Pump Up the Sales – July 2010

To: The KBC Team
From: KBC Chicago

July 2010 – Pump Up the Sales

We found this article online and thought it was interesting, especially when everyone at the smaller branches tend to play multiple roles.

SALES vs. CREDIT
(credit-to-cash advisor article)

These two have been arm wrestling for dominance since the first transaction on account was made. Each believes itself to be the more important half of the pair.

On the credit side, there may be the opinion that salespeople are fixated on making the sale at whatever the cost. They may feel that salespeople have tunnel vision which totally bypasses the probability of ever collecting on the account. They can be incentive driven, quota focused, and glad-handers who would “give away the store” to make the sale.

On the sales side, they may wonder if the credit department folks have a clue as to what’s going on in the “real world.” They may feel that the credit department seems to come up with endless ways to delay, pick apart, set up road blocks to, and eventually kill the sale. They may believe that the credit department has earned the title of sales prevention.

The solution to this sparring match lies in focusing on the larger vision… the overall success of the organization. Both departments must effectively perform their functions, and neither can perform effectively without the other.

Here are some cold, hard facts:
Credit has no purpose without the sales. Net terms were birthed to facilitate and support sales. But before all you salespeople start gloating over victory, 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, but to bring in the cash. Cash only flows when accounts are paid according to terms. The probability of collecting the cash rests squarely on the shoulders of the credit department’s decision to extend credit to begin with.

It’s in everyone’s best interest to not only let each department do its job, but to cooperate and collaborate with each other for maximum impact on the marketplace. Sales and credit are on the same side. The winning strategy is teamwork. After all, our customers don’t see different departments, only one company.

Tips:
SHARE INFORMATION. The sales force should collect credit information at the first interaction with the customer. Make it clear what information is required, why it is needed, and how it can affect the sale. They need to understand that the more information supplied, the greater the likelihood that the account will be approved. Don’t make promises to the customer prior to receiving and checking their credit application. Let the credit department know if there is an order pending, if the customer has a required delivery date on their purchase order, and/or how much credit is requested by the customer.
Credit should reciprocate. Provide salespeople with past due invoices when a customer is about to be placed on hold so there are no surprises. Have the salesperson that made the sale contact the customer. Be willing to discuss any problems or delays that arise and keep sales “in the loop.” Let the sales department know if credit refs do not/will not reply or if there is any conflicting information resulting in a delayed open account decision.

INVEST IN EDUCATION. Both departments should be trained to recognize the needs in establishing COD or Open Account customers. Use alternate arrangements when large credit limits are not appropriate.

Both departments may speak to different contacts within your customer’s company so everyone should ask questions and gather as much background information as possible regarding the company, what they do, and how their business is doing. This info should be documented in the customer notes and may come in handy when credit decisions need to be made on future orders. Also document slow paying accounts because this will help salespeople determine if a discount is justified; if we have to carry a customer for 60 or 90+ days, it cuts into our profits. Salespeople who take a new order from a customer may want to quickly access their outstanding invoices. If they notice that the customer has invoices close to 30 days, they may want to politely remind them.

Customers need to be educated too. When a ‘term letter’ is sent when a new account is established, the customer learns that credit is taken seriously. Does KBC have one?
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FREE SHIPPING

Some customers are not in a hurry to receive their orders. Ask. If they can wait, why not ship the order complete to save KBC money on the freight?
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F.Y.I.

We would like to believe that companies who haven’t ordered from us in a long time have either (A) become unhappy with our competitors, (B) their business has picked up tremendously, or (C) they have just missed us so much. Sadly none of these are always the case. We have discovered a few customers of ours that have been maintaining a steady rotation of suppliers and ordering from whoever they are not on A/R hold with. It’s a good idea to ask for an updated credit app from customers we haven’t heard from in a while (1 year?) who had low previous sales and now wants to place a large dollar value order. But how do you know if they are juggling multiple suppliers? You don’t unless they tell you (which doesn’t happen often), or unless you have an ‘in’ at the company so try to find one and become their friend. It’s kind of amazing as to what kind of info they will share with you… how the company pays, operates, etc.
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It takes ALL of us to keep customers happy and coming back for more so let’s keep them happy! Have a great July!

Pump Up the Accounts Receivable – July 2010

PUMP UP THE A/R

Collection calls. We dread them. Who wants to be the one to beg for money?
Below are some helpful tips, some old, some new:

• If you know the first name of the person in Accounts Payable ask for them by name. If the receptionist asks “Who is calling?” just give them your first name and no company name. They make think you are a personal call and put you right through.

• Ask WHEN the check was mailed, not when it WILL BE MAILED.

• Always ask for more than you expect to get. Ask for everything 31 days and over. If the customer says they cannot pay the full amount, ask them how close they can come to the amount you are asking for.

• Let them know up front if there is a possibility that if an order is placed it will or will not be placed on credit hold. If you are calling for Accts Payable and they are not in, ask for Purchasing and let them know if orders will be held.

• Let them do the talking. Just state what you are calling about and be silent. I am one of those people who hate uncomfortable silences and try to fill it with ramblings. Let them take the lead. They know why you are calling and what you want to hear.

Sometimes when making collection calls the hardest part is actually getting through to Accounts Payable. Here are some ideas that may help:

• Get the name of the person in Accounts Payable and ask the receptionist what is the best time to call them in the future

• Get the name of the person you are leaving the message with. Then when Accounts Payable doesn’t return your call and you have to call again you can ask Acct’s Payable “I left a message with ________. Didn’t they give it to you?”

• If you get Accounts Payables voicemail leave a time or date that you expect a return call by. Also, just leave a message that you are calling about an invoice (not a past due balance). They might be more willing to call back if they think it’s about a billing error.

Happy collecting & good luck to all of you. Remember that even though our customers are experiencing an increase in business and the economy seems to be getting better that often means that people are more inclined to hold onto their money in case worse times are ahead. That means we have to work harder to make sure KBC is at the top of their list for getting paid.

KBC Michigan