Upfront: 4 Ways To Improve Sales Profitability

How can finance executives help keep the sales force on track with corporate profitability objectives?

1. Get involved early. When finance is involved early in the sales cycle, sales representatives are more likely to negotiate terms that make sense from a working capital perspective. CFOs need to communicate with their sales staff about the financial systems and processes that sales activities must support to achieve profitability. Establish open communication, and encourage salespeople to ask questions.

2. Align sales with operations. Believing that the customer is always right, many salespeople offer clients customized services and/or products without considering the sale's impact on profitability. Educating reps about the costs underlying production and fulfillment processes can help ensure that every deal they strike is profitable. A thorough approach coordinates forecasting, training and reporting between sales and production departments.

3. Learn from your mistakes. When instituting best practices for future sales efforts, review prior contracts for profitability by tracing each deal through the pipeline to understand where bottlenecks and late payments occurred. If some individuals or teams consistently achieve better results than others, have those groups explain the reasons for their success to other sales teams.

4. Link compensation to collections. A sound compensation package for sales staff ties rewards to collected payments.

Source: REL Consultancy Group