Dear Tariq,
Those who have rubbed their shoulders with the salespersons, know the adage,
it is easy to sell but difficult to recover. To meet the sales target, the salespersons are tempted to do the credit sale. However, a chunk of their energy goes into recovery.
I am doubtful of the impact of a letter or an email on the recovery, however, well-drafted it may be. Not that there will not be an impact, but it may not be a lasting one and things could come back to square one within months if not in weeks.
To overcome this challenge,
your company may not reward the salespersons only on meeting the sales target. Rather, take into account:
a) % of credit sales against the total sale
b) the number of days of the credit sale and
c) recovery done within the credit period against the total sale
Additionally, you may start calculating the
Account Receivable Turnover Ratio (ARTR) for the sales department and for the individual salespersons as well.
The credit sale is always a trap. Nevertheless, many companies fall into this trap willy-nilly. However, once the brand image of the company is developed, it becomes difficult to change the perceptions of the customers.
Finally, credit sales also depend on the strength of the product/services. If the products are world-class, the company starts dictating the terms rather than getting dictated by the customers.
Thanks,
Dinesh Divekar