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How Sales and Credit Teams Could Be Friends

Highradius

Speakers

Lisa Tanner

Director, Global Credit and Collections, Nidec

Transcript

Lisa Tanner:
I’ve been talking about this topic for years and years and years, and one of the things I find is that in every conference I learn more from you guys than you probably do from me and that’s why I keep doing this. To start with this as a topic that goes back to the very beginning of time, sales and credit have been at odds, going back to the Garden of Eden. The original salesperson was Satan. Satan was going to get Eve to buy that Apple and she was the original creditor. She wanted to eat now and pay later. And so here we are today!

Lisa Tanner:
A couple of the items on the agenda. The credit and sales arm wrestling. What do sales expect from credit? This is kind of one of the most important things you have to understand how the sales team thinks. What does credit expect from sales? We kind of all know we want them to help us with, make sure that it gets paid on time. Sales and credit, it’s a partnership. It truly is you as a credit professional cannot be successful if you don’t get your sales team on board with you, your life is going to be a nightmare, so making friends with them right off the bat is the only way to go. The Next Step: How Can Technology Help with the Partnership. These are several of the things that I’ve been working with.

Lisa Tanner:
I went to work for Needed Motors, a little over two years ago. I came from the Coleman company. I spent 17 years at the Coleman company and when I got into credit management at the Coleman company in 2001, I found out what the good old boys club was. I had a sales team who was convinced that they were going to tell me how to run the department, who we were going to give credit to and how much credit we were going to give to them. So there was a lot of work and effort that I had to put in to convince them that there were better ways. Fortunately, because my background was sales, being originally in sales I knew what sales wanted. And that enabled me to help them understand that we were partners.

Lisa Tanner:
The first thing I always tell myself, is we have the same job, your job is the same. Theirs is to overcome the objection to buying. Yours is to overcome the objection to paying. It’s that simple. You’re on the same team, and once sales realize that’s your objective, that’s your goal, your life will get a whole lot easier. But you’re going to have to give them some bonuses along the way. And we’ll talk about some of those bonuses. So, the arm wrestle. You know sales teams, they want to focus on revenue, it’s all about that sale. They don’t care how, but they just got to get it. They don’t care about the risk category. I have a few salespeople that I believe go out and look for the lowest hanging fruit, always. You could always tell which salespeople because they have the highest risk portfolios and they’re not out there working on those good accounts. So how could you help them? How could you help those salespeople that always seem to be bringing in that low hanging fruit?

Lisa Tanner:
I’m curious as to how do you guys break your teams up, are you regional or your salespeople regional? Everybody regional, okay. One of the things that we do within our department is we go back through sales history. I don’t know if you guys rotate through salespeople often but we seem to do. You? Your salespeople rotate fairly often every 345 years somewhere in there. We’ll go back through sales history, and we’ll find customers who were good buyers. You know good payers at a historical sales point and we’ll go out. We’ll do a quick review and we’ll say, “Hey, there are still really good customers”, and we’ll push them out to sales. We’ll say, “Hey, go in or reintroduce these customers to the Nidec team. Go show them some new products. You know, let’s try to bring these good old customers back.” Because what we find is a lot of times when salespeople leave them, we leave them. We lose the account at the same time. And this is an effort to try to bring them back.

Lisa Tanner:
There are other options that we use. We frequently pick up information on customers from specific regions, and we do the same thing. We go out, take a look at them and then we go back to our sales teams and say, “Hey you know, here’re some customers maybe you should go look at.” The other side of that is we engage in sales immediately. We ask them if you are cold calling on customers get us your list, let us hit your list. And we give you a letter that you can walk into that new customer which says, “Hey, welcome to Nidec. Your credit is pre-approved and will sell you on net 30 terms, up to X dollars.” And that helps them close that sale when they can walk in the door without assurance right off the bat. So those are several of the things that we do that I started doing at Colman and I now do it at Nedic to try and help the sales teams know that I’m here to help them grow but we need to do it profitably.

Lisa Tanner:
So let’s not naturally go look for the low hanging fruit the guy that just needs to be able to buy on terms because nobody else will sell to him on terms. Let’s go to some customers who represent some substance. So, credit teams you know, our focus is on lowering the risk. It’s on the results of low sales in revenue. I’m not sure how they put that result in the credit teams. Just in case we didn’t know credit teams, sales think we focus on lowering the sales. We’re all about the risk. No no, you can’t sell them, you can’t sell them on terms. That’s not true. At least I hope it’s not true in your organization. And that we delay onboarding. I’m curious, let’s have a quick survey. What is your typical onboarding timeline? Anyone start over here.

