Transcript Chapter 10 PPT

Chapter
10
Sales Force
Expenses and
Transportation
Our men give their talent to
the company and their genius
to their expense accounts.
Life
Copyright © 2003 by The McGraw-Hill Companies, Inc. All rights reserved.
Factors Influencing Sales Force Expenses
Transportation
Meals
Office
supplies
Entertainment
Expenses
Communication
Copyright © 2003 by The McGraw-Hill Companies, Inc. All rights reserved.
Gifts
Lodging
Characteristics of a Sound Expense Plan
• No net gain or loss
• Equitable treatment
• No curtailment of beneficial
activities
• Simple and economical
• Avoidance of disputes
• Company control of expenses and
elimination of padding
Copyright © 2003 by The McGraw-Hill Companies, Inc. All rights reserved.
Salesperson Expense Options
Method
Reimbursement
Advantages
Disadvantages
Salespeople pay
their own expenses
None
Simple, no costs
Reps may not spend
enough on customers
Unlimited
payment plan
All legitimate
business expenses
Flexible and fair,
allows for territory
differences
Encourages excessive
spending
Limited
payment plan
Specific amounts
Limited and predictable
allowed
expenses
e.g.
$80/day - lodging
$45/day - food
$0.26/mile - transportation
Inflexible
Possibility for
switching expenses
between categories
Sales may resent
Flat allowance
$700 per week
Limited and predictable
expenses
Inflexible
Sales may resent
Copyright © 2003 by The McGraw-Hill Companies, Inc. All rights reserved.
Factors Influencing Automobile Ownership Decision:
Company Owned, Company Leased, or Salesperson Owned
Maintenance
Special design
Size of
sales force
Control
Mileage
Operating
Personal
preference
Investment
Administrative
problems
Copyright © 2003 by The McGraw-Hill Companies, Inc. All rights reserved.
Automobile Allowance Plans
Method
Example
Flat amount
$400 /month
Fixed mileage rate
$.28/mile
Graduate mileage rate
$.25/mile, first 15,000 miles
$.15/mile, second 15,000 miles
Combination flat and
mileage rate
$200/month + $.16/mile
Copyright © 2003 by The McGraw-Hill Companies, Inc. All rights reserved.
Other Methods of Expense Control
• Training and enforcement
• Credit cards
• Expense bank account
• Change in nature of entertainment
• Telemarketing
• Careful travel planning
Copyright © 2003 by The McGraw-Hill Companies, Inc. All rights reserved.