Should you involve sales in your debt recovery?

Brian O'Connor

As a credit controller you will naturally use every tool at your disposal to secure a payment.  If there is a problem with the price you call in the sales person, if there is a problem with delivery you call the warehouse and so on. You will always use the appropriate person to help your solve the problem.

But what if your customer hasn’t given you a clear reason for the payment delay, what if the problem is that the customer is simply not paying.  This is where you might try and leverage the good relationship the sales person has with your customer to help chase up the payment.

However, in the absence of a clear issue, sales people can be very reluctant to get involved. Sales people put a lot of  effort at the beginning of the sales cycle in creating and building the relationship and ultimately securing the sale.  In general sales people do not like to be the ones delivering bad news to customers as it may have a negative effect on the relationship and risk future sales.

We can appreciate that position, but at the same time when you have exhausted all other avenues, getting them involved can be your last resort.

Convincing them to help can be difficult. One controversial approach we have seen is to use their commission payments.

When a sales person makes a sale, they are typically paid a commission as a percentage of the total sales value.  Most companies will pay that commission on the receipt of a valid order and the sales person moves onto the next sale. As far as the sales person is concerned their part in that sale is finished. If a problem arises there is no financial incentive for them to step back in and help.

Changing how their commission is paid can be a great way to ensure that the sales person is invested in making sure their customer is both credit worthy and pays their overdue debts.

The payment formulas we have seen are;

  • Paying half the commission on receipt of the order and paying the second half on the receipt of payment
  • Paying the full commission only on the receipt of payment
  • Paying the full commission on receipt of the order but with a crawl back clause on the non payment of the invoice.

There will always a number of different people involved in the complete sales cycle.  It is however important that everyone takes responsibility to ensure that their step of the process runs smoothly and helps to lead to a prompt payment. Using this approach improves the salespersons sensitivity to the issue of delayed or non payment. We want them to be conscientious of these issues and to ensure that they play their part by only sell to credit worthy customers.

It is also important to be fair to the salesperson, back up should be provided of the efforts taken by the company to recover the debt to assure the salesperson that every reasonable effort was made.

Using sales people to help you chase difficult non payers can be effective.  But a word of warning - use it sparingly.  The more you rely on that good relationship the less effective it will become!

photo credit: Hunters Race on Unsplash

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