Audience Speaker:
24 and 48 hours

Lisa Tanner:
24-48 hours? Excellent anybody else?

Audience Speaker:
Five business days.

Lisa Tanner:
Five business days? Anybody else any shorter any longer?

Audience Speaker:
Two hours

Lisa Tanner:
Two hours?

Lisa Tanner:
Anybody else wants to join? Okay. Go ahead!

Lisa Tanner:
No risk?

Audience Speaker:
Two to Three Minutes

Lisa Tanner:
Two to three minutes? Very good.

Lisa Tanner:
We guarantee our sales teams three business days. Our average is for two hours. Even with risk. Sometimes, if we require PMSI, everybody knows what a PMSI is in the audience? No? Okay, we’ll talk about it. If we require PMSI, we could take an extra day or two. Depending on how quickly the customer can review, sign and re-term it. We’re good. But getting those accounts set up quickly, that’s very important. Most of your sales teams think it should be instantaneous. Sales kind of has a thing about instant gratification, and that’s okay because we want to serve the customer, we want to make them happen quickly. So, here we are, I already stated this. The one common denominator is the fact that they’re overcoming the objection to buying. We’re overcoming the objection to paying. Very simply, so a common organizational goal is more revenue, reduced risk. Sales wants more revenue, we want the reduced risk.
Lisa Tanner:
So what do sales expect from credit teams? I’m curious, what do your sales teams expect from you? Anyone?

Lisa Tanner:
No objections.

Lisa Tanner:
Anybody else.

Lisa Tanner:
Very fast decisions.

Lisa Tanner:
Say Yes! Just say yes! Nod right? Just nod. Alright.

Lisa Tanner:
So do your credit teams give your sales teams advice on potential customer opportunities?
I talked about some of the ways we do it here. I’m curious how many of you are doing that today, anyone?

Lisa Tanner:
Yeah. Does it work?

Lisa Tanner:
Yeah, do your sales teams like it?

Lisa Tanner:
Okay, so that’s like two out of ten. About 20% of us are doing it. The other 80%, you need to find ways to help your sales teams. Go out and get those good sales customers. And I would love to have an additional conversation with you on different options for doing that.

Lisa Tanner:
Okay, so what does sales expect from the credit teams? They want real-time access to accurate credit data and credit limit revisions. In other words, they just want you to approve it. Okay, you have to be able. If you’re going to meet their expectation to approve it that quickly, you have to have access to that information instantaneously. You have to know what the risk is, you have to be able to get there somebody said two to three minutes to approve an application, somewhere in here? I’m assuming you’re using something automated already that’s going out and doing that scoring model for you and telling you what that risk is. Good for you. All right, faster customer onboarding and customer decisions, same thing, and identification of potential sales opportunities. And this, again, is something where technology can help you out. There are about 80% of you in the room who aren’t currently giving your sales team leads. So you want to hang around and learn how the technology can help you with that.

Lisa Tanner:
So what does credit expect from the sales teams, what do you guys want from them, pole? What do you want yourself to do for you?
Anyone-?

Lisa Tanner:
Early warnings.

Lisa Tanner:
Assess for collections

Lisa Tanner:
Information? What kind of information?

Lisa Tanner:
What do you want to know?

Lisa Tanner:
Revenue projections. So you want sales to go in and sit down at the table with the buyer and say how much money are you going to make this year?

Lisa Tanner:
Okay, there you go. All right yes. Sales forecast. Why are sales forecasts important to you?

Lisa Tanner:
Absolutely. So that you can be proactive, yes. They allow you to set those credit limits proactively. You know that’s a really important topic one of the biggest struggles I tend to have with my sales teams is getting accurate sales forecasts. And once they understand, look if you don’t give us an accurate sales forecast, or you have a big deal and you don’t tell us about that order, you can potentially get to the point of shipment, and then it stops because you’ve got a credit limit problem and you haven’t engaged us. So, you know, the responsibility to prevent delays to your customer sits with you. If you know you’ve got a deal that’s coming up or it’s going to be something out of the ordinary, engage us and engage us early. Let’s make sure we know what we need to do. Great answers. So, how often do you guys encounter this, a customer paying immediately, on sales insistence? Sales go to the customer and they pay you today.

Lisa Tanner:
You do? What?

Audience Speaker:
Cash sales.

Lisa Tanner:
Cash sales only?
How often do you have somebody there who is like really past you and your sales guy picks up the phone, makes a call and boom, you get paid? Does it happen? Yeah. So how many of you are using sales and how many of your sales teams are willingly doing this?

Lisa Tanner:
Yeah. Good for you.

