6. Base Commissions on Collections
Someone (probably a retired CFO) once said, “A sale is not a sale until the invoice is collected.” If this is true, why pay a full sales commission when the product ships? Consider paying partial commission at the time of shipment with the balance payable at the time of collection. Or adjust the commissions monthly based on receivables that age out past a predetermined time frame (i.e., 60 days). This will encourage your sales staff to provide better customer service and follow through after the sale. This, in turn, will speed up your collections and cause cus-tomers to be happier with your performance. Read the rest of this entry »