Why Credit Management and the Sales Team Need to Buddy Up

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Finance Insights for ProfessionalsThe latest thought leadership for Finance pros

Thursday, February 11, 2021

Forging a strong relationship between your credit management and sales teams can deliver significant benefits for the business, including bringing in more revenue with less risk.

Article 4 Minutes
Why Credit Management and the Sales Team Need to Buddy Up

Sales and credit management teams feeling like they're on opposing sides can be a common problem for companies. The former is focused on winning new business and generating revenue, while the latter has to think about things like assessing customers' creditworthiness, which can involve blocking deals to minimize risk.

If friction between sales and credit management is an issue in your organization, it's worth considering how you can bridge the gap between these departments and get them working in harmony with one another.

Achieving this can lead to some major benefits for the business.

Relationships with the right customers

The target-driven nature of sales means it's not uncommon for members of the team to be focused on getting deals over the line, without much consideration for the customer's financial position and their ability to adhere to payment terms.

By working more closely with the credit management team, sales can focus on making connections with the right customers: those with good credit ratings that won't put your business at risk of bad debt or late payment.

It's in the interests of sales - and indeed every department in the business - to prioritize healthy, sustainable client relationships. As well as minimizing credit risk, working with customers that are in a strong financial position will open up more opportunities for upsells and cross-sells, which will certainly be welcomed by members of the sales team.

Maintaining working capital

One of the top priorities of the credit management team is to maintain working capital - the cash the business needs to meet daily financial obligations such as:

  • Paying suppliers
  • Replenishing inventory
  • Paying employee salaries

Sales and credit management working more closely together to bring in business from high-quality, low-risk customers makes it much easier for the company to manage its working capital, since you're less likely to encounter problems and delays in payment.

Mutual benefits

Sales and credit management can gain mutual advantages from a closer, more collaborative working relationship.

From a sales perspective, having the credit team involved at every stage of the cycle helps with quicker pre-approval of customers, meaning the whole process can move along more smoothly. This also contributes to faster client onboarding.

The credit department can also recommend particular buyer profiles or offer guidance on customers that are likely to be rejected, meaning sales can eliminate these prospects early on to make the best possible use of their time and resources.

When it comes to assessing a client's overall financial health, the credit team can get insights and information from sales to build a detailed picture of the customer in order to evaluate and manage risk.

The sales department's efforts to build strong relationships with customers can also make it easier for the credit team to collect payments on time.

How to improve collaboration

If you're keen to realize the benefits of collaboration between sales and credit management, it's worth considering some strategies that can bring these departments closer together.

Focus on communication

It's vital to emphasize the importance of the sales and credit teams opening up clear lines of communication with one another. Taking active measures to avoid silo-based working and remove barriers between different areas of the business can make a big difference.

By simply talking to each other more, members of these departments can strengthen their understanding of what the other team does and what they have to gain from working together.

Involve the credit team early in the sales cycle

It's not uncommon for credit management only to get involved in the sales process towards the end of the cycle, when the sales team has already put in a lot of work and the customer is almost ready to sign.

Bringing members of the credit team on board at an earlier stage provides more opportunities for collaboration between the departments, as well as reducing the risk of sales wasting time on customers that will be rejected as not creditworthy.

Utilize technology

There are various technologies that can support a closer relationship between sales and credit management. Modern workplace communication tools, for example, make it easy for members of different teams to stay in touch with each other, even if they're based in different locations.

Processes like automated credit scoring can also help to save time for everyone and maximize efficiency.

Offer training

Dedicated training can be an effective way to help individual sales and credit management employees learn more about what the other department does and how these functions are connected.

The better these teams and the people within them understand each other, the more able and willing they'll be to work together and share ideas.

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