Behind the numbers: Accounting for the sales team

Accountants are often tasked with figuring out how companies can cut costs and operate more efficiently. It takes more than spreadsheet skills to tackle these projects.

>> Skip ahead: Solve a real business problem with basic accounting.

As an accountant, you’re required to bring business savvy, research and problem solving skills, and the ability to work with lots of different people to the job.

Here’s an example:

The situation
Your client is a big regional printing company. It employs lots of sales reps who spend lots of time on the road, driving from one sales appointment or customer meeting to the next. These employees have been using their own cars for this and submitting expense reports based on the mileage they drive. An individual sales rep often has mileage reimbursements totaling several hundred dollars per month.

The challenge
The CEO of the printing company, Arial Franklin, is wondering if there’s a way to reduce these costs. She’s asked you to map out a proposal to save money.

The analysis
You’d probably consider two different avenues:

1. Could the sales reps simply drive fewer miles?
2. Would it be cheaper if the company bought cars for its sales reps to use?

To determine the best solution, you’d need to crunch the numbers.

You could start by meeting with sales reps to understand why they drive as much as they do. Is all their driving really necessary, or are they going on extra trips or driving extra miles to pad their monthly mileage checks?

To find out, you’d need to interview some individual sales reps to better understand why they drive as much as they do.

You might also look at how much those individuals sell each month. Do the reps who sell the most also drive the most miles? Or do reps with higher sales drive less because they spend more time qualifying potential clients over the phone before they spend time (and money) on an in-person meeting?

Once you’ve got a clear picture on how much the sales reps need to drive, you could look at the possibility of providing them with company cars.

Company cars change the picture completely. This option eliminates the need to reimburse reps for mileage, but you do have to account for fuel costs, maintenance and repairs, insurance and, of course, the cost of buying or leasing the cars.

You’d also need to consider what kind of cars the sales reps need? Vans have poor gas mileage but provide space for orders and samples, but would fuel-efficient hybrids be a better choice?

Buying a fleet of company cars would be a new expense for the company, and doing so might also have tax implications. The amount the company pays for local property taxes might go up, while income taxes might go down as depreciation expenses take effect.

Managing a fleet of company cars and company credit cards – which you’d need to provide to sales reps to pay for gas purchases – could require hiring a new manager to oversee these new assets. How much would that cost?

Once you complete your investigation, you’d present your recommendations to the client.

So what’ll it be – less driving for sales reps or purchasing new company cars? Or is staying the course the best thing for this printing company?

Want to know how these sales reps will be getting around? You’ll need to become an accountant for that.

It’s your turn!
Think you can tackle a business challenge on your own? Test yourself and see how you might handle a real accounting problem.

"PRODUCT UPDATE OR NEW PRODUCT LAUNCH? SOLVE AN ACCOUNTING PROBLEM"

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