by Todd McDaniel, Vice President at Dynavistics Inc.
Historically, the interaction between the credit collections department and the sales team has been an adversarial relationship. The credit collections team believes that salespeople have no concern for collections and just want to sell to anyone to make commissions and meet quotas. The sales team sees the credit collections department as an obstacle to opening new accounts and closing deals.
The key step to integrating sales and collections is to remove the artificial barrier between their respective processes. Though one sells and the other collects, they are two sides to the same coin, so much so that the collection process should be presented as the last step in the sales process. Collecting payment is arguably more important than making the sale. Management can reinforce this concept by basing sales commissions on payments collected rather than invoiced amounts. This also aids the company in guaranteeing they only pay out bonuses based on what they actually received during the quarter. For collectors, include them in a payments-based incentive program to get them to participate in the entire sales process — not just the overdue accounts.
Unlike sales, a group that typically operates on commissions, defining a plan for the collections department can be trickier. They need some sort of bonus for actively participating in the process but not so much so they step on the feet of the sales team. One advantage for the collections team is the data they compile. They know who buys what, how often they do so and how much they spend monthly. Challenge the collections team to put together customer reports for the sales team that denote clients ready to invest further, clients to pursue further and leads that have gone cold. This then makes collections an integral component at both the beginning and end of the process.
While performing this overhaul, it is vital to underline the importance of your collectors respecting the salesperson’s relationship with the client. Salespeople may be willing to engage some customers regarding collections while others they may want to leave completely to the collections department. Open and frequent communication between salespeople and collectors will help both parties understand and enhance the customer relationship. Ask your sales team to provide a list of VIP customers to the collections department for special handling. Likewise, allow collections to add to this list should they receive specific requests from customers that prefer being only handled by sales.
With clear and constant communication between the sales and collection teams, a business will see great improvements in consistent cash flow.
Todd McDaniel is Vice President at Dynavistics Inc., a software development and distribution company. Todd currently manages the software development and sales operations for Dynavistics including the design of new software features, management of partner relationships, and customer relationship management. He has over 20 years of professional experience in financial systems implementation, IT management, solution design, process design, and organizational development.