There is a popular misconception that the Credit Control Department is “anti-sales” and they will try to create barriers towards the sales effort wherever possible. This “Sales v’s Credit” attitude is wrong and can only be removed by strong personal relationships and education of the sales staff that a sale is not a sale unless the company is paid for it.
You can improve the process with a full understanding of each others roles, which are very similar in a lot of ways. Both departments want to –
- Develop new business
- Ensure continuity of that business
- Make a profit
- Achieve Success
The education process begins with regular meetings between the two departments. Discussions points should include, collection results, problem accounts, new prospects, unresolved queries, frauds and potential frauds, any information shared from Credit Circles or competitors on poor payers, cases that may go legal or to debt collectors and updates on cases that have already been passed to solicitors or debt collectors, and proposed customer visits.
The Credit Controller or Manager of Credit Control should visit prospective and existing customers as regularly as possible with the sales team. This again will cement the relationship between the two departments and give the Credit Controller a clearer understanding of the sales teams daily challenges.
In the same way each new and existing sales person should be given an induction to the role of the Credit Control Department and their key objectives towards profitability.
Selling – bringing home the business – is a tough job, especially in the current financial climate, and the sales team should be congratulated when any new business is received. The Credit Controller’s part in this process is to seek to do business at every possible opportunity. If a customer is deemed un-creditworthy, you should look for alternative solutions like Cash on Delivery, Personal Guarantees, or Guarantors. If the Credit Control Department decides to offer credit on the basis on the Personal Guarantees or Guarantors they should be thoroughly investigated first to ensure that they are credit worthy and also have assets should anything go wrong with the account so they could be pursued to recover any monies owed. Credit Control should never decline the account, without giving reason to sales.
The most important point to note is communication. Credit Control should always keep the sales department informed of any key changes to their accounts whether it be good or bad. Credit Control should never forget that the account also belongs to sales as well as them. The sales team are extremely valuable to many credit processes including collections, risk assessment and gathering information. The setting of clients terms and credit limits will also become an easier process when a good relationship exists between Credit Control and Sales staff. Monthly, or weekly meetings should be held between sales and credit control and all of the points in paragraph 3 should be discussed, documented, and action points should be noted and actioned before the next meeting. This adds to the commitment, trust and overall communication between the two departments.
If the sales team is treated professionally and with confidence, Credit Control will gain their trust and respect in their options, and future dealings will become easier because you are working together. Sales people and generally positive, driven people, and credit professionals should be equal to this attitude. The stuffy, blue suited, office bound individual is a thing of the past. The Credit Control department is the link between sales and finance and makes a real difference to corporate profits and liquidity. This should not be overlooked at any stage.
The Credit Control department should use positive language when addressing the sales team. They should not talk negatively about “blacklists” or “stopping supply” even though this maybe their only course of action left. Credit Control should use other phrases focusing on positive action and try to be pro active about highlighting potential issues with sales before they arise. Credit Control should praise sales on their successes and focus on how their customer skills and strengths can help Credit Control achieve their objectives.
Without sales, the company would not survive. Without money and cashflow, the company will not survive. Allowing credit accounts to clients is an incentive for sales to win business. This incentive comes at a cost, and the role of the Credit Control department is to keep the cost to a minimum by collecting, communicating, and minimising bad debt, and also creating a fantastic environment for clients that will ensure repeat orders for the sales team.