Every month I receive a variety of questions from salespeople and their managers. These come from a variety of sources - my live seminars, the monthly phone seminars, questions that are sent into my newsletter, and issues that arise in the course of my consulting work. Out of all of these, I select those that I think have the most universal application, and respond to them here.
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How much responsibility for collections should a salesman have?
Good question. This is one that comes up a regular basis when I'm working with a client to refine their sales compensation plan. It usually is expressed something like this: "Should we deduct old or uncollectible receivables from a salesperson's pay?"
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I don't have an answer that will please everyone, but I do have some thoughts on this. There are two sides to this issue. On one hand, there is an argument to be made that a sale is not complete until the money is received. Therefore, a salesperson should be involved in collecting any old or doubtful receivables. Besides, the argument goes, the salesperson is close to the account, knows the people to talk to, and can probably be more effective at collecting than the collections department.
The other side of this issue takes the position that collecting is a responsibility of the credit/collections department. To bring the salesperson into the transaction diffuses the salesperson's time. He/she should be selling, not collecting. And, it is possible that a salesperson collecting in an account may jeopardize the relationships with the people who make the buying decisions.
I have to admit that I don't feel strongly on this issue. I've been involved in refining compensation plans in which the company took a strong position on one side or the other of this issue, and either one is OK with me. I don't see it a major component of the sales person's job, or of the compensation plan.
Having said that, I do believe that salespeople should be expected to facilitate payment when it is necessary. I don't think it jeopardizes the relationship, and, while it might diffuse a salesperson's focus from selling, it doesn't take all that much time. And, a salesperson really is the person who is best able to identify and resolve differences in an account that often are the cause of receivable problems.
So, I think it is appropriate to refer all old receivables to a salesperson to collect, and to deduct that commission that he/she made from the sale if it is not collectable.
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If you have any comments or questions, email them to me.
I do, of course, reserve the right to edit
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Is it Time to Revise Your Sales Compensation Plan?... If you're paying your sales reps straight commission, you're using an obsolete formula. If you're paying your sales reps a straight salary, you're also using an obsolete formula. Read this article to find out a much more effective way to compensate your sales staff.... {Read More}
How to Deal with the Salesperson Who Has Leveled Off... Every manager has, or will, confront this troublesome issue. Itīs arisen in every workshop for sales managers or branch managers Iīve done. One or more of your salespeople has leveled off. Their performance hasnīt improved much in the last few years. Where before you were able to count on significant increases each year, now you can not. You know that these experienced salespeople can do better, but they seem unable or unwilling to break out of a certain level of performance. You are scratching your head, frustrated, and loosing sleep at night wondering how to improve the situation. What do you do?... {Read More}
There are also many other action-packed articles for sales professionals that offer how-to solutions to every day sales problems that you can read online at www.davekahle.com/article.htm.