Lisa Tanner:
Okay so, what credit expects from sales teams? Capturing the complete customer picture from the beginning. Can your sales team help you do that? Sure they can do the boots on the ground, they’re the ones who are going to the customer’s door. They can tell you what that customer location looks like, they can tell you all about that customer. They can tell you if this is a small family-owned company where dad is getting ready to retire and the son is going to step in and take over. Is that information you want to know? It is yes. So your sales teams are a great source of information but you know what? If you don’t make friends with them, you’re not going to get that information.

Lisa Tanner:
All right, you have to have a solid relationship with your sales team, involving credit teams during the early phase and the customer interactions. How many of you go out and visit customers? So about half of us are making those customer visits. That’s very good. And supporting the collection process driven by the sales relationship. So, you know if your salesperson has that relationship with the buyer, there are often at the end of a situation where you don’t know whether to turn up for collections or not. They’re your best friend, they’re the ones that are going to get that deal closed. Alright so, at the end of the day, neither one of us, neither sales nor credit, we can’t launch, we can’t hit it out of the ballpark, we can’t go anywhere without each other. So it’s really important to develop that relationship early on.

Lisa Tanner:
You need both speed and weight, and although I’m not a fan of this particular slide, sales is the speed. They’re out there, hitting the ground, bringing in the new customers and credit is the weight. Sales would agree with this slide but me, I’m not personally a fan. I don’t like to be known as the weight but I guess we do bring it back to Earth. We’re the ones who say, “Well, wait a minute, you know we got to look at this guy. He’s been turned over to collections 10 times this year. I don’t see us giving them terms.” So what are the next steps? How can we share information? How can we share the responsibilities and how can we earn more revenue while mitigating the risk? These are the key questions. So, sharing information, how many of you do any kind of a quarterly review with your sales teams? What kind of information do you share in your quarterly meetings?

Lisa Tanner:
Okay, so your top ten aging, is that past dues down or dollars down? Past dues down, all right. Is that broken out by a salesperson?

Lisa Tanner:
Okay. Who else does quarterly meetings? You do quarterly meetings, what kind of information do you cover?

Audience Speaker:
It’s an aging customer by a salesperson. It’s got credit available. And it’s color-coded so it’s easy for them to see who the danger customers because you know salespeople don’t like Excel, and also before we have a big trade show for our dealers in the summer and so six weeks before we start sending out information saying, who’s good for credit stretches, who are not good for credit stretches, who can go above their limit to get them to buy at the conference.

Lisa Tanner:
Excellent.

Audience Speaker:
We don’t quarterly basis the payment behavior review because we work in the direct distribution market with a very risky business, and with a big number of customers. So 7000 active customers and our sales guys, they need to know where the risk lies. So we do this review of the payment history of the customer, what went wrong and where we suggest from the credit to the prepayment, and why. And they need to take the action, and another part is the targets. So they also have to overview and commercials as targets shared with us. So they need to understand where they are against this target so we do a review also monthly.

Lisa Tanner:
That’s fantastic. All of these are fantastic ideas, but I’ve heard the word Excel. “Sales doesn’t like Excel.” So you’re manually creating your data that you’re providing in your quarterly report, is that correct?

Audience Speaker:
Yes, definitely.

Lisa Tanner:
Yeah, technology can help you, technology is your friend. Let’s get out of Excel and just find better ways to get that information to your sales teams. One of the things that I learned early on in my relationship with sales, is you’re right, sales doesn’t like Excel. You can send them Excel spreadsheets all day long and they’re not always going to look at it. But pictures? Sales like pictures. Here’s your secret. Graphs, pretty pictures with colors, pie charts, bar charts, sales understand these things. It’s the perfect way to connect. I would encourage you to look for technology solutions that will allow you to share that quarterly information, all of the content that you’re talking about right now.

Lisa Tanner:
Yeah, you’re creating all the bar charts and?

Lisa Tanner:
Wouldn’t you love it though, if you could go and click on a button and say, top 10 sales, or top 10 past dues and the graph was there. Fabulous. What are you using?

Lisa Tanner:
BPL? I’m not familiar with that. All right, it’s a coded system that you’ve created. It’s something that you’re doing internally. Okay. I’m not that smart so congratulations to you.

Audience Speaker:
I just want to say that it’s not, an Excel or not Excel, it’s so I’m a big visualization guy but I like to build my visuals in excel actually and I graph them in Excel and give them nice pictures but as the years have passed, I have learned that not everybody speaks that language. As much as I try to go like, “Hey look at how the data pops out and it tells you something”, there are some people who just think on tables. And no matter how pretty the chart you put in front of them, they don’t even want to look at it, send me my table, let me figure it out, versus kind of digesting it and that’s just styles of how people work and behave. So sometimes your best bet is to send them a report on the table but that’s just because of their style, and how they understand information and processing.

