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Strengthening the Credit and Sales Relationship

There is no shortage of laments about the relationship between the credit and sales functions. Each views the other as a necessary evil: integral to a business’ function but populated with impediments to success. Though the path is forged by miles walked in another person’s shoes, bridging that gap is essential to a company’s health. Having a lower profile, it is the burden of the credit function to make those first steps.

Davy Tyburski, founder,, cites work done by the Credit Research Foundation (CRF) that asserts that credit professionals must take a leadership role in process improvement initiatives, as well as in creating seamless processes that reduce errors, delays and rework. By working with sales to identify common mistakes and hiccups, the credit function can establish itself as a herald for the common mantra of the modern business world that companies must evolve into complete customer service-oriented organizations.

“Those words are thrown out a lot: ‘We need to be customer driven;’ ‘We need to listen to our customers,’” commented Tyburski during his NACM-sponsored teleconference “Strengthening Your Credit and Sales Relationship.” “But very few business credit and collection professionals know how to do that. And even if they know how to do it, it’s sales that can take the appropriate actions to make that dream a reality.”

The credit and collections department must face the fact that corporate executives don’t completely understand business credit. This is made apparent in the two questions Tyburski asks when he personally works with companies to improve cross-functional relationships: what the perceived value of business credit and sales is. On a scale of one to ten, company executives will rate the value of the credit department as 7.5, which is a vast underestimate of importance. The average perceived value of the sales team is 9.25.

“It doesn’t matter where you are at today,” stated Tyburski. “What matters is what are you doing from today forward to increase your perceived value within your organization?”

Sales is on the frontlines delivering revenue to a company, while business credit is on the backend delivering cash. The problem often is that the sales staff fails to realize the frustrations and difficulties that arise in collections when they make rash decision about low-quality accounts. The impact is felt directly on a company’s bottom line. Delinquent accounts bleed away profits and the longer the account remains in arrears, the less likely a company will see that money. After 60 days delinquent, more than 15% of accounts will go completely uncollected. After 90 days, the percentage rises to over 27%. At six months, over 43% of delinquent accounts will never be collected upon. So, that credit and sales relationship must be improved to cut back days sales outstanding (DSO).

Tyburski recommends that credit managers zero in on three relationship principles between the sales and credit teams: respect, appreciation and communication.

Credit departments must respect the time of sales staff. For sales people time really is money. There may be just 10 hours a day for them to try and sell. But, in many organizations that Tyburski has worked with, sales ends up serving as the middle man between credit and the accounts payable person, spending as much as 25-30% of their time on what he deemed as “administrative-type duties.” That could be researching problem invoices, sitting down at a customer’s location making copies of invoices and then getting those invoice copies to credit. In this type of situation, the credit department needs be proactive and to think of ways on how to provide sales people with more time to sell.

Another way credit can help eliminate needless mistakes and confusion, as well as wasted hours, is to create a sales guide to business credit.

“Here’s the secret about sales people: we don’t really like a lot of text. We like pictures. We like graphs. We like flow charts,” said Tyburski. “If you can make it in color, that’s even better.” He suggested making the guide 25 pages or less so that the sales people can carry it with them in their sales bag.

Guide should be full of flow charts and ideas that can expedite the application process. For example, if a credit manager is noticing that whenever credit applications are coming in from the sales team or the customer Line 7 is often not complete, this is something to point out in the guide. Common issues and occurrences are what the credit team wants to put in the guide’s pages, informing the sales people that this is something they want to be careful about because the problems cause delays in the processing of the credit application, delays in company revenue and ultimately a delay in the salesperson receiving their commission.

Credit can also sit in on sales calls, make joint customer visits and have credit members present at sales meetings to better improve the relationship and understanding between the two functions, because as Tyburski says, “You will not hear me until you know me.”

Matthew Carr, NACM staff writer