Sales is the lifeline for every business, no matter what the size. And if you’ve ever worked in sales, you know just how cut-throat and revenue-focused the job is. You’ve got to make a certain number of calls each week; you’ve got to convince prospects that your company’s products/services can help them solve specific problems; and ultimately, you’ve got to turn that interest into an actual sales deal (i.e. signed contract). It’s a lot of pressure.
With so much pressure to close deals, it’s common for sales managers to chase after any and every lead, regardless of whether they’re a good fit or not. But as our “The Sales vs. Credit Control Battle” research study found, this can be quite dangerous and become a huge productivity and revenue drain. In fact, 54% of the respondents in the study said they waste up to 20 hours each week chasing down bad leads. Meanwhile, 52% of the respondents said they lose up to $200,000 a month because the finance team rejects their deals for being too risky.
Just let these two stats sink in – that’s a huge problem that most companies haven’t figured out how to fix and could lead to millions in lost revenue each year.
Rather than dwell on the stats themselves, I’d rather dig deeper into why this is happening. One reason is that there’s a real divide between sales and finance teams.
Sales and Finance Working Together
Despite a shared goal, sales and finance can’t seem to get along. The two teams have one thing in common – driving revenue for the business. But how they go about doing that is different for each team.
Sales teams are focused on targeting qualified leads, engaging with prospects and converting them into sales deals, which will both result in revenue growth for the business and higher commissions for themselves.
Finance teams, meanwhile, are numbers-focused people. They’re constantly analyzing financial data to plan annual budgets, manage cash flow, process and collect payments from customers and protect the business from financial, legal and compliance risks. While the sales team might not think the finance team’s job directly results in revenue growth, it absolutely does.
Both teams are necessary to keep the business running smoothly and both contribute to revenue growth. But the big problem is that the relationship between the two teams is fractured. Each side is so focused on their own roles that they’re unwittingly creating more problems for the business. How? Consider this: 42% of the respondents in our study confirmed that they have little to no understanding of their company’s credit policy. To make matters worse, 18% of the respondents said they don’t even know if there is a credit policy at their company.
Sharing Doesn’t Guarantee Knowing
Sharing the credit policy as a 50+ page PDF via email isn’t good enough.
When I saw these findings, I was a bit disappointed. But I can’t say I was all that surprised. How can finance teams expect sales teams to know about the company’s credit policy, let alone to follow it in their sales process, if they haven’t properly shared and trained them on it? I don’t mean sending a PDF (50+ pages long) via email to all sales reps. Let’s be honest – sales reps won’t read it. With the target they have to reach each week and the pressure to deliver sales for the business, they need to be as productive with their time as possible. So, expecting salespeople to read an exhaustive credit policy isn’t realistic.
What would work, however, is if the finance team hosts interactive sessions with the sales team, where they walk them through the specific factors and data they consider when deciding to approve or reject a deal. Using mock scenarios and having sales reps contribute in these mock scenarios can be extremely beneficial for both sides. Not only will the sales team understand why some of their deals have been rejected, but they can also prevent that from happening in the future. At the same time, the finance team will be able to increase its deal approval rate. When both of these things happen, it means more revenue for the business and higher commissions for sales teams. It’s a win-win.
Sales Needs to Make the Effort
Sales teams can’t afford to be apathetic about financial data.
This doesn’t mean the sales team has no responsibility in this matter. Once they’ve been informed of and trained on the credit policy, they need to make sure they’re looking at the necessary financial data early on so they aren’t wasting hundreds of hours chasing a deal that will end up getting rejected by the finance team in the 11th hour.
And if they don’t have this type of data available, then they need to push their sales leader or technology leader to bring on the right tools (or integrate with a platform that has the data). The more salespeople know about their prospects’ financial health and payment behaviors, the more likely they are to have their sales deals approved by the finance team. Ultimately, that’s the end game.
Mending the fractured sales/finance relationship needs to be a priority at the top level. One thing to remember is that it’s not just the sales and finance teams’ responsibility to remedy this situation. It’s everyone in the organization’s responsibility. Ultimately, it needs to be driven and supported from the top leadership down.