Sales & Credit Control
I wrote an article back in November 2019 entitled “Credit Control and Debt Collection” Here and I stated “It is not uncommon to have conflict between sales and credit control but, that is an article for another day.” Well, two years later I have decided that today is that other day!
First of all, this article is not H.R or Manager advice on dealing with conflicts in the workplace in general (that may be an article for another day!) its simply looking at dealing with tensions between Credit Control and The Sales / Account Management department(s).
It touches on the lack of support for credit control and in general the misunderstanding of what credit control actually is, and it is not “sales prevention” no more than Sales / Account management should be perceived as people who would sell their granny if they thought they could get a commission out of it with not a care in respect of being paid or not for said sale.
So, how do we prevent or minimise the conflict between sales and credit control? Hopefully a few bullet points will provide some advice on that.
1. First and foremost, both departments are crucial to the Company being a success or failing and both need to understand that and the need to work together.
2. A well drafted Credit Control Policy is vital, it needs to outline the steps to be taken before we get to that new sale and acceptance or rejection of credit applications.
3. Sales and marketing no doubt will have a “list of targets” but, what of that list and how does it fit in with the credit control policy? Well, data integrity is a start, get data checked, remove companies who are no longer trading and have credit scores and recommended limits applied to said data.
4. Your credit policy will outline the criteria for acceptance or rejecting new account applications, apply it to the sales and marketing data and it saves wasting time on potential clients that may not meet the Credit Risk criteria. In other words, spend your time focusing on companies that are perceived as credit worthy.
5. Some of the conflicts that arise are new accounts being rejected so, that can be dealt with at point 4 but, if upon review by credit control (keeping in mind they will have access to most up to date information) you need an escalation process in your credit policy which states the process when an application is rejected by credit control and sales disagree. Who does it get escalated to? By whom, do they (be it FD or MD) have the final say on the matter?
6. Other conflicts arise when accounts are over the Credit Limit or are not adhering to payment terms / not paying at all. Credit Control will possibly want to refuse further credit and / or take further action to collect payment and sales will disagree as they want more sales and/or don’t want to upset the client. Again, as with new accounts, the credit policy will detail who decides on withdrawal of credit and / or further debt collection actions. It will also have an escalation process in the event that sales / account managers disagree and who has the final say.
7. When considering credit policy, it is important that directors / senior management consider the skill set of credit controllers and what credit control is. I.E. Risk assessment, controlling the credit rather than just debt collection etc. The last thing a FD or MD wants is that they need to decide on each issue that arises as such, they need to trust the staff they employ in Credit Control, support them and develop them.
8. Finally, I mention Credit Control Policy, when drafting the policy, it is important that other stake holders from you marketing manager / director to sales manager / director have input at the outset in order to raise any concerns. When it is agreed and signed off as company policy, it is important that it forms part of the induction process for all relevant employees. If they are made aware or policy at the outset, there is less likely to be disagreements / conflict in the future.
The points above are not exhaustive but, if you, dear reader, think I have missed anything, please feel free to comment below.
© Jim Sleith of JMS Credit Consultancy www.jmscredt.co.uk