Finance 101 for Sales Force
Tim Northup (Corporate Controller, Stiles Machinery)
| Feb 3, 2010
I am in the process of developing a short summary handout to our sales force that encompasses key ratios, financial concepts and other relative financial information aimed at educating them to identify opportunities within potential customers for sales opportunities. Our business surrounds selling capital equipment and I am looking for any insight or examples if someone has already prepared.
Thanks,
Tim
Comments
Company: "in-between"
Some of the information you can share with the sales force is the following:
- Net Invoicing
- Gross Margin
- CTS ($ and %)
- Inv Obsolescense
- Claim & Warranty Costs
- Rebates
- Cash Discounts
- Operating Capital
- FTE (NI/FTE or EBIT/FTE to measure efficiency)
- ROS
- OCT
- ROC
- OCF
- Investments
- DBO and
- ITR
All of these ratios or indicators can be provided to them in relation to the whole organization or to their own area (region) of operation.
Company:
What would be great to see is your definition/explanation of each of these. If you can boil them all down to a couple of lines of definition each then you would have a quick "go-to" guide that would not have to be delivered in person every time and would serve as a handy reference for them (and for all of the Proformative viewers).
Company: in-transition
Tim - I did the same exact thing you are doing a few years ago and what made it successful was using my company's real data in all the examples. We made it a practice to share our company's operating results (BS, P&L, cash flow) with all employees at least quarterly so when they saw how some of these familiar numbers were generated and their source the lightbulb lit very quickly.
I also would recommend that you create your presentation then have a "test drive" with a potential participant. This is the best way to fine tune your information and insure that your message is being understood.
JEFF
Company: Proformative, Inc.
Great addition, Jeff. One more thing I would add is that while you are at it, you should do a presentation on revenue recognition and proper negotiating and contract structuring. I have had great results with that and it saves you untold headaches down the road.
Company: Seeking new opportunities
I also did some profit/loss statement training with sales and, on relevant topics such as obsolete on-hand customer inventory, walked them through numbers that end up in the P&L, providing a visual depiction of processes surrounding the numbers and the salesperson's role within those processes. This made some 'light bulbs' go on with the reps and aided their understanding of how their individual activities impact those in other functional areas and on the numbers that end up getting reported.
Company: In-Between
Does all this work really impact the Sales Force? Yes for the day they were trained. If it can help them close a deal, then they may learn enough to be dangerous.
Years ago, a salesman called on me and presented a package that would warm the heart of any Controller, CFO out there. I asked him if he had an Accounting background. To my surprise he said he didn't.
So how did he get the information to me in way I wanted to see it? He said that Corporate had an Accounting Support Person, take the raw information and put it in the format he presented.
He said that they had trained all the field sales personnel and almost to a man, they all admitted that they had it down. But, they didn't and this played out in their sales numbers.
Fortunately the Controller had the insight to put on a Sales Support person for proposal presentation, convinced the VP of Sales (which is really hard to do) that it would be better for corporate to do the proposal and accounting do the financials for it.
Field Sales was retrained with how to ask the correct questions using a corporate joint questionnaire developed by Sales and Accounting.
Let the sales professionals do well what they are good at and give the support responsibility to the Accounting and Sales Departments at Corporate. Give your sales professionals the ammunition (which is the ability to ask the right questions and a basic understanding of the Accounting they are presenting) and the company will reap the rewards.
The problem today is that for the most part Multi-tasking has come to mean, that all things can be done by all people in the company. Which is so untrue?
People will do what they do best with the tools we provide, we should not expect a Sales Representative to be an Accountant any more should we expect our Accounting Staff to go out there and do the selling.
Try it, it just might work for your company.
Tim, I might try sitting down with Sales to develop the handout, however, in my personal experience your sales force will in all probability not be successful at developing key ratios, financial concepts and other relative financial information that will help them to identify opportunities within potential customers for sales opportunities. To be quite honest with you, I know several Accountants that have trouble doing what you are potentially asking the Sales Force to do.
Since your business surrounds selling capital equipment I think that having the Sales Force get the basic information to corporate for evaluation and have them prospect might work out better.
Just some thoughts you might like to think about.