs. credit control is a classic example of this.
From the perspective of a salesperson in a business whose main customers are credit controller departments, I’m privy to a unique perspective on this age-old divide. In the most successful businesses, these two departments work seamlessly together – two equally valuable sides of the same process. In businesses where this isn’t the case, there’s room for growth and improvement in efficiency when these departments are drawn together to work more effectively.
The Sales Perspective
As sales teams strive hard to win deals, it’s understandable that frustration is felt if credit control refuse to extend credit to close a deal. Those who have worked in, or close to, a sales department may have heard inaccurate, but popular, reference to credit control as ‘the risk department’ or ‘order prevention’ at times.
There are many salespeople out there who will go to great lengths to avoid involving credit control in the sales process – fearing they will shut down a promising deal, for undue worry about their ability to pay.
But stop and think about it. If a deal is genuinely at risk of going unpaid, is it worth ‘closing’ anyway? Credit control have no negative agenda, they are simply watchful to ensure credit isn’t overextended and cashflow is reliable. This shouldn’t be considered as sales vs. credit control. So, let’s understand their side of the story…
The Credit Control Perspective
Where credit control can be accused of being too cautious, the inverse can be true of their view of sales. Credit control departments have to pick up the fallout from sales committing to working with unreliable clients who may struggle to meet invoice payment deadlines.
There’s a popular saying in credit control departments – “It’s not sold until it’s paid for”. It’s no good winning the biggest deal, if the money can’t be brought in. Businesses rely on cashflow, and it’s up to the credit control department to ensure that the money is brought in.
Understandably, it only takes a few bad experiences before credit control departments can be heard referring to members of the sales team as ‘sharks’ who will ‘sign anyone up, regardless of the risk’. This perpetuates the perspective of it being sales vs. credit control.
We should pause for thought here too, as how many salespeople are educated on risk factors for payment, or encouraged to work collaboratively with credit control to ensure deals are landed that stand the best chance of success?
Reconciliation for Success
Reconciling sales and credit control, through better mutual understanding, and communication, is key to addressing any divide. It’s common for businesses to focus on improving performance by training and educating within the narrow band of each employee’s designated role. But great value can be achieved by interdepartmental training – particularly between complimentary departments such as sales and credit control.
Encouraging a tighter working relationship between sales and credit control will ultimately enable the business to chase more profitable business
Consider how much less time would be wasted if sales teams filtered out high-risk opportunities, which would be shut down by credit control anyway, before they progressed things too far. Encouraging a tighter working relationship between sales and credit control will ultimately enable the business to chase more profitable business, more quickly, and ensure greater reliability in cashflow. Benefits could also be measured in improvements in DSO or delinquency.
Taking the concept of sales and credit control collaboration further still, credit control could proactively furnish sales teams with information about any existing clients who have an uplift in credit-rating. This would imply that they are growing, or at least present a lower credit risk. Sales teams could use this insight to drive higher sales volumes with these clients.
Better Tools, Better Working
Tools such as credit information resources can provide inter-departmental value, as mentioned above, but what other tools exist to improve this working relationship? At Corcentric, we find that some of our clients rely on Corcentric EIPP to provide deep insight into what is being sold where. In some cases, detail of specific product sales, in specific locations, is only apparent from invoicing records. Beyond this, our clients use Corcentric EIPP to identify late-payers and address these, as well as calculating credit risks based in insight not available to credit information resources.
Sales teams can also benefit from knowing when a customer is facing payment reminders, so they can either hold back from trying to grow a troubled account, or even assist in the communication process to bring the cash in more quickly.
Ultimately sales and credit control are two sides of the same process, and both rely on the overall health of the business (i.e. cashflow) being optimal to ensure ongoing security and growth within their departments. Working more closely together, and sharing data from appropriate tools and services, leads to a more efficient business and better working environment for all.