It Turns Out You Can Sell Too Much

For most businesses, you can never close too many sales. Selling more means more revenue. Selling more means faster growth. How bad could that be? About $600 million worth of bad, for Barclays.

The problem is a regulatory one. Barclays had obtained SEC approval to sell structured financial products up to a maximum of around $21 billion. But somehow it overshot this maximum by about $15 billion. It sold $15 billion too many structured products and notes, and now it needs to unwind those deals at an estimated loss to the bank of 450 million pounds (591 million U.S. dollars).

Incidents like this remind us of the importance of being able to track all sorts of data representing usage against limits. We typically associate this type of tracking with business spending. Companies often track authorized or budgeted spend limits in a procurement or spend management system. Some maximum will be captured at the time of the original contractual commitment, and this amount will be loaded into a spend tracking function that monitors actual spending against this limit. These systems typically alert people as the limit gets closer, and can disable further spending when the limit is reached.

This incident is a reminder to sales teams that limit tracking is not just a procurement need. If your sales are limited by regulatory approvals, you should have automated tracking. If you have a limited supply of physical product, you should have automated sales tracking. If you have contractual restraints (e.g. you can't sell in certain countries), you will need a way enforce these restraints as part of sales operations. In each case, you'll need good quality data to make these tools work.

Bottom line: if there are limits to what you can sell, you should know them, track them, and enforce them. The cost of not doing so may be substantially higher than you expect.