Selling Financial Results to Executives

Bill Stinnett

Because of the broad variety of measures and metrics that businesses use to track and report their performance, leaning the language of business is an ongoing process. If you sell across multiple industries – such as manufacturing, financial services, retail, and healthcare – it will take a while to learn all the terms and jargon used by executives within each industry. Fortunately, there is one universal standard for measuring business performance that applies to every for-profit company: Executives all over the world measure their business in terms of financial results.While many businesses use a unique set of KPIs (key performance indicators) or success metrics to measure and manage the various aspects of their business, there is one set of business performance scorecards that are pretty much universal. These are called financial statements. The three major financial statements companies use are the Income Statement, the Balance Sheet, and the Statement of Cash Flows. Here we will explore the first two.Governments and other regulatory bodies all over the world require publicly-traded companies to produce and disclose these financial statements for the benefit of current or prospective shareholders. They are also used internally by executives to monitor their progress and support informed decisions about how to make their businesses more competitive, more profitable, and more attractive to potential investors.Executives know that any purchase or investment they choose to make will ultimately have an impact on one or more of their financial statements. A small investment will usually have only a small impact. But if what you sell costs hundreds of thousands of dollars – and the potential payback over the useful life of your product or service is in the millions – the impact could be enormous. It only makes sense that if executives think about how the purchase of your products or services will effect there financial results . . . you should too!

Impacting the Income Statement

The Income Statement, which is often referred to as a Profit & Loss Statement (P&L), records all of the income generated and all of the costs and expenses incurred by a company during a given fiscal period (month, quarter, or year). Whatever is left over after subtracting all expenses from all income is considered net profit or the “bottom line.” This financial report measures business performance and the effectiveness of the executives who manage it.Although the basic structure of an income statement is fairly standard, the way companies choose to categorize their income and expenses varies widely from industry to industry. A large financial services firm might categorize income into interest from loans, insurance premiums, and commissions, while a pharmaceuticals firm lumps all income together and calls it revenue. A restaurant chain could categorize operational expenses by food costs, payroll, and rents, whereas a high-tech manufacturer would break down expenses by research and development, sales and marketing, and administrative costs.To become more familiar with this, print or download the most recent income statement for a few of your prospective clients to get a better feel for how the companies that you want to sell to record revenue and expenses. The objective is to learn exactly how your products and services can be used to have a positive impact on one or more of the line items on your customer’s income statement. How can your customer use your products to increase their income? How do your services help your clients reduce costs or expenses? What impact can your solutions have on your customer’s bottom line? Answering questions like these is how you learn to sell the value of financial results.

Impacting the Balance Sheet

The Balance Sheet, which is sometimes called a Statement of Financial Position, is used to report everything that a company owns (its assets), minus everything the company owes (its liabilities). The balance left over after they subtract liabilities from assets is recorded as shareholder’s equity. Here again, assets and liabilities are categorized in a way that is meaningful for the type of company issuing the report.Download or print the balance sheet for a few of the companies represented in your active sales portfolio. Become familiar with the way the companies you sell to categorize their assets and their liabilities.If your prospective client carries inventories, how could they use your solutions to reduce their inventories and free-up cash for reinvestment? If your customer sells on credit and therefore has accounts receivable, can you and your company do anything to help them shorten their receivables cycle or reduce bad debt and improve their cash flow?The balance sheet is a little more complicated than the income statement in that it is not always obvious which line items your customer wants more of, and which ones they want less of. An increase in accounts receivable could be good. It increases current assets and could suggest a marked increase in sales. But if accounts receivable are increased because customers aren’t paying their bills on time, it could be an early indicator of cash flow problems.You don’t have to become a financial expert in order to sell financial results, but you will have to able to articulate the benefits of using your product or service in terms of dollars and cents. If you don’t yet understand how to do this, find someone in your company who does and ask them to teach you how. Learn which lines on these two financial statements that you and your solutions can have an impact on. Then, learn how to share examples of how you and your company have helped other companies to improve their financial results.

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