Sometimes, the left hand doesn’t know what the right hand is doing, and sometimes it simply doesn’t care. I’ve worked as a consultant and/or independent contractor to many different businesses, in various industries, ranging from large to small. I’ve noticed a consistent disconnect between departments. This disconnect is typically between sales and accounting and sometimes operations. 

The nature of sales is sell, sell, sell. Do what needs to be done to close the deal. They are often the primary revenue drivers of the company. Sales also has the responsibility of keeping happy customers. This means delivering on promises and/or services in a timely and acceptable manner. However, they don’t typically handle the entire process alone and rely on operations and sometimes accounting. Successful sales people can often make a bundle in commissions. Therefore, they are often extremely bottom line driven. Unfortunately, that drive is sometimes focused on their personal bottom line, rather than the bottom line of the company. 

For example, sales staff may offer discounts that help them close a sale, but leaves the company in a low to negative cash flow situation. They’ll sometimes push a sale order through without proper documentation, such as a signed PO or making sure that the prospect is fully authorized to make the decision. They may be paid a commission on this sale prior to funds being received by the company. 

Accounting sends an invoice to the customer/client. Purchasing on the consumer side attempts to match the invoice to a PO, but there’s no PO. The customer rejects the invoice and no money is remitted. The company has already provided the product or service, but no money will be exchanged since there’s no proof of an authorized order. As you can imagine, this causes a serious problem for accounting and the company at large. 

The nature of accounting, at least corporate accountants, is very definite. Their focus is primarily the bottom line of the business. There are no gray areas. Either debits equal credits or the books don’t balance. They can often be unwavering, exacting and by the book. They’ll search high and low to find what’s causing the imbalance. 

Even if they don’t want to be, compliance with Sarbanes Oxley guidelines require that they be sticklers for paperwork. A paper trail is needed for all financial transactions. There’s no wiggle room. While these attributes can go a long way to keep the company out of financial troubles, it can sometimes cause discord. Accountants often don’t adapt to change well and can be uncompromising in situations where they sometimes should. This may cause other departments to find them unbearable. 

In the eyes of accounting, a sale isn’t complete until the invoice is paid. This is one area where accounting and sales tend to bump heads. If there’s no revenue for a sale, accounting has to claw back commissions to protect the bottom line of the business. The salesperson hates this transaction because it negatively impacts their personal bottom line. Depending on the dollar amount, these situations can get ugly and sometimes escalate to the CEO. In most cases, the CEO will side with accounting, unless there is some sort of extenuating circumstance or justification to side otherwise. 

Operations are typically in the middle of all the crazy. Operations personnel have to be ready for anything and everything. While they’d like to be able to trust the process, they’re never allowed to get comfortable. Murphy, as in Murphy’s Law, is always looking for an opportunity to interrupt progress. An assumption in the most simple matter could mean production dates are missed. Missing production dates can result in upset clients, infuriated sales staff, stressed out accountants, an overwhelmed operations department and a lose/lose situation for all. Operations must remain results driven as getting emotional will only exasperate a problem.

For example, operations receive an order from sales. In some circumstances, operations may need approval from accounting prior to building an order. Accounting may reject the order if discounts are being issued that will result in a loss for the company or the client has past due invoices. Accounting may also require a partial or full upfront payment from the customer/client if the order will cause the company to have too much risk exposure, meaning the company will have to spend X amount and not receive revenue for the expense until for 30 to 90 days after an invoice is submitted. Sales won’t likely want to request upfront payment from the customer/client as it could jeopardize the sale. Operations is often stuck with communicating between accounting and sales. 

Operations also have the added bonus of communicating with outside suppliers and manufacturers if the goods aren’t produced in-house. Some suppliers and manufacturers are dependable and have excellent communication while others are the polar opposite. Constant communication is required to ensure products for manufacturing will be received on time. Sometimes, the required products for production are out of stock at the supplier level. Operations have to find the product elsewhere in time to meet production requirements. Maybe operations find another supplier, but the product isn’t the same quality or price point. This requires testing and possible approvals from accounting, depending on cost differences. 

If a production date is missed, chaos ensues down the entire line. Fines are imposed for rescheduling.  Sales staff tend to point the finger at operations. Accounting may also look at operations as the bottom line is affected. Operations may look back at both sides, and want to say, “Get off my F…ing back!” None of this is conducive to the overall well-being of the company. 

How do we fix this issue? As Steven Covey so eloquently put it, “First seek to understand, then to be understood.” Most of the frustration between sales, operations and accounting could be resolved with the simple desire to understand. Each department should have a common goal, and that is helping the company achieve its goal. Starting from that point, we then look to have a basic, if not in depth understanding of how each department functions as well as the importance of that function. Understanding the nuances of each position, will also help to create further understanding and comradery. “Team work makes the dream work!”

How do we get an understanding of each other’s functions? Deliberate time and effort has to be given. A genuine desire to understand must be present. This can’t just be a matter of going through the motions. If possible, sit down and get a walkthrough of the process. If this can’t be accomplished, get a detailed explanation of the process, and pay careful attention to make sure a good understanding is gained. Just because each department functions as if they’re from another planet, doesn’t mean that we can’t learn to speak a common language. And that should be the language that supports the overall good of the company. 

Written by: 

Eric L. Lipsey | Founder | Owner 

VENTRE Capital, Inc.

www.VentreCapital.com