Lisa Tanner:
I love to work with the graph that you can double click on, and there’s your table. That way you’re only getting to the data that you need to get to. So, your salespeople, they like tables. You have unusual salespeople and I’ve yet to come across them. That’s very good.

Lisa Tanner:
So how can technology help automated credit scoring? You guys are making quick credit decisions. That means you already have scoring models that are going out and they’re saying okay, here’s how long this customer has been in business. Here’s the type of business that they are in, and here’s how they pay. Their payment never ends. You’re looking at all of these important scoring things that are going on, you may be using financial statements and doing some scoring there but if you’re doing it in two to three minutes or 30 minutes, then you probably have some type of technology, assisting you already with that. Single data repository for credit decisions. How many of you are using an online credit application where the customer fills it out already today? Most of you. This is one of the most critical things you can do to speed up the onboarding process.

Lisa Tanner:
One of the things that I found when I went to work with Nidec was that the legal entity was a huge gap within Nidec. They had no online credit application, they were still using paper applications. Believe it or not, and 90% of the time, the complete customer name was incorrect. Even worse, say we’re loading it into the customer master, that way whatever was on the application was exactly what was going into the system. So we utilized the technology to go back, trace all that, identify the correct legal entities and make sure that we had the right legal name on our invoices. So if you’re not doing that today, that’s something technology can help you. With that, we use quite a bit, integrated order management and credit solutions.

Lisa Tanner:
So, how many of you are in RP systems today? Everybody? So, you already have a system where you have credit rules built into the system that says if the customers over the limit or past due this much or this percent, they’re going on hold, correct? Again, these are all technology solutions that we need now. One of the unique challenges I say explain I have 14 different ERP systems. So for us to do order management at the RP level, we have to operate in 14 different environments. Our solution was to go to the cloud, to take all of that data and put it in the cloud and run our credit rules through the cloud by using pushes from each of the ERP systems, what that allowed us to do was to consolidate our data. So now, I may have a salesman in Texas, who’s handling an account for this Nidec business but I have another salesman in Texas who’s handling the same customer for another Nidec business. We now have one picture of what is going on with that customer, and this is one of the ways technology helps if you’re working for a company that’s in the acquisition and does a lot of buying out there. So I think we’re down to about the last three minutes. Are there any questions? Does anybody want to throw anything? go out?

Audience Speaker:
Yeah, with 14 different earpiece systems, I’m sure they don’t talk to each other?

Lisa Tanner:
Not.

Audience Speaker:
Do you have customers that operate in multiple countries that you’re giving credit to and if so how do you manage that exposure across all those countries?

Lisa Tanner:
Yes, we do. We have some very large organizations that may operate on every single continent out there again. Our only solution was to turn to the cloud and I’ll be very honest with you. HighRadius has offered us phenomenal options for getting all of that data into one collection point. We were able to do some parent matching okay? So, I have different ERPs in Europe than I do in the US even since we were able to take that customer master level data and using the correct legal entity match all of the customers across the world we can get them into one collection environment right now we can see our master customers, top to bottom, we can see all the different regions. Now it’s not perfect, it’s not ideal. At this point, but it’s so much better than what we were encountering, we were trying to dump data from 14 different er B’s and consolidate them into one XL so that we could see the customer and the toughest part for us was do friends may have put that customer name indifferently, Denmark, the customer name and so So at the very first start, what we had to do was go back to customer master and clean the data, we had to do an absolute data cleanse. It was a challenge, but it was well worth it and bringing intense help with that process paid for itself very very quickly because we were finally able to see our customers top to bottom, and almost real-time, almost real-time. Go ahead.

Lisa Tanner:
It’s not a question, it’s just kind of a comment. So for our sales team, you talked about credit limits. And what we provide is, we provide a report in Excel which now that you’ve told me about graphs and when you look towards that. But with a live report out every day that it’s called an Uber credit limit report right and it shows them the top customers that are potentially over their credit limit based on sales orders, and that’s effective because now they look at that and they know

Lisa Tanner:
Okay, I need to be proactive.

Lisa Tanner:
That’s just one of the tools that we’ve come up with. That’s fabulous and your sales teams are looking at it, they are. That’s great. I can almost guarantee you if you put that into a bar chart you go. They’re gonna be a whole lot more responsive to it because no sales guy was his name at the top of the list with along this bar, you know, they’re very competitive. It’s a great way to go. Any other questions.

