Ways the Credit Department Can
Help Increase Sales "Safely"
C. Dennis, MBA, CBF
Some people believe that a natural animosity does and must exist
between sales and credit. We disagree. We believe that credit
and sales can work together to increase sales and profits, and
that there are many things the credit department can do by itself
to help the company and the sales department to increase sales,
Help the sales department to further penetrate existing
accounts by identifying active customers that would qualify
for a significantly larger credit limit than they currently
If possible, provide the sales department [and sales management]
with a monthly report showing total A/R balance and the credit
limit approved. This report can be used to target customers
with additional and as yet untapped potential for incremental
sales with limited credit risk.
Be willing to consider the possibility that your credit
policy may need to be liberalized in order to attract potential
new customers. [Note: A decision to liberalize credit terms
should not be done by the credit department without the express
approval of senior management.
It is even possible to increase sales to marginal accounts
by requiring additional security [such as a personal guarantee]
and by more aggressive collection follow up on delinquent
Always take the time to solicit input from the salesperson
about a customer's creditworthiness. While it is clear that
the salesperson usually has a vested interest in getting
orders off credit hold, it is also true that salespeople
often know a great deal about their customers, their plans,
their competitive position, and their prospects. It would
be a mistake not to take advantage if this inside information.
Pre-qualify potential new accounts. Provide preliminary
but non-binding estimates about what limit and terms the
potential customer might qualify for after reviewing the
information available [from a variety of sources] to most
If you think of the role of sales and credit as analogous to
two people on a teeter-totter rather than as two people playing
tug of war, you will start to understand the symbiotic relationship
that should exist between sales and credit.