Credit, sales, and the balance of the universe

Thea Dudley

 

Dear Thea,

LBM Resources

White Paper: Stop Wasting Your Employees’ Time! Automate Routine Tasks Using Modern Tech

Investing in new technology is a cost-effective and scalable way to get the most value from your staff and drive efficiency throughout your organization. By removing low-value or redundant tasks from your operation, you can get more done with the same workforce. Your staff will be able to focus on activities that help your business grow, rather than getting bogged down in busywork that wastes valuable time.

One of my sales reps recently argued with me that he should be able to release orders and have override ability on his accounts that go on hold or do not have enough credit. I am new to credit, but that isn’t a thing, is it? I don’t think it is, but he said it with such conviction that I am second guessing myself. Help!

— Second guessing in Saginaw

Dear Second,

- Advertisement -

Let’s talk about nature a little bit. There is a certain equilibrium in nature that keeps everything in balance and stable. Any slight change in certain parameters will be corrected by a negative reaction that will eventually bring the changed parameter back to the original position of balance. That’s how it is with sales and credit. There is a certain balance that keeps everything stable. Any slight change (like sales governing accounts), and the balance of credit and sales shifts—usually not in a good way.

To be fair, I can see how, in theory, some sales reps could think they would be diligent, and that watching over their own accounts, keeping track of lien rights, past due balances, over-credit limits, and other challenges seems plausible. Okay, I could not even write that without laughing. Just think about it: if sales is commission-based, wouldn’t it make sense that they would want the account to pay on time? They would want to know if we are about to lose money. They would want to keep the account on track with products moving so the beautiful equilibrium remains in balance! What if they are engaged but don’t want to be the tough love parent? What if they aren’t commission-based? What then? Money is the great equalizer.

Sales in charge of a credit function would tip the balance of the cashflow equation into a negative reaction. The delicate balance is kept when everyone works together to ensure the objective: get the sale, support the customer, get paid as agreed. Nature remains in balance.

- Advertisement -

I find it charming that your sales rep believes that he should have override and release capabilities. I believe I should never have to work out, I should sleep all day, and have unlimited chocolate and wine with no consequences. But, alas, nature does not work that way.

What I do hear loud and clear is your sales rep does not like your decisions or does not like having to go to another person in the company to ask for collaboration, especially if that someone has an opposing point of view. Let’s get something straight right now. The customer is not “his,” the customer is “ours,” and it takes a village or, in this case, the entire company to manage them. From obtaining the sale, inputting the order, credit approving and releasing the order, warehouse pulling and loading, drivers delivering, credit collecting, and cash app applying the funds, everyone in the company has a role in a customer’s success and is equally as important. Some, not all, salespeople get a little territorial about the customer but—be clear on this—everyone has ownership.

In short:

  • It is not a thing.
  • Sales should never have the ability to increase a customer’s credit line, override the limit, or release orders on past-due accounts.

Just because he believes his own hype doesn’t mean you should. The equilibrium of the universe depends on you.

 

With more than 30 years of credit management experience in the LBM industry, Thea Dudley consults with companies on a wide range of credit and financial management issues. Contact Thea at theadudley@charter.net

Get our free newsletter

Join thousands of other lumber and building material industry leaders and keep up with the companies, people, products and issues shaping the industry.

What's New

Digital Partners

Become a digital partner ...

Sales Comp Study

Download this 55-page, in-depth study by LBM Journal of industry trends in sales force compensation and benefits. See how your organization stacks up.

Webinars

- Advertisement -

White Papers

View all ...

- Advertisement -

Partner Content

View all ...

- Advertisement -

Registration is now open for the LBM Strategies 2024 Conference