Cash Cow vs Sales Parrot
These two functions have been arm wrestling for dominance since forever and a day. Each believes itself to be the more important half of the pair. As a 35 year Credit Manager in just about every Industry including a Collection Agency, today is an opportunity to set everyone straight!
On the credit side, we have the generic opinion of salespeople as fixated on making the sale at whatever cost. They seem to have tunnel vision which totally bypasses the probability of ever collecting on the account. At worse, they are seen as pushy parrots whose sole calling is to repeat the same sales pitch to new prospects without regard to the risks these prospects pose to profitability. At best, they are incentive driven, quota focused, glad-handers who would "give away the store" to make the sale.
Sales has a different take. They wonder if the credit department people have a clue as to what's going on in the "real world." They see credit as obsessively focused on details that have little impact on the big picture. The credit manager seems to come up with endless ways to delay, pick apart, set up road blocks to, and eventually kill the sale. They say, credit has earned the title of sales prevention. Credit, it seems to them, is oblivious to the fact that sales drives revenues and are the life blood of the company.
Hmmmm, so Cash Cow vs Sales Parrot! Each has its own view, its own side of the story. Each is certain the other does not understand its importance or the challenges it faces. If only the other would get on board and see the larger vision (defined by their particular agenda), all would run smoothly and profitably.
The solution to this sparring match actually does lie in focusing on the larger vision. But that vision is greater than the agenda of either sales or credit - it lies in the overall success of the company. And, for that success to be realized both departments must effectively perform their functions. Interestingly, neither can perform effectively without the other. Ha-try to wrap your arms around that one!
So, here are the cold, hard facts. Credit has no purpose without sales. The credit function was birthed to facilitate and support sales. But before all you salespeople start gloating over a victory, because I know some of you are reading this, HEAR THIS! Without credit, profitable sales - the kind that consistently bring in revenue and make for a successful company - are not possible. Remember, the purpose of sales is not to meet quotas or win incentives, but to bring in the cash. Need I repeat that again? REMEMBER, THE PURPOSE OF SALES IS NOT TO MEET QUOTAS OR WIN INCENTIVES, BUT TO BRING IN CASH!
Cash only flows when accounts are paid according to terms or are collected by the credit department. The probability of collecting the cash rests squarely on the shoulders of the credit department's decision to extend credit to begin with or in my business to protect our receivable once a purchase order is accepted.
Are you getting the picture - or should we say, larger vision? It's in everybody's best interest to not only let each department do its job, but to cooperate and even collaborate with each other for maximum impact on the marketplace.
The successful company relies on credit and sales working together to bring in the kind of business which results in overall growth. By agreeing on this as their mutual goal, replacing stereotypical characterizations with relationships, and adding in a good dose of humor and patience, these two functions can work together. And, maybe, even enjoy it. Hopefully, at this point, you get my point that sales and credit are on the same side. Approach working with each other from that standpoint. One of the best places to start is by improving communication.
It became clear to the sales force that I was as interested in making the sale as they were. I made them understand that the more information supplied, the greater the likelihood that I would be able to find a way to approve the account or develop a compromise solution. I was able to teach them how credit can secure riskier transactions that would otherwise not be approved, and how sales can help that process to benefit their bottom line. After all, aren't we all just customer service reps?
I invested time in the sales force which helped remind everyone our jobs are interactive. The sales force and credit department should be trained to recognize the needs of each department in establishing Cash, COD or Open Account customers. Credit should attend sales meetings and give presentations on various aspects of credit as well as the use of alternative arrangements when open credit is not appropriate. By working together in the same department, we were effective and a dynamic force. This "walk-a-mile in my shoes" exposure provided a better understanding of the challenges and frustrations that each of us go through. Sound easy? Ha - if your a credit manager you know its not!
Again, Cash Cow vs Sales Parrot? Which is the more important function? As long as the wrestling match continues, both lose - because the organization as a whole is adversely effected. The winning strategy is teamwork - two vital, interdependent functions in agreement on creating an environment that gets results and benefits the organization. Credit managers and sales people are on the same team; the team that sells.
A trained, informed and motivated team that fosters inter-departmental cooperation will help your company offer those customers top-notch service. In the end, EVERYBODY WINS!
