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Joining Forces

Get your credit and sales departments to work as a team.

Making the sale is great, but the transaction isn't complete until it's paid for--which is why your sales and credit departments need to function as a team. At the same time, says Bernie Luchs, CEO of Contract Furniture Gallery in Salt Lake City, there should be a minimal amount of crossover when it comes to each department's responsibilities. The credit department should work on credit issues, and salespeople should stick to selling.

"Our salespeople don't get paid unless [the company] gets paid, so it's in their interest to get the account approved," says Luchs. "But if the customer doesn't adequately complete the credit application, the credit department handles it."

In most cases, Luchs says, salespeople are kept out of the collection process, which helps preserve the sales relationship with a customer who might be only temporarily in arrears. Of course, if salespeople have information that can assist the credit department with collecting on past due accounts, they willingly provide it.

The key to a successful credit-sales connection is communication, Luchs says. That's why his credit manager attends the company's weekly sales meetings and salespeople are trained on the importance of getting full and accurate credit information. When a customer is deemed uncreditworthy, the credit department works with the salesperson on alternative arrangements, such as a larger deposit, a letter of credit or c.o.d. terms.

Also, credit standards at Luchs' company are not so rigid that they obstruct the sales process. Luchs believes a certain amount of uncollectable debt is simply a part of doing business. "If all your business is collectable, your credit department is probably too strict and you aren't taking enough risk," he says. "If it goes the other way and your losses are too great, your policy is probably too lax."

Contact Source

Contract Furniture Gallery, (801) 972-1267,

This story appears in the July 1998 issue of Entrepreneur. Subscribe »