Is extending credit to customers needed to make the sale? 3 keys to remember

Just as consumers are finally cutting back on spending, we can count on B2B customers to do the same, across all industry sectors. The good news? Companies that offer superior products and services and can easily demonstrate their expertise will weather the coming storm best.

The key (as always) is a company’s sales team. Driving new business and keeping long-term companies happy is important in good economic times but downright critical in a recession. One potential pitfall a CEO or CFO needs to be aware of is a conflict between Sales managers and their counterparts in Credit & Collections or Accounts Receivable.

Case in point: If Sales pros refer to Credit as “Sales Prevention,” it’s past time to jump in. Sales pros will be asking for more wiggle room to accommodate customers short on cash. Small businesses in particular are finding it’s near-impossible to secure a bank loan or simply can’t afford the sky-high interest rates.

Reminder: Sales will share info when asked!

The National Association of Credit Management (NACM) featured experienced Credit pros on its podcast Extra Credit. All agreed that extending credit to certain customers will be necessary to get a deal done or risk losing those prospects to a competitor.

Here are a few action steps to ensure Sales and Credit are on the same page:

1. Team up on sales calls: Credit managers need to see and hear Sales pros in action. Coming along on a sales call can be a learning experience for both parties. For example, Sales may not be explaining credit terms clearly enough. Following a sales call, Credit can share a point or two. Conversely the credit manager is likely to learn what customers are looking for from the company.
2. Give Sales the tools to win: Savvy Credit pros can identify prospects that are underutilizing their credit limits. When Sales is targeting a certain area, credit flexibility is one of several factors that make or break a sale. CFOs need to ensure their Credit teams understand they need to support Sales in a proactive way and also be available when Sales seeks help.
3. Take time to explain decisions: Sales managers and reps don’t always agree with a decision to limit or deny credit to a prospect. Credit can keep the relationship positive by focusing on the potential risks to the company. For example, collecting partial payments from customers about to declare bankruptcy can be a major hurdle.