Does your business regularly find your credit management and sales teams at logger heads?

With sales working hard to win deals and meet targets, it is understandable that they are frustrated when a deal collapses because the necessary credit extension cannot be agreed. Or if a key account is put on stop and is unable to trade because they have exceeded their credit limit. It is not uncommon for credit management to be referred to by sales teams as the “order prevention” department.

In this article we turn this assumption on its head. We demonstrate how through collaboration between teams, effective credit management can increase sales, build stronger customer relationships, and enable sales to work more efficiently and effectively.

1. Enable data-based prioritization of sales leads

Working in collaboration with credit management during the early stage of a deal can help sales prioritise their leads. Credit analysis can enable sales to identify and focus on low-risk prospects which have a strong long-term revenue opportunity. And avoid spending time working leads which would never make it through the credit risk process. This not only improves the efficiency of the sales team resource but will also protect cash flow. Related article: Credit and collections during Covid-19

2. Build stronger customer relationships

It is widely accepted within modern business that market share will be as much won on customer experience than on product and price. Delivering the customer a positive experience through every stage of the customer journey is now critical if a business wants to maintain competitive.

“Times have changed. To remain relevant in today’s market, organisations need a better understanding of their customers, and they must rethink their traditional business models. It is no longer enough to provide an excellent and well-delivered product, accompanied by good customer service.

To gain competitive advantage, customer needs must be fulfilled, even anticipated, at each stage of the customer journey and beyond.” PWC – Customer Experience

Credit control has a vital role to play in building customer relationships. They will often be the last contact your customer has with your business and therefore how your business will be remembered.

Regular credit control contact can help customers feel valued. Rather than simply chasing payment, your credit-control team should be perceived as an extension of your post sales customer support team. A call made to check as invoice has been received and everyone is happy, is a far more positive call than one made when the invoice is overdue. It will also ensure the prompt identification and resolution of any disputes which will in turn reduce defaults. Good credit control will keep both your customers happy, and your cash flow moving.

3. Ensure customers can trade

You have several smaller clients that have always been excellent payers. However, for a couple of months their invoices have been unpaid, and their account has been automatically placed on stop. They are not key accounts, so not a priority to call, so remain on stop for several months, until they eventually place an inbound call. It turns out there has been an invoicing error and they all have the same dispute. The dispute is now resolved but three months revenue is lost as they went to a competitor.

Anyone recognize the scenario?

It is common for credit-control teams to focus on key accounts, working on the rule that the top 20% of the customer base deliver most of the revenue. But do they? Does your business know how much revenue is outstanding / lost simply because 80% of your accounts do not receive a credit-control call?

Following up on the delivery of the invoice to see if the customer is happy, is a good credit control practice to subtly test to see if there is going to be a problem with the debt. This means that any disputes can be resolved prior to the customer defaulting, and avoids accounts being unnecessarily placed on-stop, leading to lost sales and at worst, a client lost to a competitor.

4. Enable increased trade from existing customers

A credit limit feels just that, limiting. However, as much as some clients’ default and credit limits must be reduced, many clients will pay promptly, grow their business and be suitable for credit extensions. With sales and credit management working collaboratively, these opportunities can be swiftly identified and passed onto the customer. Sales now not only have an excellent reason to contact their account with a good news story, but also through collaboration with credit management, the opportunity to increase sales from credit-worthy clients.

Conclusion

Most modern businesses strive to have a companywide vision and purpose and to ensure all functions are working collaboratively to deliver the overall corporate objective. However, for many businesses the reality is very different. With the business divided into functional silos who are focused on delivering departmental targets rather than overall goals, teams can easily become bickering factions focused on winning the battle rather than the war. In many businesses this is most visibly played out between sales and credit management where sales opportunity is required to be checked against the credit management balance of risk of defaults and bad debt.

However, create synergy between sales and credit management, through aligned goals and KPI’s, and you can create a formidable team. Strong collaboration between sales and credit management can increase sales, deliver the company’s revenue and working capital targets and your customers’ an outstanding experience.

Contact us now at sales@4dcontact.com or on 020 37691487 for a no-obligation quote.

Interested in receiving more news and views from 4D Contact?

Subscribe to our weekly newsletter

[TOFU offer] eBook – A C-Suite executive’s guide to Delivering successful order-to-cash transformation
Download our eBook

A C-Suite executive’s guide to Delivering successful order-to-cash transformation

A review of the considerations and tactics critical to achieving successful transformation within your order-to-cash function

Download

You may be interested in these other recent articles

7 Strategies to help businesses overcome staff shortages

16 November 2021

As the world reopens after Covid-19, there have been reports from employers in the United States, Canada, Australia, parts of the EU and the UK…

Read more

How to improve your working capital position before year end

20 October 2021

As businesses approach their year-end on December 31, finance teams across the globe will be reviewing actuals versus forecasts and wondering whether there is anything…

Read more

7 Common Pushbacks to Outsourcing Credit and Collections

5 October 2021

Outsourcing Credit and Collections: 7 Common Pushbacks and how to overcome them When it comes to credit-control and debt collection outsourcing, it is very common…

Read more

Order-to-Cash Transformation Support

23 September 2021

Looking to improve the efficiency and effectiveness of your credit and collections process, and reduce cost to serve, you’ve invested heavily in a new credit…

Read more

Outsourced Credit-Control Case Study: Schindler UK

9 September 2021

How Schindler UK delivered a 581% increase in cash collection This case-study from Schindler highlights how the strategic use of outsourced credit-control can help improve…

Read more
[TOFU offer] eBook – A C-Suite executive’s guide to Delivering successful order-to-cash transformation

Download our eBook

A C-Suite executive’s guide to Delivering successful order-to-cash transformation

A review of the considerations and tactics critical to achieving successful transformation within your order-to-cash function

Download

Book a consultation

Discover the benefits your business could achieve with a bespoke, outsourced contact solution.

Our brief consultations are designed to outline the impact your organisation could achieve, whatever your starting point and unique requirements.







Register to receive updates

Enter your email to receive regular news and updates.


Our contact details

4D Contact: London

Barratt Smith Brown & 4D Contact
Bentinck House
3-8 Bolsover Street
London
W1W 6AB

4D Contact: Malaga

Four D Contact S.L.
Camino de las Cañadas 1D
Centro de Negocios Martín Buendía
Planta 1ª, Oficina 17
29651 Mijas Costa
Málaga, Spain

4D Contact: Dublin

The Black Church
St Mary’s Place
Dublin
D07 P4AX

Global Sales Enquiries:

© 2021 4D Contact. All rights reserved  |  Privacy
Registered in Ireland, number 626576  |   Website by Jeremy Hickman