August 17, 2023
How to Speak the Language of Sales
Kendall Payton, editorial associate
It might feel like the credit and sales teams are speaking two completely different languages. But by putting the company’s goals and objectives first, both departments can become an unstoppable force in driving positive business results. Taking the time to understand what both departments need from each other can help foster a strong relationship and build mutual respect.
Sales departments are in charge of convincing customers that their company’s product or service is worth buying, and credit is in charge of making sure that customer will pay back what it owes. Without sales, the credit team would have no customers to investigate. And without credit, the sales team would have no direction for making a sale. Both departments must work together.
Communication Between Departments
Clear communication is fundamental. If the sales team decides to challenge a credit decision, the credit team should clearly communicate their decision process and how it relates to the goals of the company rather than making a decision without consulting sales first. Explain that the credit team wants to make a sale without costing the company, said Marlene Groh, CCE, ICCE, regional credit manager at Carrier Enterprises, LLC (Salisbury, NC). “We should never be the sales prevention team,” Groh added. “Sales are what drive companies, so we must both understand that credit has an equally shared role with the sales team.”
The sales and credit departments both have the most interaction with a customer over any other department in a company. The sales team can play an important role in the customer investigation if credit and sales work together. For example, a salesperson may have inside information from their conversations with the customer and can inform the credit team of any red flags.
“Being on the same page not only benefits sales and the customer, but it gives us as credit managers leverage with the customer by using their relationship to obtain additional information that we might need in order to give them the maximum credit line or to sell to their maximum potential,” said Jill Burns, regional credit analyst at ABC Supply Co., Inc. (Beloit, WI). “Maybe we need a new credit application and are expecting communication from the sales rep. A good credit-sales relationship can ensure we’re not going to be changing the customer’s account without notifying sales first.”
Take Time to Build Trust
Trust is a key component in building a strong relationship with sales. Trust is the glue that holds both credit and sales teams together. Sales teams are hungry to sell, and credit teams want to make sure there is the least amount of risk involved with the sale. “We have to take an intelligent risk,” said Burns. “We don’t want to be surprised something didn’t pan out the way it should’ve, so being transparent with sales on what we are looking for is a tremendous help.”
Tim Bastian, ICCE, senior director risk at Western Oilfields Supply Company dba Rain for Rent (Bakersfield, CA) has worked in both sales and credit throughout his career. He said there are two levers to pull from in B2B sales. “One lever is getting information upfront and a thorough screening as you develop the relationship,” he explained. “The other is, if you take a casual approach, you must have a stronger and faster collections response. I try to ask the sales team which conversation they would rather have with the customer. If we are not paid, the salesperson does not earn the commission. You almost have to sell why the credit team is important to the sales team.”
Credit professionals can use their customer knowledge to help guide the sales team. Be sure to let the sales department know if a good-paying customer has room in their credit limit for more purchases. Listen to what the sales department needs from the credit team, too. For example, do they need you to shorten the credit application processing time to avoid losing sales? “It is a more competitive business environment now, so we could quickly lose the sale if a customer sees it’s easier to do business elsewhere,” Burns said. “That is why it’s important to give any possible information we know to sales. It can help save time.”
Join Sales on the Frontline
As credit professionals, meeting with your sales team to touch base regularly is important. Some credit departments meet monthly with their teams, while others meet annually. However, try to take it one step further and join sales on a customer visit. It is a great way to build a relationship with your sales team as well as a way for training purposes of new sales representatives.
“In credit, you have to be your own advocate to get in front of your sales team,” said Burns. “Once you do, everyone sees the benefit of it. Sales team members need to know who you are and who to contact. It is always helpful to put a face to a name if you can. They’ll know exactly who to contact if there’s a discrepancy on an invoice or information we need with our credit policies.”
Making smart decisions that benefit the company is a shared responsibility between credit and sales, said Bastian. “At the end of the day, management or ownership will determine what level of risk they will take with the company. The key driver is to make sure the sales management team and ownership are supporting credit in any efforts possible.”
Emerging Credit Leaders Will Shape the Future of Business
Jamilex Gotay, editorial associate
An emerging leader refers to an individual who is in the process of developing and displaying leadership qualities, often in the early stages of their career or leadership journey. Emerging leaders are recognized for their potential to drive positive change within their organizations. Emerging leaders may not hold formal leadership titles but are often identified by their actions, attitudes and potential.
What Qualities Make an Emerging Leader?
Taking initiative is one of the prominent traits of an emerging leader. This can be taking initiative when making credit decisions, communicating issues or presenting ideas to the C-suite. “Being willing to go the extra mile, in whatever manner necessary, makes someone stand out from their peers,” said Dallas Kleiboeker, retail credit and membership manager at MFA Incorporated (Columbia, MO).
