Selling and Collecting – And the Two Shall Meet

Every business I’ve ever worked for acknowledged that a sale, is not truly a sale, until it is paid for. Despite this caveat, these same businesses believed it necessary, some even felt beneficial, to foster a tension between the customer side of the business (sales) and the support side (credit & collections).

This unnecessary construct is a remnant of the old silo mentality, a holdover of 19th century manufacturing. This model was able to survive the 20th century because of an abundant supply of educated labor resulting from the post war baby boom and women entering the labor force.

Ultimately, this model wastes human capital and energy that can contribute diverse talents to the sales and customer relations cycle. Selling, in today’s stripped down lean organization, is no longer the sole responsibility of one department. Customers interact and develop relationships with many parts of your organization. These broader, deeper relationships require everyone in your organization is aligned to deliver previously unimagined levels of attention and service to all parts of your customer’s business.

As seller (the credit granting company) it has never been more important to align your business strategy and value proposition with every other part of your business that interacts with your customers’ business. Let us start with a typical sales traction.

 

 

CONFLICT RESOLUION

 

In this transaction sales has set the tone of what to expect in the business relationship, gives the prospect a credit application and tells them to turn everything in to the Credit department.

If the Credit department is being judged on the percent of total accounts recievable past due and bad debt it is easiest for them to be strict in granting credit. This maximizes the departmental objectives but works counter to business goal of making more sales,and maximizing profit.

This siloed decision process that makes the Credit dept. look good may artificially restrict revenue (sales) growth, under utilizes operational capacity thereby over stating costs while sending the unintended message to the new customer you are not as eager to do business with them as sales led them to believe. This, in turn, will likely cause you to miss future opportunities. This is an example of one department, at the beginning of the cycle, not aligning with the business strategy but supporting the those measures that make the department look good.

Historically the Credit Department has not been viewed as a selling function because it was not revenue generating. It was seen as a cost center or a necessary evil, to minimize risk. In this scenario the Credit Department talks to the customers accounting department to gather credit information. They will talked to either operations or purchasing at the customer again after the credit evaluation process is done to inform them of the credit line and terms of sale. The manner in which these processes are handled sets a tone and flavor that will inevitably be communicated through the customer’s organization and start to paint a picture, in their eyes, of what your company is like. The Credit Department is selling you and your company to a broader part of your customer than the Sales Department will be.

This same example of cost center departments interfacing with your customer and engaging in soft selling/ relationship building conversations, can be played out in shipping, receiving, reception and most others in your business.

It is my experience these support functions historically feel disconnected from the higher profile, well paid, selling part of the business. These people know they are integral to the delivery of product and service but do not feel appreciated for everything they do in their often invisible role. For many of these jobs the people are doing their job best, when their function is invisible. They are too often only recognized when there is a break-down in what they do. This lack of formal accountability and coorespondingly, recognition, results in them being mentally disengaged from both the opportunities and resulting successes of seeing each customer engagement, at any level, as a chance to serve and impress a customer.

As business environments become increasingly competitive you can ill afford to not fully utilize all your employees and their talents. When you engage customers deeply, across their entire organization you have the ability to forge much closer relationships and garner more business. Every business I’ve been part of acknowledges it is easier to grow sales with existing customers rather than find and sell new ones. When you empower and engage with everyone that works for you this becomes not just possible, but probable when done correctly.

 

 

Michael Londo

President

Just in Time Direction, LLC.