Dear Thea,
I am the credit manager for a three-location material distributor. Our sales reps get paid commission on the sales they make so you think that it would motivate them to help make sure we get paid. It doesn’t. How can I get them engaged and help get our money collected?
Signed, Baffled in Biloxi
Dear Baffled,
Knowledge. Money can only do so much. But if used properly, knowledge can get you just about everything you want or need. There are about as many quotes about money as there are stars, but perhaps my favorite is “A fool and his money are soon parted.” In other words, why would someone work that hard to obtain a customer and secure the sale (or many sales) only to forgo the pot of gold at the end of their proverbial rainbow?
Can we assume your sales team is littered with fools who are independently wealthy and do this sales jig for grins and giggles? Who got super-busy chasing other sales and lost sight of the goal? Who possess rudimentary math skills and are not aware they are losing part of their paycheck? Who make so much money on their base salary they are content and do not care? Who have no concept of how to ask for the money? So many choices. Which to choose, which to choose?
Let’s rule out the first assumption as well as the next three choices. That leaves us the more practical of the list. Do they already make a comfortable enough salary that they aren’t properly motivated and they are uncomfortable or don’t know how to ask for the money? At least that is where my mostly logical mind goes.
I referred to knowledge, which I lack some of in this question. You never mentioned if you had conversations with them or the president/owner of the business. I am going to take a leap that you have not and are just a tad passive aggressive in this scenario (apologies if you already had the come to Jesus meeting with them). Here’s what I recommend.
1. Provide your sales team with a report that shows which clients in their sales portfolio is past due.
2. Calculate the loss of commissions. Real dollar signs speak much louder than an abstract version of “hey you’re losing commission” comments.
3. You can do this one of two ways: one-on-one in person, one-on-one by email (copying their boss helps) or in a sales meeting that you get invited to. To be clear when I say invited, invite yourself to be on the agenda.
This sheds light on the subject and gets the conversation moving. You also didn’t mention at what point they lose their commissions. 60 days past due, 90 days past the due date, when the account goes to collection? When it is written off? Do they get paid commission if the account is at some point collected or is it lost for good?
Once you put a spotlight on the loss of income, address the elephant in the room. Are you uncomfortable talking to your customer about money? They just might be. They may be great at asking for the sale, but not as great at asking for payment. They may not even know how to start the conversation. A few helpful hints from you, my friend, my leave you baffled no more.
Teaching them some of your “go to” moves. Enlist your sales reps who have no issues with asking for the cash. If you have none (and that would be a rarity, in any group there is always one who is the pack leader) then you are going to have to enlist your sales leader. Offer to go with the sales rep to the slow pay, no pay customer and lead by example. Let them see how you work your magic. This will give them a baseline to start from. The best sales reps I know bust their tails for customers but make no mistake, they expect to be paid for their efforts and have no problem addressing it with the customer.
If all else fails, run the numbers. How much money are you taking into bad debt, what is it doing to your DSO and percentage buckets? Then take that to your company president or CFO. Present the data, some “adjustments” might need to be made to the pay structure to increase the motivation of your bunch. Word of advice—park in a spot you normally might not, you will not be popular when this tracks back to you.
Once you have the knowledge of what is lacking, you can grease those wheels, and everyone gets everything (almost) that they want and need.
