As the key strategic partner, the CFO of a company plays an important role from a sales perspective right from product pricing to cost of sales. Here are the five things a CFO must know about the sales function.
Strategic planning is no longer just an annual activity for next year’s capital-budget for companies. With the increasing complexity of businesses these days, company leadership across the globe have realised the importance of continually evolving plans. A 360° company strategy is one that takes into account the developments and challenges departments face that bear a direct impact on the direction of a company. And to generate this, the C-suite must have access to insights into the functioning of various parameters including the sales function.
To be a truly successful organisation, the CFO and the C-Suite should be heavily invested in the smooth functioning of departments across the company. This is especially true in the case of the sales team. As an active partner in the development of the company strategy, CFO’s play a significant role from a sales perspective. The Chief Financial Officer helps design and manage the cost of sales, product pricing, channel planning, partnerships, forecasting and much more.
A CFO must understand these aspects of the sales function that potentially affect the company’s valuation:
The finance leadership must have an understanding of how compensation plans and key sales management processes affect the call patterns and customer priorities. The Finance function has control over product pricing, terms and contract negotiation.
For a company to be able to earn more from current investments, CFO’s need to gain insights into what drives higher sales productivity and what helps close the right deals with the right customers.
Understand The Customer
Though this is something that is often neglected, the C-suite should be in touch with what happens on the field. An understanding of evolving customer realities is necessary to reduce assets assigned to underperforming activities.
The Selling Cycle
The selling cycle is typically the single biggest source cash for companies; both of cash out and cash in. Accounts payable accumulate during selling and accounts receivable are largely determined by what’s sold at a particular price and how soon.
The Overall Sales Pipeline
It is important for the CFO to be informed of timeline slippages within the sales pipeline on a weekly basis in the form of reports. This visibility will help them make better decisions and forecast more accurately when it comes to cash flow, receivables, payment terms, timelines, investments and other vital financial processes.
A CFO must also be proactive with opportunity flow through the pipeline, cost of outstation sales in terms of travel productivity, training of the sales force on business principles. They also need to play an active role in resource allocation, their usage in the sales process and the hiring and onboarding of new sales talent.
The working relationship between the sales department and strategic decision-making team, a.k.a. The C-suite is a crucial one. A disconnect between these two teams can lead to a dissonance in execution and strategy. As a strategic partner, the CFO can effect change and bring about significant improvement in the sales and overall company operations.