Q please share the exit policy for FMCG industry in sales for seniors and juniors when outstanding dues are held in the market?
From India, Gurgaon
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From India, Gurgaon
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Dear Kavita,
There is always a risk associated with credit sales. Not all customers pay their dues upon the completion of the credit period, requiring significant follow-up. Recovering dues from customers can take a toll on the time of salespersons or recovery executives. However, when credit is extended to a customer, it is done on behalf of the company, not in the salesperson's personal capacity. Therefore, if a salesperson leaves the company, the newcomer must handle the recovery of dues.
If the recovery of dues is linked to the employee's exit, the salesperson might need to extend their stay with the company. In such cases, will the company pay the salary for the extended period? Additionally, during this extended stay, if more amounts become due, the salesperson will have to pursue new targets for recovery, which could continue indefinitely.
Due to the fear of delays in collecting dues, salespersons might stop extending credit to customers. This could deprive the company of revenue that could have been earned during the extended credit period.
Nevertheless, those who make credit sales must also recover the dues. To make salespersons accountable, you may start calculating the Account Receivable Turnover Ratio (ARTR). Calculate this ratio for the last five years. Then, conduct a brainstorming session with the salespersons on how to increase the ARTR. Record the minutes of whatever collective decision is made and have each salesperson sign it. Their involvement in finding a solution will increase their accountability.
Thanks,
Dinesh Divekar
From India, Bangalore
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8097There is always a risk associated with credit sales. Not all customers pay their dues upon the completion of the credit period, requiring significant follow-up. Recovering dues from customers can take a toll on the time of salespersons or recovery executives. However, when credit is extended to a customer, it is done on behalf of the company, not in the salesperson's personal capacity. Therefore, if a salesperson leaves the company, the newcomer must handle the recovery of dues.
If the recovery of dues is linked to the employee's exit, the salesperson might need to extend their stay with the company. In such cases, will the company pay the salary for the extended period? Additionally, during this extended stay, if more amounts become due, the salesperson will have to pursue new targets for recovery, which could continue indefinitely.
Due to the fear of delays in collecting dues, salespersons might stop extending credit to customers. This could deprive the company of revenue that could have been earned during the extended credit period.
Nevertheless, those who make credit sales must also recover the dues. To make salespersons accountable, you may start calculating the Account Receivable Turnover Ratio (ARTR). Calculate this ratio for the last five years. Then, conduct a brainstorming session with the salespersons on how to increase the ARTR. Record the minutes of whatever collective decision is made and have each salesperson sign it. Their involvement in finding a solution will increase their accountability.
Thanks,
Dinesh Divekar
From India, Bangalore
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Exit Policy.xls
EXIT INTERVIEW POLICY.doc