Scribd
Upload
62 views

Compensating Sales Personell

The document discusses four main methods that companies use to manage and reimburse sales personnel expenses: 1. Requiring weekly detailed expense reports that are verified and reimbursed. This method is used for salespeople with varying expenses. 2. Only requiring a total expenses report without details. Expenses are automatically reimbursed under this method. 3. Predetermining maximum reimbursable amounts for different expense items based on sales territory costs. 4. Setting a maximum monthly reimbursement limit. Expenses within this limit are reimbursed but anything over is not.

Uploaded by

Aditya Sood
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
62 views

Compensating Sales Personell

The document discusses four main methods that companies use to manage and reimburse sales personnel expenses: 1. Requiring weekly detailed expense reports that are verified and reimbursed. This method is used for salespeople with varying expenses. 2. Only requiring a total expenses report without details. Expenses are automatically reimbursed under this method. 3. Predetermining maximum reimbursable amounts for different expense items based on sales territory costs. 4. Setting a maximum monthly reimbursement limit. Expenses within this limit are reimbursed but anything over is not.

Uploaded by

Aditya Sood
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
You are on page 1/ 13

Managing expenses of sales personel

Under this method, a weekly report of the actual expenses is submitted in detail, itemwise, by the salesmen. After the items are verified by the office, payments are made. Usually, this method is followed for the salesmen not travelling through regular routes and whose expenses vary from week to week.

Under this method, a detail of expenditures is not submitted by the sales force. Only the total travelling expenses are reported to the company. The aggregate amount is automatically reimbursed by the company on the presumption that the salesmen have spent the amount actually claimed.

Under this method, the organisation clearly states beforehand the maximum amounts which can be spent on various items. This method is based on a rough estimation of the cost of boarding, lodging and other facilities in a sales territory. Consequently, the salesmen are granted a predetermined amount irrespective of the actual expenses incurred by them.

Under this method, the firm lays down the maximum amount which will be paid towards meeting the travelling expenses of a salesman every month. All the expenses reported by the salesmen within this limit are paid by the firm. If the salesmen spend in excess of the maximum prescribed limit, such expenditures are not reimbursed.

Thus, there are several methods of compensation as well as travelling expenses reimbursement plan put into use by the organization. It is up to the firm to adopt a specific plan of compensation to suit its requirements. However, the adoption of a specific plan for an organization is never permanent. The changing market condition always dictates the method of compensation for the sales force. Since the compensation plan is a reward for performance, every care and caution is needed while adopting a compensation plan for the organization. A carefully selected compensation plan can instill satisfaction in the sales force, on the one hand and enable the organization to exercise control over the sales force, on the other.

It means the average pay or money earned per year (or month)It is important to decide levels of pay for all sales positions decided based on the following factors Levels of pay for similar positions in the industry

salaries commissions bonuses fringe benefits

100 percent compensation is salary, which is a fixed component No concern for sales performance or salespersons efforts This plan is suitable for sales trainees, missionary salespeople, and when a company wants to introduce a new product or enter a new territory Advantages Salespeople get secured income to cover living expenses Salespeople willing to perform nonselling activities like payment collection, report writing Simple to administer Disadvantages: No financial incentive to salespeople for more efforts and better performance. Hence, superior performance may not be achieved May be a burden for new and loss-making firms

Advantages Salespeople get secured income to cover living expenses Salespeople willing to perform non-selling activities like payment collection, report writing Simple to administer Disadvantages No financial incentive to salespeople for more efforts and better performance. Hence, superior performance may not be achieved May be a burden for new and loss-making firms

It is opposite of straight-salary plan Most popular commission base is sales volume or profitability Commission rate is a percentage of sales or gross profit This plan is generally used by real estate, insurance, and direct-sales (or network marketing) industries

Combines straight salary & straight commission plan Four types of combination plans used by companies 1) Salary plus commission 2) Salary plus bonus 3) Salary plus commission plus bonus 4)Commission plus bonus

Paying bonus is a method that a company adopts to reward special contribution and as an incentive to superior performance. Profit Sharing Many experts in the field of sales management disapprove extending profit sharing to salespeople. For once, companies agree with them. There may be an argument in favour of such a payment if no bonus plan is established for excellence in sales performance.

You might also like