How breaking down internal divisions can help your sales and payments process

For manufacturing and producing businesses, issues arise when the sales and finance teams have different aims. How can you make sure everyone is working together to achieve a common goal?

Businesses will often face risk in their receivables process due to a lack of buy-in on policy from internal stakeholders, like sales teams. They’ll offer discounts or ignore payment terms if it means winning new sales.

But that has a knock-on effect on things like cash flow, days sales outstanding (DSO), and other departments within your business. For sales and payments to run smoothly, it’s important to engage with senior stakeholders, and to break down silos with other departments.

To find out more about how professionals work in partnership with their internal stakeholders, we asked a global community of manufacturing businesses to share their experiences, and how they improve their sales management and payment processes through collaboration.

Are you doing enough to make sure internal teams are working towards the same goal?

Within any organisation, juggling internal relationships can be tough – especially when there are competing priorities across different departments. One senior procurement officer in a large international corporate making and selling medical equipment said: "I work with so many functions – everything from IT to marketing. I can’t be an expert in all of these functions. I’m there to ensure we’re heading in the right direction."

When departments work in isolation, cash flow comes under risk from things like delays in customer payments, or demand overtaking supply. For businesses that prioritise sales, there’s the specific risk of falling into the trap of extending credit to customers in order to make a sale.

But chasing short-term sales targets impacts risk management. When you’re looking to win sales no matter what, it can be easy to lose sight of whether a customer is a good payer or not. Likewise, expanding into new markets brings the risk of bad debt and non-payment. And if a company is forced to borrow money to cover the cost of late customer payments, it could be hit with financing charges.

It’s important, then, that departments and internal stakeholders work in partnership, rather than silos. It’s best practice for your finance and sales departments to work together to develop payment terms that work – for both your business and your customers.

Is a scale-up in sales worth the potential risk to other areas of your business?

Every business wants to grow. But growing too quickly brings its own set of risks – especially for producer businesses. The CFO of a mid-market clothing manufacturer told us that in times of growth, one of the biggest risks is growing too fast. “Despite the desire from other senior stakeholders to pursue growth, we have to balance our stock commitments and supply chain capacity with demand.”

It can also be challenging to set standardised global payment terms when expanding, since international customers have varying norms when it comes to payment. There’s a variety of cultural differences to consider, like the way businesses in different countries negotiate deals and handle contracts.

Manufacturing and producing businesses often find that demand is more competitive in some countries than others. And in these instances, customers expect to pay less as a trade-off, or the company’s DSO is affected – putting pressure on cash flow.

Could you make sales and payments processes tighter by reassessing your vision for them?

The solution to clashing sales and finance priorities is better collaboration. How? By establishing a shared vision for your sales and payments teams. Your position in the finance or treasury team means you are uniquely well-placed to bridge the gaps of understanding between departments.

Making sure you’re all on the same page helps put the needs of the business at the centre of sales strategy decision making. When you reach an agreement that works for everyone involved, you’ll find your cash management process becomes stronger. The finance manager of a growing mid-market enterprise in the packaging industry said: "I spend a lot of time working with internal teams. A lot of effort goes into updating our stakeholders on business performance."

It’s important that your business has a shared sense of responsibility when it comes to balancing orders with supply chain capacity, and this can be helped with the use of digital tools. "We have a centralised business development monitoring system to create visibility of sales pipeline and order backlog," said one finance director at a large aerospace corporation. So, with the help of technology you’ll find that sales and payment processes will run more efficiently, and you’ll develop better relationships with your customers, too.

Using data to work out your supply requirements helps your sales team stay on track with things on the production side. It’s useful in many ways – you can use data to predict the cost of upcoming projects and take your findings to stakeholders to manage expectations, for instance.

Data also helps with risk management, giving you the chance to take proactive steps to address disruption before it happens. "Modelling financial performance should be used to implement strategies to help manage risk to the business. I’m accountable for creating action plans whenever we’re off budget," said one finance manager in a growing mid-market enterprise in the packaging industry.

Creating awareness of risk on the horizon caused by the sales process puts your business in the best position to tackle it.

Is better collaboration the key to creating a better sales process for your business?

One of the keys to more effective sales and payment management – and healthier cash flow – is to work collaboratively; to break down silos and embrace data to gain insights. When you have shared ambitions, you’re far more likely to work together to achieve them. Is your business divided by tension, or united by a single ambition? Do you have clear goals in place that all departments are bought into? And are your payment policies being enforced effectively for the benefit of every team?

Need more answers and insights? Find out how businesses like yours are collaborating to improve sales managements and enhance business performance. Talk to one of our advisors