In an article that appeared in Agency Sales magazine within the last year, the author encouraged salespeople to work around and avoid the procurement department to consummate the sale.

I wanted to offer a different perspective on how working with the buyer can avoid delays in purchasing and payment, and even help close the sale faster.

For 20 years, I have presented contracts training to both procurement (purchasing) and sales departments of companies in various industries around the country. As a result, I’ve become familiar with companies’ purchasing and sales processes and policies. I’ve also been privy to both sales’ and purchasing’s “pet peeves” when dealing with the other.

“Back Door” Selling: The Purchaser’s Pet Peeve

When purchasing is not involved with its company’s purchase decision, the purchasing community refers to this as “back door” selling.

For those of you not familiar with this term, it means that the sales representative contacts the stakeholder/end user within the company (often engineering or operations) without going through the purchasing department and sells their product directly to the stakeholder.

After the quote or proposal has been given to the stakeholder and the deal is “done,” the buyer is contacted and requested to generate a purchase order (PO). Sometimes, the stakeholder “signs off” on the deal without going through purchasing.

Why is this a problem?

Major Factor in Customer’s Late Payment

Most companies will not pay an invoice unless a PO has been issued to the vendor. Purchasing is the department that issues those purchase orders.

When the stakeholder makes a “deal” to purchase without involving purchasing, that violates most companies’ policies. The vendor may consider that a deal has been made, but the customer will not.

Why?

No PO has been issued by the customer.

Delay in Customer Payment Means Delay in Commission Payment

The practical impact of not involving purchasing is that payment of your principal’s invoice will be delayed until issuance of a PO. Of course, so will payment of your commission.

To add to that delay, if your principal is not listed in the customer’s ERP system, the principal must be “on-boarded” into that system. In large companies, the on-boarding process can be as long as six months.

Worse yet, sometimes products are delivered before a PO has been issued. I’ve heard stories of products being used by the customer or sitting in their warehouse while the vendor awaits payment. The reason, of course, is that no PO has been issued.

Sell to Two Groups

Eliminating purchasing from the sales process often leads to further payment delays as well as a poor working relationship moving forward.

Salespeople need to recognize they aren’t just selling their product or service to the stakeholder. They will likely have to deal with purchasing before anything gets done and the purchase order is issued, or a contract is signed. In short, a salesperson must win over two groups: Stakeholders and Purchasing.

Yes, I understand that involving purchasing can be annoying. Particularly when you discover that purchasing wants to release an RFP and do price comparisons and market research after you’ve made the deal with the stakeholder.

Nevertheless, in many companies, the purchasing department’s involvement is essential.

Partner With Purchasing

If you’re selling to a small company, you may not have encountered these issues. However, opportunities to sell to large companies or government entities require that a supplier comply with the customers’ well-established purchasing policies.

To close large sales, it’s important to establish a good relationship with purchasing.

My suggestion may sound counter-intuitive: After obtaining the stakeholder’s “buy-in,” encourage a discussion between you, the stakeholder, and purchasing. Address the important sales questions about the customer’s needs and how your product or service meets those needs. Importantly, discuss major issues such as payment terms with the buyer. The stakeholder has no authority to make those decisions.

Certainly, power-hungry or gate-keeping buyers exist, just as some overly pushy or tactless salespeople exist. But often, buyers will be happy to explain their process and the why behind it. They will also appreciate (and take note) that you are one of the few salespeople who understand their role in the process.

Benefits of Working With Purchasing

Working with purchasing can be beneficial for several reasons:

• Purchasing can provide valuable information — Purchasing is often responsible for managing supplier relationships and negotiating contracts. As a result, they can provide valuable information about the company’s needs, budget, and decision-making process. Gaining these insights can help you tailor your sales pitch and pricing strategy. If you combine all that information, you can work with purchasing to ensure that your product or service meets the organization’s purchasing policies and requirements, making it easier for them to decide in your favor.

• Pricing and payment terms — Purchasing is responsible for negotiating pricing and payment terms with vendors. By establishing a relationship with purchasing, you have greater ability to negotiate pricing and terms favorable to both parties, which can help you win more business and create a long-term partnership with the customer.
• Ensure compliance — Purchasing is responsible for ensuring that the purchasing process is compliant with internal policies and external regulations. By working with purchasing, you can ensure that your sales process is compliant with the customer’s policies, which can help build trust and credibility with the customer.
• Build relationships — Building relationships with purchasing can help you build a long-term partnership with the customer. Purchasing is almost always involved in the vendor selection process. By building a relationship with purchasing, you can facilitate the issuance of a PO.

Conclusion

Ultimately, it is important to build relationships with both the stakeholder and purchasing, as they both have important roles to play in the buying decision. By working collaboratively with both groups, you can increase your chances of success in selling your product or service.

MANA welcomes your comments on this article. Write to us at [email protected].