It is easier said then done by wanting to institute financial discipline into the organization.

To implement accurate and timely financial planning, it is quite difficult for the following reasons:

• We need to get data from other operating management of different business unit. We are now crossing outside our own finance border into the operation and the marketing side of the business;

• We need to convince all your fellow operating managers to put up these figures uniformly and consistently by explaining all the goods reasons for doing so;

• At times, if the company is newly set up, we might need to set up the procedure and the correct model to forecast for example setting up the correct sales filtration process/sales cycle to collect sales figures and how to forecast expenditure ahead of the actual occurrence and many others

In most matured multinational organization, the sales filtration process/sales cycle model would have been quite systematic and in order.
 

For the benefit of the readers, I include in this article, an approach to the sales filtration process in a newly set up Information Technology organization.
 

Assuming that in this IT organization, we have a few sales business units.
 

Before sales can come in, we need to gauge the success or probability of closing this potential sale opportunity by:
 

(1) first identifying the customers
(2) the products likely to be sold
(3) the probability of winning it
 

The following Sales Opportunity Schedule needs to be set up:
Sales Business Unit: No 1
(1) Salesman A
(2) Potential customer name
(3) Products
(4) Total Contract Value
(5) Win Probability
(6) Estimated Sales (5) x (4)
(7) Reason Win/Lost
(8) Estimated Close Date
 

Looks simple, what we need now to do is to either put up an excel spreadsheet or automate this process by cumulating all the salesman results in all the various business unit and we can then get the estimated sales for the various months in the year.
 

However, please watch out for the following salient points:
 

(1) we need to consistently and periodically “interview” or interact with the heads of the business unit to verify the truthfulness of this sales opportunity schedule. This particular role is crucial failing which sales forecasted would never be accurate;
 

(2) we need to ascertain what is the “Win Probability which can be as follows:

• 10%-Opportunity identified but not yet qualified;
• 20%-Opportunity qualified; not ready to commit resources;
• 40%-Resources committed to qualified project;
• 60%-Order expected to be closed within 90 days;
• 80%-Order not closed; customer signature date known
• 90%-Order won: awaiting official order documentation
• 100%-Order signed and submitted to Finance

It is very important that these percentages be used appropriately so that we are able to determine where an opportunity is with respect to the sales cycle.
(3) Reason Win/Lost should not be belittled. “From failure, come success” hence all data whether for win/lost should be recorded. It is important to select the best possible reasons. This information will be used to analyse the effectiveness of sales programs and to potentially drive program revisions.

Valid reasons should include:

• price;
• performance;
• price & performance;
• quality;
• education;
• make/image;
• terms;
• don’t know;
• features/functions;
• availability;
• capacity;
• support;
• delivery;
• relations

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