Black Sales Journal

When I discussed this over a year ago, I wanted to stress the importance with knowing your company’s expense policies and to stress avoiding even the most correctable errors.   Proper personal expenses management is that part of your sales activities that merely helps you maintain your credibility and gives managers confidence that you will do the right thing when no one is looking.

Following the program correctly won’t necessarily get you a lot of additional points, but it will secure you in the mind as someone who can be trusted. Be smart and in control of the process.  Knowledge counts here.  Read this and remember, ignorance of the policy is no excuse.  Read on…

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Business entertainment, especially customer dining, is an event that we may take for granted.  It is important for most businesses but always suspect as an expense that can be smartly trimmed in terms of cost, and even frequency.

Business entertainment is a tool that when used wisely can aid in relationship building.  When done correctly, this can result in far greater returns than the business meal or entertainment actually amounts to.

If you desire to claim a business lunch, dinner, or other entertainment, these expenses should be directly related to the business purpose.  The meal or refreshments should be related to the legitimate image business activity, and should be able to stand the test of proof.  Technically, only then would you and your employer be allowed to treat these expenditures as expenses, and not as income when the burden of proof comes along.

Getting Technical

The IRS sets some basic rules that individuals and business follow.  A quick review of the rules that the IRS as set forth will show a couple of rather simple tests:

Directly Related Test

To qualify for reimbursement under the directly-related test for entertainment, including meals, you must be able to prove the following:

• The main purpose of the combined business and entertainment was the active conduct of business.
• You did engage in business with the individual during the entertainment period
• You had more than a general expectation of getting income of some other business benefit at some future time

The Associated Test

If the expenses meet the directly-related test, they may qualify under the associated test.

This test states that entertainment is:

• Associated with the active conduct of your trade or business and,
• Directly before or after a substantial business discussion.

This test includes the Substantial Business Discussion rule that is a requirement of deductibility for your employer.

According to Publication 463 – Travel, Entertainment, Gift, and Car Expenses for 2010 from the Internal Revenue Service, “A business discussion will not be considered substantial unless you can show that you actively engaged in the discussion, meeting, negotiation, or other business transaction to get income or some other specific benefit.”

Keeping Credibility

Accuracy and truthfulness are at the heart of professional credibility for the Black sales professional.  Even greater is the fact that only one instance of inaccuracy or untruth can do away with years of work establishing the credibility.  There is more on credibility in the last Black Sales Journal 3/31, Credibility – A Goal of the Black Sales Professional.

I am going to cite some basics, and these are truly basics for expense report integrity.  Here are some suggestions for keeping your standing and credibility intact regarding expenses:

• Be timely – Submit your expenses no later than 1 week after they are due.
• Be organized – Keep information in a system that allows you to produce your receipts and expense forms as is necessary.
• Insure accuracy - If you do your expenses regularly, you will be under no time pressure.  The accuracy in your reports builds confidence.
• Be honest - Above all, there is truly nothing worthwhile to gain by having your employer pay for a lunch for you and your friend.  It is frankly not worth it!  Only claim what you can prove using receipts.
• Be Knowledgeable – Know intimately your organization’s expense policy.

Some Business Entertainment Specifics

We all have a particular responsibility when it comes to business entertainment, and especially meals.  We should make sure that the meal or event matches the business purpose.  There should be no instance where entertaining at the most expensive restaurant in town happens for a casual business discussion.  Remember, being modest and practical is prudent and a sign of good judgment.

