In many businesses, sales and credit management are viewed as opposing forces. One focuses on winning new business and increasing turnover, the other on assessing risk, protecting cash flow and ensuring invoices are paid on time, writes Tracey Westell, director of Pecunia.
But this perceived conflict is misplaced. Sales and credit control share the same ultimate objective: profitable, sustainable growth. And when they both work cohesively, sales performance improves, cash flow strengthens and the risk of bad debt is significantly reduced.
In other words, the Sales versus Credit concept is a myth.
It is often assumed that credit control exists to hold sales back when, in reality, it can result in better quality sales. Without robust credit assessment and ongoing monitoring, turnover may increase but cash collection suffers. Revenue alone does not fund a business. Cash does.
Granting credit without proper risk evaluation can increase the number of late payments, strain customer relationships and land you with rather costly bad debt write-offs
Remember, credit management is not about saying no. It is about saying yes to the right customers, on the right terms, at the right level of risk.
When sales and credit teams collaborate, the impact is measurable.
Such early engagement ensures, for example, that customers understand payment terms from the outset, reducing confusion, avoiding disputes and, eventually, delayed payments.
‘Sales teams play a critical role – ensuring orders and pricing are correct, delivery expectations are clear and invoices reflect agreed term’
And remember, not all sales are good sales. Selling to customers who consistently pay late or fail financially can destroy margin and profitability which is why credit management in invaluable in terms of assessing customer financial strength, payment history and ensuring appropriate credit limits
A lot of management time is lost on queries and disputes. Many late payments stem from unresolved queries rather than any unwillingness to pay. Sales teams play a critical role in preventing and resolving these issues, ensuring orders and pricing are correct, delivery expectations are clear and invoices reflect agreed terms.
In other words, proactive collaboration reduces friction and prevents small issues from becoming aged debt. All of this means there needs to be a cultural shift in many organisations. The responsibility of a sale should not end when the order is placed or the invoice is raised. A sale is only truly complete when payment is received.
This raises the question: should sales targets be based on invoiced or paid sales? Many forward-thinking organisations are increasingly linking incentives to the latter.
Traditional commission structures reward volume alone. This can unintentionally encourage sales to prioritise closing deals over the quality of those deals.
Aligning targets ensures sales behaviour supports the financial health of the business. When bonuses reflect both revenue and cash collection, collaboration becomes natural rather than forced.
The strongest businesses understand that cash flow and sales performance are interdependent. Improved communication, shared KPIs and mutual respect transform discord into harmony.
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