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.

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

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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

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