We are looking for a sales representative with financial knowledge!

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Don’t be reminded of the job postings from the past that said, “We are looking for a secretary who knows accounting and finance, understands sales, and will handle all company purchases.” I’m sure – I hope – such postings no longer exist.

Today, we will focus on whether the competencies of sales teams should be limited to just sales.

We won’t be solving questions like finding the derivative f′(x)f′(x)f′(x) for f(x)=x3−5×2+6x−2f(x)=x^3−5x^2+6x−2f(x)=x3−5×2+6x−2. Instead, we’ll focus on simpler but equally important topics.

Every company should feel responsible for the careers of the people they work with. This sense of responsibility shows respect for their employees and ensures that existing employees are considered for new opportunities within the company, creating a unique work environment.

But are they ready for new opportunities? They should be…

In the past, due to the small population, lack of skilled human resources, and the limited reach of technology, the motto “I can do any job” evolved into “I only do one job.” Today, it has further evolved into “I do one job well in all its aspects.” The notion of “I only do sales” belongs to the previous era. Today, the requirements for specializing in sales or managing a sales team have changed. Knowing a bit of psychology, being able to create a mid-level budget, understanding the details of a proposal to a customer, and having enough sociological knowledge to empathize have become necessary not only to be a good sales manager but also to specialize in any profession.

Considering it from a financial perspective: Today, we will evaluate the topic solely from the perspective of financial knowledge.

The financial knowledge we refer to here is not about preparing cash flow statements or calculating EBITDA. The required knowledge is what they need to perform their jobs effectively and to have a successful career.

Let’s start with the easy part.

One of the most crucial attributes a good sales manager should have is the ability to develop and manage pricing strategies.

During the initial interaction with a customer, analyzing their needs and deciding on the qualities of the goods or services to be sold is essential. At this stage, a sales representative who knows their customer well will create the right pricing with the correct discount and draft the contract. Numerous parameters will come into play while drafting a contract, such as payment terms, discount rates, the customer’s budget, and suggestions on how to meet this budget. This indicates that selling is not limited to just quoting a product price; many challenges will emerge during the contract closure.

If you are selling apples, the product is specific. The production amount is limited by the trees you have. Risks are also standard, such as pests or weather events. Increasing production to reduce costs is not feasible in the short term. Therefore, making significant changes in parameters like discount or payment terms as a sales manager might not be possible. In fact, standard products limit the scope and development of sales managers.

However, as the products or services become more complex, the playing field for salespeople to demonstrate their skills expands. If the sale involves a service or production-related order, whether your production line can handle the additional order, the impact of increasing production on unit costs, and the benefits of the extra sales amount are no longer just the concern of the finance managers. Sales knowledge might bring the customer, but financial knowledge closes the deal. Relying solely on sales knowledge can make you realize and understand what you’ve lost and why it takes time. At this point, how you play the game becomes crucial. To develop tactics for the customer, sales knowledge alone is insufficient.

Team synergy:

For closing large sales, the approval of other teams is often necessary. From my experience, finance teams generally prefer risk-free areas and love discussing risks. To close a sale, sales teams need to demonstrate leadership and persuade the finance teams to accept and manage potential risks. Sales teams understand that bringing in large contracts without risks is challenging. It may be necessary to convince the finance team of the benefits to the company of operating without profit for the first few years, even if it means convincing them with enough mathematical and financial knowledge. In the past, I approved contracts where the feasibility study showed no profit for the first four years but high profit margins in the following five and four-year periods. Despite receiving criticism from the global headquarters, if you can mitigate risks within the contract and have a sound financing structure, you can always aim to strengthen your volume side in the future.

In the absence of financial knowledge, the focus shifts away from sales, leading to meetings analyzing lost market shares and discussing the results of closed contracts, which indicate falling into a dangerous pit.

Financial knowledge is no longer a luxury:

As mentioned earlier, the days when sales could close with just sales knowledge are long gone. Today, in a system with more customers and competitors, making the right sale also requires knowledge of finance and financial statistics. This knowledge is not a luxury but a necessity.

Now, let’s discuss the “cherry on top.”

International reports and studies show that the CEO (Chief Executive Officer) position has often been held by individuals who previously held the COO (Chief Operating Officer) and CFO (Chief Financial Officer) roles. Although not a rule, these roles, which are closely involved with almost all company processes, have an advantage over others. However, it is also evident that in the near future, sales managers and directors with financial knowledge will be strong candidates for the CEO position.

So far, we have discussed sales teams needing financial knowledge. To be fair, should finance teams know sales? The answer is clear and has been given within this article. But let’s save the more detailed answer for our next blog post.