Taking initiative also means not being afraid to provide input to help resolve an issue. “A lot of times, the people who are quieter do not get recognized as much,” said Kara Eppard, corporate credit manager at Truck Enterprises, Inc. (Harrisonburg, VA). “But confidence helps with that and is built by taking initiative. When people under me do that, they stand out to me.”
Eagerness to Learn
An emerging leader is always eager to learn and improve in their current position. They have an innate curiosity and aspire to become better for their company. “I think leaders are inquisitive,” said Yazmin Yepez, CBF, CCRA, CICP, credit supervisor at Mitsubishi Electric Automation, Inc. (Vernon Hills, IL). “They want to learn why they are doing what they are asked to do. If you have someone on your team who is questioning why, then you’ll know that you can rely on that person because they want to understand the logic.”
Part of the eagerness to learn is the ability to learn from mistakes and respond well to feedback. “Most of the time your mistakes are also your biggest learning opportunities,” said Kleiboeker. “So, shying away because you’re scared to fail won’t help you get too far.”
Communication is key in all aspects of the job, especially when you’re trying to establish yourself as a credit leader. “Communication has been vital to my success in my leadership role,” said Christopher Finley, CICP, global credit analyst at Club Car LLC (Evans, GA), who's been in his first leadership position for less than a year. “We have significantly improved our cash collections and have been consistently hitting our monthly cash targets by communicating with everyone in the organization including the sales and customer service departments as they interact directly with customers. A lot of the challenges that we saw were because we didn’t have communication previously, but now we make sure everyone is aware and informed.”
As an emerging leader, your insights hold the power to shape the future of your company. Change in leadership can bring about fear and uncertainty, but honesty builds trust. “It’s difficult to lead when no one is going to follow, so be an honest leader,” one credit analyst said. “The understanding that there will be some fear and how to navigate that is helpful as an emerging leader. Just remember to be transparent when appropriate and mean what you say.”
A large part of leadership is being a team player, which often requires empathy. It means acknowledging, understanding and helping to solve the problems your employees are facing. “I believe that empathy is very important in credit,” Kleiboeker said. “When you’re dealing with other people, it’s important to be able to look at a situation from their point of view. Most of the time, if you can put yourself in their shoes, that’s going to make it much easier to articulate your responses in a way that makes them feel heard.”
Are Leaders Born or Trained?
It is often a combination of nature and nurture to create a strong leader. “I think leadership traits have to be taught in order to make a great leader,” a credit manager said. “Good leaders can have those natural leadership skills and abilities, but a great leader is going to learn from that with their own failures, successes and mentors along the way.”
However, leadership may come easier to those who are born with a natural ability. “I think you’re born with leadership traits,” Yepez said. “I think you can perfect them as you go and learn from others, but you must have that natural character and drive to have people follow you, do the right thing and be the one leading the team.”
If you spot an emerging leader on your credit team, invest in their training. “Ask your company to invest in leadership training programs to help build confidence,” said Brittany Yvon, CBA, CICP, credit manager at OMG, Inc. (Agawam, MA). “In my experience, these programs have provided the opportunity to help me develop my skillset and train on the potential scenarios as a leader, how I would face them and what would happen in these scenarios.”
Make sure to foster their leadership qualities so they can continue on their leadership journey, Finley said. “My leader took the risk of having me, someone who is new, to a managerial role,” he explained. “For those emerging leaders, nurture those traits and behaviors that will benefit your organization. Don’t be afraid to extend or reward those people who are excelling in their roles because they will either find it here at your organization or move elsewhere.”
Do you know an emerging credit leader on your team? Are you an emerging credit leader yourself? Join NACM’s NEW Emerging Credit Leaders Thought Discussion group to unlock your leadership potential and form meaningful connections. Secure your spot among the next generation of remarkable leaders today!
Economic Uncertainties Continue to Impact the Construction Industry
Kendall Payton, editorial associate
Today’s economic uncertainties are weighing heavily on the construction industry. For example, high inflation rates have caused higher construction costs. Supply chain and labor availability issues cause project delays, ultimately leading to a stunt in the growth of the construction industry across the nation. And despite the labor market’s stabilization, uncertainty around commodity prices and labor remains.
A recent poll conducted live during a Construction Executives webinar from ASA Construction Corporation revealed skilled worker shortages as the top challenge for construction companies today (63%), followed by financing project work (15%) and supply chain material issues (12%).
Construction employment, seasonally adjusted, totaled 7,971,000 in July—a gain of 19,000 from June and 198,000 (2.5%) year-over-year, according to data from the Bureau of Labor Statistics. Finding qualified employees is the most common challenge for construction firms. “Industry unemployment rates have been at near-record lows and job openings at near-record highs,” said Ken Simonson, chief economist at Associated General Contractors of America. “Even though pay increases for hourly workers in construction have exceeded increases in other sectors, employment shortages are still a challenge.”
