This keeps happening and i dont know how to fix it. sales closes a deal, sends over the contract, customer expects net 60 or sometimes net 90 because thats what the rep promised. then it lands on my desk and im supposed to figure out how we can afford to wait 3 months for payment.
we have a credit approval process but sales just skips it half the time. they say if they slow down to ask finance the deal will go cold or the competitor will swoop in. i get the pressure but we cant keep operating like this.
last month we had to turn down a 45k order because the terms were net 120 and we literally could not float it. sales was pissed at me like it was my fault. but nobody checked our cash position before making promises.
the rep who closed it got his commission. i get to explain to the owner why we passed on revenue. feels great.
i've tried pushing for a pre-approval step before reps even go to contract but nobody wants to add friction to the sales process. so what actually works here. is there a way to set guardrails without becoming the department that kills deals
what is the best way to prevent sales from offering long payment terms
byu/Appropriate-Plan5664 inEntrepreneur
Posted by Appropriate-Plan5664
3 Comments
Have a meeting with your sales to clarify that’s not possible for oyu and they shouldn’t offer it.
If they insist it’s required, you need to find a solution.
been in this exact spot. the fix isn’t more process, it’s a comp structure change. you’ll never win with friction alone because sales will always route around it.
what actually worked for us:
1. commission tied to collection, not booking. rep doesn’t get paid until the invoice is actually paid. close a deal at net 90? commission hits 90+ days later. if the customer never pays, no commission. changed rep behavior in a single quarter. suddenly they cared a lot about credit checks.
2. pre-approved terms matrix. finance publishes a one-pager: under $X and net 30 is automatic, no approval needed. net 60 requires a credit check with a 24 hour turnaround. net 90+ always needs CFO or owner signoff. gives reps a fast lane for standard deals so they stop feeling like finance is the slow lane.
3. early-pay discount instead of longer terms. when a customer pushes for net 90, offer “2% off if paid in 10 days, net 30 otherwise” instead. a lot of customers take the discount. the ones who don’t are exactly the ones who genuinely can’t pay on time, so you just flagged a credit risk without having to play bad cop.
4. make the owner the wall, not you. anything past net 30 over a threshold requires the owner or CFO to sign off. you top being “the department that kills deals” and become “the person trying to get finance approval for this deal for you”. totally different framing to sales.
5. DSO as a sales kpi. not just quota. if a rep’s average DSO creeps up, it affects their ranking or their bonus. takes leadership buy-in but if your owner is losing sleep over cash flow they’ll want this.
also that $45k net 120 thing wasn’t your fault. it was an org design failure. the rep got rewarded for behavior that actively hurt the business. until the comp plan stops rewarding that, no process will fix it. when you bring this to the owner, frame it as a cash flow risk, not as “sales is being difficult”. lands completely different.
The rep got his commission and you got blamed for protecting cash flow which tells you everything about how the incentive structure is broken.