Lisa Tanner:
Do you use the shared service center in your company for the creditor and collection activities? I’m sorry I really can’t hear you. Do you use credit and collection activities in the shared service center so do you perform it from outsource location from centralized and we own our own shared

Lisa Tanner:
services. All right, so we have a shared service center in Manila. They operate predominantly in the US and Asia Apac countries. And then we have shared services in Romania and Romania that covers the UK and all of Europe. And how do you make sure that with these divided locations? You have a good connection between sales and those teams.

Lisa Tanner:
Well, our Center for Excellence is in St. Louis. So we have me as director, we have our analysts management in the St. Louis facility, our sales teams, even our global sales team. All report into the St. Louis office so most of that interaction is occurring here at the sea level. Even so behind schedule regular weekly calls with sales teams, and this is also very very powerful if I’ve got a customer who’s become a sudden deduction problem. All right, we see trends we see constant pricing problems whatever the reason is, for those deductions, I will set up a weekly call between the analysts, the collector, and sales. I typically sit in on the first call to set the tone. And then I let them go and I give them a timeline and I tell them the expectation is you identify what’s causing this and make sure that we take action to stop it. Within this amount of time I want this done by the end of the month by the end of the quarter, whatever. And if you need my help if I need to jump in to remove a roadblock I need to go visit the customer whatever we need to do, let’s just make this happen. And our sales teams have been very receptive. They appreciate it because number one, they don’t understand the directions. They have no idea you have to walk them through you have to help them understand and the best way to do that is to explain how it affects their op. Does everybody know what OP is? All right, a deduction is a bleed on top and they are losing profit. They are losing the value of that transaction when we have deductions so it is very important to them to engage to get involved and help you come up with solutions that prevent those chargebacks from occurring in the future. So, anything else.

Lisa Tanner:
We are in the cash app, and we are in collections. We wanted to implement EIPP, but we’re being pulled back. We’re in the process of an upgrade to Oracle 12 and one of our largest companies right now. So resources are less than, then, to say the least. So yeah PP is gonna have to wait till the end of the year. We will also add credit management now full disclosure, I implemented many of these when I worked at Coleman. So when I came over to need it. My first progress when I walked in and saw the paper credit applications, and the Excel spreadsheets and all of the labor and work that was being done to consolidate this was, oh my god we got to bring technology in. So I’m speaking later this afternoon jointly with some others on how to convince the C suite to bring technology into the HR space. I want to encourage you to conclude that it’s got a lot more substance to it. I am giving away my formal RFP document in that presentation, it’s what I sent out to about a dozen different companies. I’ll talk you through the gap analysis process of how we selected the right tech partner, which is very important. If you’re going to convince your C suite to spend the money, you’ve got to show them that you’ve got the right partner with you. And it’s all there this afternoon I think that’s it about 215.

Lisa Tanner:
All right, thank you guys I had fun.

Lisa Tanner: I've been talking about this topic for years and years and years, and one of the things I find is that in every conference I learn more from you guys than you probably do from me and that's why I keep doing this. To start with this as a topic that goes back to the very beginning of time, sales and credit have been at odds, going back to the Garden of Eden. The original salesperson was Satan. Satan was going to get Eve to buy that Apple and she was the original creditor. She wanted to eat now and pay later. And so here we are today! Lisa Tanner: A couple of the items on the agenda. The credit and sales arm wrestling. What do sales expect from credit? This is kind of one of the most important things you have to understand how the sales team thinks. What does credit expect from sales? We kind of all know we want them to help us with, make sure that it gets paid on time. Sales and credit, it's a partnership. It truly is you as a credit professional cannot be successful if you don't get your sales…

What you'll learn

Should Credit & Sales squabble over customer risk? The answer is YES. Despite their hostile relationship, they both can work wonders for the organization if this squabble can be channeled into a more fruitful debate which touches all the right chords and is argued with a better understanding of each other. Given her unique experience of being on both sides of the table, Lisa from Nidec Motors discusses how Credit and Sales could strike the perfect balance between revenue and lowering credit risk.

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HighRadius Credit Software automates the credit management process, enabling credit managers to make highly-accurate credit decisions 2X faster and enable faster customer onboarding with 4 primary components: configurable online credit application, customizable credit scoring engines, credit agency data aggregation engine, and collaborative credit management workflow. Along with that, there are a lot of key features that should definitely be explored some of which are online credit application, credit information aggregation, automated credit scoring & risk assessment, credit management workflows, approval workflows, and automated bank & trade reference checks. The result is faster customer onboarding, better internal collaboration, higher customer satisfaction, more targeted periodic reviews, and lower credit risk across the company’s customer portfolio.