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Ways the Credit Department Can
Help Increase Sales "Safely"
By Michael 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, including:

  • 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 use.

  • 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 balances.

  • 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 credit departments.

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.

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