Take ownership of credit

If you have been attending any of our LBM Journal webinars, you have heard from the credit expert in the LBM industry, Thea Dudley. She is also a columnist for this magazine. At her website, creditoverlord.com, she states, “Your credit department should support sales, not prevent it.” This is why I am writing about credit this month.

The challenge for our business is that credit and sales are deemed separate “departments.” Sales is the process of cultivating new business and, after the fact, credit is the department that later ensures bills are paid. Credit should be part of the sales dialogue and, both Thea and I agree, an aspect of client interaction to be planned before the heat of battle.

Instead, salespeople view the discussion of credit as an awkward invasion of customer privacy. They see the dialogue as something to be handled by the “sales prevention department,” and often criticize when things don’t go as hoped. The result is a salesperson who argues passionately for credit leniency, thus placing the credit manager on the defensive by creating tension in the credit dialogue.

Great sales leaders, on the other hand, treat credit as an integral part of the sales process rather than an obstacle to success. They are confident that good customers understand the importance of discussing payment terms. Sales leaders produce credibility within their organizations by being the ones who handle the delicate subject of credits and payments with grace and efficiency.

Here are four tactics that will make you a stronger sales leader and manager of credit.

1. 1. Change your mindset
      Credit is an expectation that contractors assume is part of the service. Unfortunately, many find it insulting when their credit credibility is doubted. Remind buyers that you are taking a significant financial risk with every delivery and have a value statement to back it up such as, “You wouldn’t expect a bank to give you a loan on a house without an in-depth review of your finances, would you? So help me to help you communicate with my team and get you the credit you need.”
   2. Formalize delivery of the credit application
      Salespeople have long been taught to casually “drop off” a credit application early in the process. Instead, try scheduling a meeting to formally discuss credit review, payment terms, and your client’s expected financial needs. This creates a great sales dialogue about potential volume and future business while also clarify- ing expectations down the road.
   3. Delegate the difficult dialogue 
      I get that some small business owners do not want the sales representative to know the details of their buying financial strength. Thus, the prepared sales leader connects the buyer and credit department prior to the sale to dis- cuss financial statements, issues surrounding personal guarantees, and other sensitive information the buyer wants to keep private.
   4. Sell what you got
      The best credit relationships occur when you get customers to pay within your standard terms. I’ve worked with dozens of dealers who offer far too many special exceptions to their standard credit terms. Great sales leadership is not creating a new rule for every customer, but instead getting them to do business within your standard terms.

If you want to create customers who enjoy working with your credit department, then take ownership of the process. It’s the path to credit credibility with customers and your organization.

Rick Davis, president of Building Leaders, is a premier sales trainer in the building materials industry. His latest book, Sales Economics: The Science of Selling, is now available at buildingleaders.com. Rick can be reached at rickdavis@buildingleaders.com.