Sales + Credit: The Dynamic Duo
The success of Sales + Credit is not measured by the amount of risk avoided, but by the amount of profitable business secured!
A company’s sales force and credit management team must always work hand-in-hand if the business is going to succeed. Let’s face it…
…Without Sales to generate customers, the company will fail.
…Without Credit Management to collect on the sale, the company will fail.
…Without repeat customers, the company will fail.
When it comes to company success, Sales and Credit are truly the Dynamic Duo! Which is why ongoing communication between the two teams is crucial.
Without Sales to generate customers, the company will fail.
Sales is the engine that drives revenue. If your company never has any sales, you have no need for credit management. Credit simply has no purpose without sales.
It’s a two-step process: Sales brings in the business and Credit brings in the cash.
Did you know that it’s 6-7 times more expensive to acquire a new customer than retain an existing one? Not surprisingly, it’s also 50% easier to sell to existing customers than to new prospects.
Clearly, the sales team can’t do it alone. In order to sustain existing customers and generate repeat business, they need support from the Credit Management Team.
Without Credit Management to collect on the Sale, the company will fail.
There are four primary reasons why credit is extended to customers:
- Customers need time to ensure the product/service meets their needs
- Customers need time to process the invoice for payment
- Their competitors do it
- Credit allows the customer to sell goods at a profit
Quite frankly, credit management makes a profitable sale happen.
Without repeat customers, the company will fail.
Customer engagement is necessary for both Credit and Sales, because customer service is everyone’s responsibility. And excellent customer service naturally leads to repeat business.
“Profit in business comes from repeat customers; customers that boast about your product and service, and that brings friends with them.”
W. Edwards Deming
The sales team serves the customer by offering the company’s services at a reasonable price and landing the business. The credit department then follows up by extending credit services to retain the customer and collecting on the account (completing the sale).
By working together, Sales and Credit can grow the business and increase cash flow – paying customers pay your bills!
Keeping an Open Dialogue
How often do your sales and credit departments talk and meet with one another?
Maybe not often enough. Frequent dialogue and meetings between the two are critical for your business to thrive.
For instance, the credit department should respond to sales’ inquiries promptly, and vice versa. Weekly meetings help maintain dialog and relationships. The more the two areas engage in interactive communication, the more likely they are to make business decisions based on fact – not on friendships.
Also, Sales and Credit should have access to the same information – even share the same systems, if possible. This will help to keep communication between the two departments ongoing. Another helpful business practice is cross training. If they “walk in each other’s shoes” for a while, each area can fully understand and appreciate the other. Then when problems arise, both departments are equipped to work together and find solutions.
So what is the key to successful Credit and Sales interaction? Well it’s CREDIT. That is:
Let’s examine each component…