Why do sales, credit and finance end up in friction?

Each team is measured on something different, and few people understand the other two measures. Sales is measured on revenue and wins business with a quick yes. Credit is measured on risk and must make sure the business won is business that gets paid for. Finance is measured on what actually lands in the bank.

Left alone, sales pressures credit to open accounts quickly, credit argues about the limit after the order is placed (the worst possible time), and finance lives with the result. Everyone ends up defending their own number.

Think of three people driving to the same wedding in three cars, each following a different map. They all want to arrive, they just disagree on the route.

Is it a genuine conflict or just a poor process?

Both exist. A genuine trade-off is real, for example a large order outside your usual risk appetite, or pushing growth into an industry the industry index is flagging. Most disagreements, however, are about risk and friction that clear processes can fix.

What to do:

• Have sales and management share the deals they are working on early, so credit and finance are not surprised.
• Agree in advance how higher risk deals are handled, for example the first two orders on COD and the third on credit, or shorter terms.
• Remember that a credit decline should come with a clear reason, so sales understands why the customer is not one to extend credit to.

What does each team think a good customer is?

Usually three different things. Sales will say a customer who buys a lot, credit a customer who pays on time, and finance a customer who pays on time and in full, every time. That is why the definition must be agreed before the deal is on the table, not during or after, because nobody makes a calm decision under pressure.

Try this in your next team meeting:

• Ask each team to describe a good customer in one sentence.
• Compare the answers and write one agreed definition, even if it is a rough first draft.

What should be agreed in writing?

Five things are worth agreeing in writing, and they live in your credit policy. The policy is not only for the credit team. It tells everyone what to do when a particular situation arises, including sales.

• Who we sell to: the prospects and industries the business is targeting, and why.
• How we expect customers to pay: terms explained plainly, so everyone understands what "30 days from statement" means for cash flow.
• What we learn from write-offs: shared at year end with all three teams, with a view to doing it differently next year.
• Early warning signs: the signals credit and finance watch for that sales may not see.
• Limit ranges per risk band: so the first limit is never a surprise to anyone.

One of Trade Shield's values is no surprises. Surprises create pressure, and pressure makes people do crazy things. The aim is to decide, not to debate.

What really frustrates sales about the credit process?

Not the answer itself, but not knowing when it will arrive. A quick no is often more useful than a slow maybe, because the salesperson can manage the customer's expectations. Sales does not need a faster yes. It needs a plan.

The process is a cycle: the application comes in complete, credit assesses the risk, credit sets the limit, the decision and terms are communicated back to sales, the order is released, and the limit is reviewed later.

Three simple rules:

• Agree a realistic time for every step together, based on how long it has actually taken before.
• Publish those times where sales can see them.
• Measure and report against this internal SLA, so every turnaround becomes a number all three teams can discuss.

How much should sales be able to see?

Show sales the why, and keep the decision with credit. When sales can see nothing, decisions feel arbitrary and they push back harder. When they understand the reasoning, they start bringing better customers to credit in the first place.

• Sales can see: the risk rating of a customer or prospect, and public information such as a negative business status.
• Credit keeps: the final call on limits and terms, approvals and exceptions, and ownership of the credit policy.

Think of the petrol gauge in a car: the driver sees exactly how much is in the tank and drives accordingly, but does not decide how the fuel system works.

What is each team measured on, and what does it need from the other two?

Look at the right-hand column as a whole: every need can be met by one of the other two teams. Credit needs complete applications and sales can provide them. Sales needs predictable decisions and credit can provide them. Finance needs accurate data and both sales and credit can provide it.

Once each team understands the other two scorecards, the conversation shifts from defending a number to solving three problems together. A common example is credit chasing missing paperwork, such as a VAT number or purchase order details, which delays onboarding. A complete application from the start, with an explanation of why it is needed, prevents that.

How do you run a Credit, Sales and Finance forum that is not "a meeting that could have been an email"?

Make the meeting about the decision, not the updates. Four principles keep it useful:

• A fixed time slot: same time, same length, protected in the diary well in advance, ideally at a time that suits the sales team.
• One page of numbers: circulated a day or two before, so everyone arrives having seen the same figures.
• Decisions, not updates: if it could have been an email, keep it as an email.
• Actions with owners: every meeting ends with names and dates.

Three questions to answer honestly

• Can you name the main KPI of the two teams you are not in?
• Do you know how long credit decisions or limit reviews actually take in your business today, not how long you hope they take?
• Do all three teams see the same DSO figure, calculated in the same way?

This is not a scorecard. A "we don't know" simply shows where the opportunity is. If every answer is yes, the rest of the Credit Thursdays community would love to hear how you got there.

What does each team gain from working this way?

Each benefit is made possible by one of the other teams, which creates a loop that helps everyone win.

• Sales targets better customers, fewer deals stall in review, and revenue converts to cash.
• Credit says yes more often, because better applications and earlier conversations mean more approvals that make a real difference. A no should come with a reason, never "because I said so".
• Finance sees cleaner terms, fewer surprises and more predictable cash in the bank.

Predictability gives sales more room to grow. It is not about anyone giving up their number. It is about all three numbers becoming a little easier to hit.

What can I start this week?

Three steps, none of which need a budget change or a project plan.

• 1. Share your team's KPIs with the other two functions. Put the scorecard on a page and send it out.
• 2. Agree one written definition of a good customer. Even a rough first draft beats three different versions.
• 3. Book the first Credit, Sales and Finance forum. Put it in the diary, even if it is for next year. If it is not in the calendar, it will not happen.

Need more help?

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