Rising costs and availability of credit are especially strenuous for owners and contractors. With multi-billion dollar megaprojects in the works, states such as Arizona, Ohio, New York and Texas have become the main centers for manufacturing in the U.S. Because of this centralization, the huge number of projects outsizes the demand for subcontractors and workers.
The ability to borrow money is the lifeblood of the construction industry, said Tom Tolbert, director of FP&A and treasury at Kewaunee Scientific Corporation (Statesville, NC). “The current environment of rising interest rates and tighter access to capital puts new construction projects at risk of being delayed or put on hold,” Tolbert said. “Fortunately, we have not seen that up until this point, but it is something we’re keeping our eye on as we look forward into late 2023 and 2024.”
Though most supply chain issues have eased within the last year, delivery times for supplies are still slower than usual. Simonson said specifically air condition materials and other mechanical equipment, including door hardware, have been problematic. “These labor and material shortages and delays mean projects often take longer to complete than anticipated,” he said. “This adds significantly to financing costs and delaying the start of revenue to cover those costs.”
Despite the challenges presented, credit managers should try their best to avoid any surprises. Keeping a strong line of communication with your customer can mitigate risk and help you understand any challenges your customer may be facing. Keep up with the latest trends in the construction industry as the economy is quickly changing.
“Changes in demand for consumer goods, office space, urban versus outlying locations and other economic factors can have major impacts on borrowers' ability to repay loans,” said Simonson. “It is important to stay current regarding supply chain issues that may affect a particular project or contractor.”
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Will AI Help or Hurt the Economy?
Jamilex Gotay, editorial associate
As more businesses adopt artificial intelligence (AI), it is likely to have a far-reaching impact on the broader economy. The question is whether that impact will be positive, negative or mixed. AI's economic ramifications are likely to be multifaceted, potentially driving growth, innovation and efficiency. However, it also brings forth challenges related to workforce adaptation and ethical considerations.
Many of the economic effects of AI are likely to be indirect. For example, “AI has no direct effect on real interest rates,” said NACM Economist Amy Crews Cutts, Ph.D., CBE. “But if the rate of employment and hours is less than the number of products that get made, productivity will increase, which can in turn increase Gross Domestic Product (GDP).”
The boost in productivity from AI may boost GDP, which could lead the U.S. economy to a higher real interest rate environment in the coming years, according to a Wells Fargo report. “Real interest rates rose during the tech boom of the 1990s when the associated acceleration in productivity and potential GDP caused the natural rate of interest to rise,” the report reads. “… the possibility of a coming AI transformation has scope to influence economic activity in the coming decade and beyond, boosting capital investment as a first-order effect followed by process improvements and efficiencies that will lift growth in productivity as a second-order effect. Together, these developments present the most realistic prospects for lifting potential GDP growth in coming years.”
AI has the potential to transform the labor market. An OECD survey of some 5,300 workers published in July suggested that AI could benefit job satisfaction, health and wages, but was also seen posing risks around privacy, reinforcing workplace biases and pushing people to overwork. Ultimately, AI doesn’t take away from labor or replace workers, Cutts said. “It rearranges who’s doing what in the workplace, such as kiosks do in restaurants or airports.”
According to a report by the World Economic Forum, automation and a new division of labor between humans and machines will disrupt 85 million jobs globally in medium and large businesses across 15 industries and 26 economies by 2025. “Roles in areas such as data entry, accounting and administrative support are decreasing in demand as automation and digitization in the workplace increase.”
The rise in AI may not drastically replace jobs, but it will impact some sectors more than others. For example, “If AI starts replacing copywriters, it will worsen their personal economy but for the people who aren’t paying them anymore, it’s improving their personal economy,” said Eleanor Hartman, CCE, credit manager at Autodesk, Inc. (Portland, OR). “AI will definitely change the economy, but whether it will help or harm the economy will depend on where you are in relation to AI.”
The hiring process and search for talent can be strategically automated by AI. Technology can now screen and select new hires based on specific criteria. “It’s at the forefront, but we’re really not seeing all that AI can do quite yet,” said Anthony Allen, CBA, credit and collections supervisor at Apex Systems, Inc. (Glen Allen, VA). “With respect to employees and the labor market, it’s going to be interesting to see how this plays out as far as bots selecting candidates based on the different matrices and talent.”
AI has already had an impact both on the hiring and the candidate side, said Alex Chausovsky, vice president of analytics and consulting at Miller Resource Group (Naperville, IL). “Many organizations have deployed AI to help write job descriptions, manage their ATS (applicant tracking systems) and sort through large volumes of applications that come in through their website job postings,” he said. “On the candidate side, applicants are leveraging AI to write better resumes and cover letters, find more effective methods of applying for jobs and keep organized during their job search.”
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