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Bridging the Gap Between Your Sales & Collections Department

Originally published: February 2014
by James Cooke, Cooke Consulting


If I had one dollar for every time I heard a sales person say, “I don’t collect money”, right now I would be writing this blog entry from a sun lounger on my own private beach!

This area has to be one of the biggest sources of contention in any business, and can result in significant rifts between departments – so, the question is why? I don’t think I have ever worked in or consulted for a business where there has been ‘harmony’ between the two teams.

Does this situation sound familiar?

Firstly, let’s acknowledge some fundamental basics for the start and end of the business process:

Start

Without a switched on sales force that can generate revenue - the company will fail.

End

Without a robust debt collections department to actively collect revenue – the company will fail.

Pretty black & white really, isn’t it - So why do businesses make it so hard for themselves?

If anything, we should logically conclude that both sales & collections - being the generator and collector of revenue - should be happily working together hand-in-hand.

In my experience, probably the biggest issue between the two business areas is communication, or more to the point the lack of it. It’s almost like two warring clans, desperate to win the adoration on their chief (aka the MD). Neither side wants to back down, and either can be the first to cry foul!

There seems to be a morbid fear that the inner complexities of these departments will get things all confused, flustered and then chaos will reign supreme.

And as a veteran of the collections industry, let me be the first to hold out the virtual olive branch, and release a couple of doves, and say, ‘let’s give peace a chance’.

Businesses in this day and age do not have the luxury of playing departmental war games, and must see past these stereotypical idiosyncrasies if they want to succeed, especially when the next economic down turn hits our shores - and it will hit us, it’s just a matter of time.

Let’s start by taking that management 101 handbook and throw it out of the window. Yes, it was helpful back in the 90’s, and even up to the first GFC. Since that time, we’ve come to live in a completely different world. So it’s time to adapt your thinking as well as your business.

Align the two business areas together, for example, if you have state-wide salespeople, then buddy them up with their respective collections counterpart.

When looking at KPI’s, make sure there is a section that links the two departments together e.g. x sales generated in Q1 = %$ for the salesperson, and X revenue collected in Q1 = %0-30 %31-60 %61-90 % %91-120 %120+ for the collector.

If possible, have your sales & collections team not only sitting on the same floor, but literally within spitting distance of one another.

If your sales team have a new or existing client to meet – by taking the collector along, not only will each be able to answer questions that the other may not be able to answer, but it will enhance the business relationship with the client - to be introduced up front to the person who they will be dealing with any payment queries, or in the event that they are chased for a late payment.

If your collectors are really struggling to obtain payment from a client, then engage with the salesperson in charge of that account. The salesperson will likely have a far better relationship with the decision-makers of the business to push a payment through, than a collector speaking with the client’s Accounts Payable department. Conversely, the salesperson may be able to give guidance to the collector in terms of whether the client is experiencing financial or other difficulties.

As for the managers of these critical areas – both need to be fully aware and conversant at a ‘high level’ with:
  • The debtors position of their clients – such as, a weekly Aged Trial Balance report
  • Any new clients being brought on board to the business
  • Which sales person is looking after that client, and
  • Which Collector is looking after that client
It isn’t just a nice concept....it works!

If implemented correctly, this approach will:
  • Improve staff engagement
  • Increase company revenue
  • Build relationships between internal staff
  • Enhance your client relationships
  • Reduce client complaints.