In our busy world of trying to get new customers and hold on to the currents ones, every company strives to attain three sales and credit goals:

  • to maximize sales safely
  • to maximize cash flow
  • to minimize credit risk, past due accounts and bad debts

When these three goals are attained, it’s often a reflection of how well the sales and credit teams are working together. Conversely, when the sales and credit teams are pulling against each other, sales opportunities are often missed, credit is provided to less than credit worthy customers, and past dues increase, impacting a company’s “life blood,” its cash flow. As a credit and collection professional who often sees both sides of the sales and credit equation, let me take a moment to offer a few thoughts on how to become a unified team.

It starts at the top – The President, CFO, Controller, Directors of Sales and Credit, and other executive management need to have a firm understanding and “buy in” that sales cannot exist in a vacuum without credit and that credit needs to support sales in every way that is feasibly possible. When the message that “we’re all in this together” comes down from the top as a written mandate and policy, everyone will be clear as to the expectations required.

Documentation is key – As a collection professional, I’ve seen my share of customer contracts, credit applications, credit reports, invoices, and other documentation that were sent in to support a claim. Sometimes the documentation has produced a very clear picture of the claim and the debtor. Other times, the paperwork has indicated a confusing situation. Or, there have been instances that documentation wasn’t sent in at all because it was never created or obtained from the customer.

Every company needs to design credit and sales documentation that will fit their business needs and will reflect a concise picture of the customer and their business relationship. For example:

  • When a new customer credit application is designed, does it end up having too little or too much information required?
  • Is the information being requested pertinent to making a sales and credit decision?

These are just a couple of the questions that need to be answered. Rather than the credit team working by themselves to draw up this document, careful and detailed feedback from the sales team will produce a new customer credit application that will be much more appropriate, effective, and readily used by all the parties involved.

In addition, a flow chart of the sales and credit processes should be drawn up so that everyone is on board with who will do what to:

  • approve credit on new customers for current and projected orders
  • approve changes in credit on existing customers
  • handle past due accounts
  • manage disputes, etc

When the flow chart details how the sales and credit processes work, including specific authorizations required, the sales and credit assembly line will run much more smoothly and efficiently. This is not just a credit policy but a “sales and credit policy.”

Walking in each other’s shoes – We’ve all heard this expression and when sales understands what credit does and vice versa, the two departments will be brought much closer together. For the credit professional, walking in the shoes of the sales professional includes understanding:

  • the meaning of a sale
  • what is involved to find a prospect and nurture them into a customer
  • what the feelings are when a sale is made or lost

Conversely, for the sales professional, walking in a credit professional’s shoes includes understanding:

  • the meaning of credit
  • what credit tools, controls, and systems are implemented to safeguard the company’s assets
  • what the feelings are when an account becomes past due, uncollectible or bankrupt

Although the above is just a smattering of my thoughts and ideas in unifying the efforts of the credit and sales teams, the value to a company’s long term profitability and viabiity of working together cannot be understated.

This article was edited by Steven Gan.

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