The ultimate goal for every business is to maximize profits while minimizing the costs. Business operations, such as sales and marketing require an investment, in order to generate revenue and profits. However, businesses strive towards reducing their expenses and increasing their return on investment. However, that’s a bit difficult to achieve without a good relationship between sales and finance departments.
Sales department works closely with marketing teams, in order to develop strategies that will boost the sales of products and services, thus generating profits and revenue. On the other hand, the finance department develops operational budgets. Their primary goal is to increase profits and limit the costs. They also focus on the company’s accounts receivable and uncollected debts.
The sales department doesn’t always monitor how much funds it spends to generate new customers or boost sales, which creates a lot of friction between the two departments. If you want to boost profits for your company, while lowering the costs, you have to ensure sales and finances work closely together. That being said, here are a few ways to improve the relationship between sales and finance departments.
The issues between sales and finances
As mentioned before, sales teams focus on developing strategies that will attract new customers and encourage those customers to make purchases. For that, they need funds provided and approved by the finances department. In other words, sales teams spend money to make money, while finance teams try to reduce costs and boost profits.
The issue in this situation is that sales may not get the funds needed to create a new strategy because finance teams believe sales spends too many funds to generate new income. It’s an endless loop of approval and disapproval that may hinder your company if you don’t step in to straighten the situation. Sometimes outside interference is necessary to make these two departments play along and improve the company’s overall performance.
One of the main problems in a relationship between the departments is about how money is and should be spent. As an organizational leader, it’s up to you to encourage these two teams to collaborate and understand each other. When teamwork is involved, both departments have an opportunity to help each other out. It’s easy to reach a compromise when you remind both sides that they share a common goal.
Fostering good collaboration through effective lines of communication is a great way to get the teams to work together and share ideas on how to best approach a certain problem. Many companies keep different departments isolated from others. That’s the main reason issues rise up and friction becomes possible. Therefore, instead of isolating them, encourage them to work together to reach the goal.
Improve the flow of information
The aforementioned isolation of departments also keeps department information siloed. That means that the information each department possesses isn’t shared company-wide, but only provided to managers and shareholders when necessary. It also means that other departments are kept in the dark about their colleagues work. Breaking this siloing habit is essential in improving the relationship between sales and finance. Information must be made available to all, in order to gain a better understanding of the issues at hand.
Establishing an effective document workflow is crucial for information flow between the departments. That way, the teams can easily share and access vital data, in order to collaborate and develop the best strategies that will satisfy both sides. For instance, the finance department can access sales data to understand why they are aiming for a certain strategy, while sales have access to financial data to understand why the budget cannot be exceeded. Mutual understanding is the foundation for any good relationship between the departments.
Establish good communication
No relationship or collaboration can be established without good communication. A seamless line of communication is essential in securing good operation flow. Employees must be able to communicate with each other to solve issues and discuss solutions in a timely and efficient way. Otherwise, the risk of misunderstandings and friction grows significantly.
You can leverage modern technology, such as instant messaging apps, project management software or other means to improve communications between the departments and ensure a seamless sharing of information and data. It’s also very beneficial for both departments to develop budget planning and annual forecasts together, in order to maximize the efficiency of both teams and establish excellent means of communications, as well as team work.
Improving the relationship
Each department operates in its own unique way and it’s different for every company. Improving the relationship between your sales and finance teams can easily come down to bringing those teams closer together. You can test out a pilot program where you’ll create unique teams that consist of both sales and finance members. That way, you can ensure that the teams can work closely together and share ideas that will produce the most viable solutions.
Even though sales and finances teams have significantly different roles within your company, they do in fact share common interests and goals. If the two departments can find common ground to work on, they can easily eliminate any friction and devise a strategy that will positively impact the company’s bottom line.
Every company’s goal is to boost profits and reach success. However, company departments often function independently from other departments, which can create unnecessary problems. Sales and finance departments are a prime example of having issues even when working towards the same goal. Your company’s success relies on your ability to ensure that two departments can work together to drive business goals.