When you think about it, the sales and credit management teams have a lot in common. They are both responsible for generating revenue for the company, and they both need to be able to work well with other departments within the organization.
However, these two teams often don't work together as closely as they should. In this blog post, we will discuss why the credit management and sales team should work more closely together to generate more revenue for your business!
Credit risk vs securing a sale
Your sales team is, understandably, sales focussed. Their primary goal is to generate revenue for the company by selling products or services to customers.
On the other hand, the credit management team is responsible for managing the credit risk of your customers. This means that they are focused on making sure that customers can, and will pay their invoices on time.
So, what happens when these two teams don't see eye to eye?
In an ideal world, the credit management team would assess the creditworthiness of a customer and give the green light to the sale. The sales team would then make the sale safe in the knowledge that there is little risk involved.
However, in reality, things are often not so simple. The credit management team may be too cautious and refuse to extend credit to customers who are actually capable of paying. This can lead to lost sales and frustrated sales staff.
On the other hand, the sales team may be too eager to make a sale and not pay enough attention to the creditworthiness of the customer. This can lead to bad debt and a lot of work for the credit management team.
The key to a successful relationship between the sales team and the credit management team is communication. The two teams need to discuss each sale on an individual basis and come to an agreement about whether or not to extend credit.
By working closely together, the sales team and the credit management team can make sure that each sale is made with the best interest of the company in mind.
Maintaining working capital
Maintaining working capital and preventing bad debt are important goals for any business, and the sales team and credit management team can help each other to achieve these goals.
Working capital is the lifeblood of any business, and the sales team and credit management team can help each other to ensure that the business has a healthy cash flow.
While the sales team can help to bring in money, the credit management team can help to ensure that the money owed to the business is paid on time.
By working together, the two teams can help to keep the business running smoothly and efficiently.
Pooling resources
By pooling the resources of both your sales and credit management team, you can create a more effective and efficient system.
You can avoid duplication of effort, and make sure that both teams are working towards the same goals.
For example, if the sales team is trying to increase sales, the credit management team can help by ensuring that invoices are paid on time. This will free up cash flow so that the business can invest in more stock or new products.
Both teams working together can also help to reduce the risk of bad debt.
By monitoring customer payments and chasing up late payers, the credit management team can help to ensure that customers are kept up to date with their payments.
This will help to reduce the number of customers who default on their payments, and will help to keep the business's cash flow healthy.
Onboarding new customers
When customers are onboarded, it's important to set up a payment plan that suits both the customer and the business.
The credit management team can help with this by ensuring that invoices are issued on time and that payments are collected promptly.
This will help to reduce the risk of late payments and bad debt, and will also help to keep the business's cash flow healthy.
At the same, the sales team should keep an eye on the customer's account to make sure that they are not getting into financial difficulty.
If the sales team identifies a customer who is struggling to pay their invoices, they can refer them to the credit management team for help.
The credit management team can then work with the customer to agree on a payment plan that suits both the customer and the business.
Building good relationships with customers
It's important for businesses to build good relationships with their customers.
The credit management team can help with this by maintaining regular contact with customers and keeping them updated on their account status.
This will help to build trust and confidence between the business and its customers, which is essential for long-term success.
The sales team can also help to build good relationships with customers by providing them with excellent customer service.
If customers feel valued and appreciated, they are more likely to do business with the company again in the future.
How to improve collaboration between sales and credit management
The good news is that there are a number of things that businesses can do to improve collaboration between the sales team and credit management team, including:
1. Communication
One of the most important things is to ensure that there is clear communication between the two departments.
This means having regular meetings to discuss any issues or concerns, and making sure that everyone is on the same page.
It’s also important to have a clear process in place for dealing with customer queries and complaints.
This way, everyone knows who to contact and what needs to be done.
2. Training
Another important way to improve collaboration between sales and credit management is to provide training for both teams.
This can include training on the products or services that are being sold, as well as training on how to deal with customer queries.
It’s also important to make sure that everyone is aware of the company’s credit policy.
This way, there are no surprises when it comes to dealing with customers who have outstanding payments.
3. Creating a cooperative vetting process
As we mentioned before, one of the main benefits of having a close relationship between sales and credit management is that it helps to avoid problems further down the line.
One way to do this is to create a cooperative vetting process.
This means that both teams work together to assess the creditworthiness of potential customers.
By doing this, you can avoid giving credit to customers who are unlikely to pay on time, or at all.
It’s also a good way of building trust between the two teams, as they learn to rely on each other’s expertise.
4. Involving the credit management team from the offset
Normally, the credit management team only comes in at the end of the sales process, when an invoice is ready to be sent out.
However, if you involve them earlier on, they can provide valuable insights into which customers are worth pursuing.
They can also offer advice on how to structure deals so that they’re more likely to be paid on time.
For example, they might recommend offering a discount for early payment, or extending the payment terms from 30 days to 60 days.
Both of these options are less risky for your business, and will help to keep the credit management team happy.
Working together to resolve disputes
If a customer does fall behind on their payments, it’s important to work together to resolve the dispute.
The credit management team will have a good understanding of the customer’s financial situation and can offer advice on how to proceed.
They might recommend offering a payment plan or negotiating a settlement.
Your sales team, on the other hand, is most likely full of your most skilled negotiators. They can use their skills to try to come to an agreement that is beneficial for both parties.
By working together, the sales team and credit management team can resolve disputes quickly and efficiently, without jeopardising the relationship with the customer.
A match made in business heaven
Working closely together, the credit management team and the sales team can help to keep the business's finances healthy and reduce the risk of bad debt. This is a win-win situation for everyone involved!
If you're a business owner or manager, it's important to make sure that your credit management and sales teams are working together as effectively as possible.
There are many benefits to be had from this close cooperation, so it's definitely worth the effort!
