Quicker payments begin at home

If your sales force is tasked only to drive product sales and margin, you could be missing out. The sales team also has a crucial role to play in improving company cash flow.

Using your sales force to negotiate the most advantageous terms (as well as the best price) will boost your business performance and avoid any issues over payment terms at a later date.

However, there are some difficulties. Many of the traditional sales people we have worked with are scared that business will fall, margins may suffer and customers lost. They will quote precedent and often believe that it isn’t part of the ‘sales culture’ to discuss payment terms at this level of detail. However, we have found that with the right training and support, even long-held attitudes can be changed. Scenario planning is an effective technique in transforming mental models and role play can be used to practice skills required to successfully negotiate lower terms.

In the case of technical sales people, their negotiation skills are often less well developed. However, by helping the team to gain an understanding of the principles of negotiation, and demonstrating how to prepare and use the relevant transactional data to develop tactics, they are able to reduce terms without any adverse impact on sales or margins.

So, once you have built the necessary levels of enthusiasm and skills required to make term negotiation part of your sales strategy, what then? You need to develop a set of objectives for each individual customer – what terms you would like to offer and how this will be achieved. For example, if your sales team is rewarded by an incentive programme then consider how to incorporate payment term targets into it. It is also very important to ensure that members of the sales team have easy access to the information they need to achieve their targets. The use of transactional model, using two years of data, will provide accurate details of each customers’ payment performance.

By getting the sales team to believe it is possible, equipping them with the right skills and developing the right strategy, companies we have worked with have been able to reduce terms with key customers by over 50%.

If you need more information then email me - david.wojcik@justoneconsultancy.com or telephone JustOne Consultancy on +44(0) 203 303 0310.