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Topics Covered: <a href='/resources/search/?query=Salespeople'>Salespeople</a> | <a href='/resources/search/?query=Closing'>Closing</a> | <a href='/resources/search/?query=Small business'>Small business</a> | <a href='/resources/search/?query=Credit and collections'>Credit and collections</a>
Sales Strategy
Oct 16, 2009 | Brad Lohner lock

It was the most exciting sale you’ve had in a long time. The call comes in late on a Friday afternoon when your competitors have left early for the weekend. It’s a big order and the fact you were there to take it while your competition was snoozing made it all the more satisfying. The commissions you’re going to earn on this deal and the hearty back-slapping that’s sure to follow on Monday when the boss finds out, is the icing on the cake.

Fast forward 31 days. Your accounts receivable department makes a friendly reminder call to your new customer to ensure there are no problems with the order and to politely remind the customer of your company’s repayment terms. The number goes to a cell phone and no company name is on the voicemail. Your accounts receivable department decides to dig a little deeper only to discover that the “big sale” was made to a notoriously bad bill payer and the fun begins.

Flapping Barn Door Syndrome 

Unfortunately this situation plays out across North America every single day.  In the heat of closing the order, the company’s carefully crafted systems and processes failed to stop this problem from happening. The barn door is flapping and the horse is long gone. Sure your company will likely claw back your commissions, but let’s take a deeper look into what you’ve just done.

What was the cost to your employer for pushing through the order? Let’s assume the order value was $20,000.00 for a product stored in your warehouse. Your company can not resell the product to someone else because it’s gone. So now you are at -$20,000.00, but the biggest surprise is yet to come. Some business owners don’t even consider this next point. Do you know your company’s average margin? Let’s assume your margins are 5 per cent. To make up for the loss, you can’t just sell another $20,000 order, you must sell another $400,000 of product just to break even! (That’s $20,000 divided by your margin of 5 per cent).

How easy is it going to be for you to sell another $400,000.00? This number is actually higher if your company uses a line of credit at the bank and many other factors.  

Follow Protocol and Stay off the Radar 

When selling for your own company or that of an employer, you must have proper systems in place to promote sales while ensuring profitability. Newspaper headlines are filled with stories of bad deals sinking good companies across North America every day. You can avoid becoming a statistic by following pre-established protocols put in place by your firms credit managers and sales managers. Over-riding or circumventing systems will invariably come back to haunt you later. Review the following signs for potential problem orders:

  • Rush orders coming late in the day especially at month end.
  • Unauthorized employee making a purchase.
  •  Delivery of rush order to location other than that of your customer.
  • Customer pressures you to deliver product before the credit application process can be completed.
  • Customer threatens to take business elsewhere if you can’t process the order right now.

While this list isn’t exhaustive, it does illustrate the most common situations in today’s market that salespeople find themselves in.  

Here are some helpful tips you can use to mitigate credit problems: 

  • Ensure your company’s credit policies are clearly outlined and frontline staff are trained.
  • If your firm does not have a full time credit manager, contractors are available through the Credit Institute of Canada.
  • Know your customer. Have each new customer fully complete a credit application.

Don’t be afraid to say “No”. Sometimes the best deal is no deal.

About the Author:

Brad Lohner is the owner of Priority Credit Recovery in Canada and Account Adjustment Bureau in the USA. For over 24 years his firms have specialized in business to business debt recovery.   

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