B2B Collections Loan Advice

should sales reps handle overdue account receivables?

Cash flow is the lifeblood of most small to medium businesses and nothing puts a dent in your cash flow like your customers not paying up.

When payment comes due and the customer is nowhere to be found, there tend to be two schools of thought on who should deal with overdue account receivables.

  •     The first school of thought says that collecting on overdue accounts is the sole responsibility of your accounts receivable team or your collections department.
  •     The second school of thought says that the sales cycle isn’t technically complete until the customer has made payment, meaning your sales reps should play a part in credit control and collections.

If you’re thinking “both of those are valid points” then you understand the conundrum. At Monetaria, we understand you need your customers to make payments to ensure consistent cash flow, which means all hands to the pumps.

But, at the same time, should you be diverting your sales team away from their own responsibilities to help with collections?

This is particularly relevant to smaller businesses that may not have a dedicated collections team and using their sales reps might seem like the only option.

Today, we’ll be looking at the pros and cons of the situation and trying to answer the question, should sales reps be responsible for collecting overdue account receivables?

The pros of using sales reps in collections

  1. An existing relationship

Calling someone to ask for money is uncomfortable, regardless of context. However, having an existing relationship in place can make the whole process a lot smoother.

Your customers already know and trust your sales reps. That pre-existing relationship can counteract, to an extent, the discomfort of having to call a customer to press for payment on an outstanding invoice.

Because the customer already has a positive relationship with your sales team, it’s also harder for them to simply ignore a collections call or email. Customers generally find it much easier to ignore an unknown accounts receivable person than a sales rep with whom they already have a personal connection.

  1. It’s not a collections calls

Getting a call from a collections team sets the tone for conversation to come and can immediately put some customers on the defensive, making it harder to get a positive outcome.

However, if your sales rep is simply calling to make sure the customer is happy with their product and conduct some sales aftercare, then they have the opportunity to connect with the customer and set them at ease before gently reminding them that payment is outstanding.

Sometimes an approach that is less obviously focused on collections can yield better results.

The cons of using sales reps in collections

Unfortunately, when it comes to using sales reps as part of the collections process, there are some obvious downsides, including:

  1. Your sales team aren’t selling

The most common argument against using sales reps as part of your collections efforts is that, while they are making those collections calls, they aren’t selling.

The primary focus of your sales team should always be making sales.

Additionally, as obvious as it seems, your sales team isn’t a collections expert.

Even with training on the gentle persistence approach, they might just not have what it takes to convince the customer to make payment on an overdue account.

  1. It puts customer relationships at risk

As we’ve already mentioned, making collections calls is a difficult and uncomfortable process, especially for the customer.

Your sales team has worked hard to cultivate the relationships they’ve built with your customers and wrongly timed or toned collections calls can ruin all of that hard work.

In the customer’s mind, contact with the sales rep has now shifted from an opportunity to add value, to an uncomfortable request for funds they might not have, making future sales calls much more difficult.

For companies who are reliant on repeat business, putting the customer relationships that their sales team has carefully crafted at risk can be a real impediment to using their sales force in collections.

There’s no ‘one size fits all’ solution

As you can see, just like the original arguments for and against using your sales reps in collections, both the pros and cons are fairly convincing.

With good arguments on both sides, it can be very hard for business owners to make a call on whether to use their sales reps in collections.

The good news is that there are other options, including:

Connecting sales commissions to completed payments

By releasing the commission generated by sales only once payment has been made, businesses can encourage the sales team to have a vested interest in seeing customers make a timely payment.

Since commissions are connected to completed payments, sales teams are more likely to focus on their due diligence, vetting customers properly during onboarding, and making sure the customer fully understands your business’s payment terms.

A greater focus on completing the entire sales process, from initial contact to payment can discourage some sales teams from pushing through customers with poor payment records in order to inflate their numbers.

Having your sales team put the necessary precautions in place at the beginning of the sales process can help to prevent the collections team from needing to get involved further down the line.

Create a customer success team

As a rule, the customer success team sits in between the sales team and collections and enjoys some of the benefits of both.

They can draw on the information and relationships that your sales team has built to connect with the customer and present themselves as adding value by helping the customer get the most from your goods and services.

At the same time, futures sales aren’t contingent on those relationships, so your customer success team can be used to gently push for payment on recently overdue accounts, perhaps less than 30-days, before handing any persistently outstanding accounts over to collections.

contact the B2B debt specialists

Instead of employing your sales force to assist in your collections efforts, you can contract with commercial debt recovery specialists like Monetaria.

We specialize in B2B and Merchant Cash Advance collections and have more than a decade of experience in helping businesses collect what they’re owed.

Our expert collections teams employ custom-tailored recovery strategies based on your specific circumstances. We know there isn’t a one size fits all solution and we’re flexible enough to find the right solution for you and your business.

Contact us today to find out more about how we can help with your outstanding accounts receivables and let your sales team go back to what they do best. Selling!