1. Copyright © 2003 by The McGraw-Hill Companies, Inc. All rights reserved. Chapter 10 Sales Force Expenses and Transportation Our men give their talent to the company and their genius to their expense accounts. Life

2. Copyright © 2003 by The McGraw-Hill Companies, Inc. All rights reserved. Factors Influencing Sales Force Expenses Communication Expenses Gifts Lodging Meals Office supplies Transportation Entertainment

3. Copyright © 2003 by The McGraw-Hill Companies, Inc. All rights reserved. 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

4. Copyright © 2003 by The McGraw-Hill Companies, Inc. All rights reserved. Salesperson Expense Options Method Reimbursement Advantages Disadvantages Salespeople pay None Simple, no costsReps may not spend Unlimited All legitimate Flexible and fair,Encourages excessive their own expenses enough on customers payment plan business expenses allows for territory spending differences LimitedSpecific amounts Limited and predictable Inflexible payment plan allowed expenses Possibility for $80/day - lodging switching expenses $45/day - food between categories $0.26/mile - transportation Sales may resent Flat allowance $700 per week Limited and predictable Inflexible expenses Sales may resent e.g.

5. 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 Operating Control Mileage Investment Administrative problems Personal preference

6. Copyright © 2003 by The McGraw-Hill Companies, Inc. All rights reserved. Automobile Allowance Plans MethodExample 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$200/month + $.16/mile mileage rate

7. 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