Here are some basics entertainment do’s and don’ts that you may benefit from:

• Take Ownership – Forget the roulette that takes place where you the participants of a meal wait for the bill to come, then “wait” each other out to see who will pick up the check.  Unless the customer has advised that they are picking up the meal, they are probably not going to do it.  “Own” the event and then the rest of these strategies will be possible.
• Wine - If you are the host, only you should order the wine.  You may not realize why if you have never been burned, but the ordering of wine is an extremely high expense at an upscale meal.  If you are unsure you can accept someone’s counsel, yet your job is to order, and replenish the wine.  Feel comfortable stating to the server, or wine steward that you are responsible for the meal, and you will be responsible for the wine.
• Cordials and Liqueurs – If you open up to your guest having these, you could be in for a surprise.  Once you open that gate, you are hard pressed to control the cost of any one of them.  An aged port could definitely be in range, yet some of these items could be the price of a small pony.
• Order First – It may seem like bad manners, yet the host ordering first begins to set the tone.  When you order a fairly simple strip or filet, you are sending a message that the ‘market-priced’ lobster, which then attaches itself to a filet to make surf and turf, is probably above the price point.  Now, they may still do it, but the majority of people get the hint.
• Know When to ‘Cut it Off’ – This is always uncomfortable, yet practical.  After the meal, when the laughter and libation goes on, know when to say to the server that you need the check.  That does cut it off…at least for you.  If someone else wants to pick up the tab, it can start there.  This is responsible, and practical.  If it seems like it is wrong, think about the bill you are going to submit, and how management is going to react to it.
• Tip Correctly – If you tip correctly you will always find those who serve you eager to have your table.  Great service deserves 20% or more.  Good service deserves 15-20%.  I have had some mediocre service at times, yet did believe that 15% was warranted, because of the size of our group.  I cannot ever believe that a tip should be stiffed unless the server was rude, insensitive, and downright awful.  If that were the case, I would be having a conversation with the manager as well.  If you are unwilling to talk to a manager, then stiffing a tip is more retribution than anything else.
• Treat Wait Staff Properly – When you are entertaining, much can be ascertained about your view on your staff and others by the way you treat the wait staff.  They are not perfect, and you are not either.  I have seen customers make a decision to avoid a formal business relationship with a vendor when that vendor launches aggressively into a server for forgetting something small.  That is about rudeness, and even sometimes about power.

Use Good Sense

It is all about using good sense.  When you do it, the most common mistakes are avoided.  Don’t feel peer pressure, or the pressure that makes people do those things that are regrettable.

Build a relationship with your customers, not a game of one-up.  Be modest when they treat as well.  You will build a relationship with your consistency.

Your comments are welcome.  You can reach me at Michael.Parker@BlackSalesJournal.com.

I was once in a meeting in Sanibel, Florida that was done in a spacious area styled meeting facility with two large screens integrated on two separate sides of the room.  Some of the numerous profit center managers were presenting their plan for the upcoming year.  It was not exciting but was informative.  The meeting was prestigious as it was based on the having some of the most influential people in certain strategic business units together to review strategies.

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It became obvious that many individuals in the room, all respectively high in their organizations, began checking their “crackberries” to find out what was happening back home.

The President and Chief Operating Officer then grabbed his personal microphone asked for everyone’s attention and said, “I have made arrangements with my assistant so that anyone who cannot turn off their Blackberry and give full attention to the presenters should go over to the help desk and get a ticket back home.”  He was serious, and I think everyone got the hint.

Creatures of Habit

This one may sound simple, yet in this day and age it is a little more complicated.  Let’s face the fact that this small item is something that you cannot do without in your daily life.  You have integrated your calendar, your contact lists, your pictures and videos, as well as your ‘to do’ list.  You check it every 5 to10 minutes or less to make sure that you are up to date, and…. Well you get the message here.

The problem with something that might be novel that you find indispensible is that others, including customers might find it a grand distraction, and even a turn-off.  A distraction to the extent that it could cost you a sale or even a relationship.

This short post will cover some of the things you might want t think about when it comes to your electronics, and the all-important interface with your customer.

Watch carefully:  When senior executives and the most important managers cut off their devices and put them away, most (but not all) people notice and do the same.  That is why we call them leaders.

The Problem With Gadgets

Gadgets, and particularly electronics, have a place.  I just suggest that it is not on a prospect or quote presentation call.

Some organizations provide presentation material on Ipads.  I don’t necessarily think it is the best idea, as I have had presentations made to me with that device, but the device serves as storage and the actual output device (the screen).

Gadgets are not only a distraction; they can make you appear rude and insensitive.  There is nothing about them that screams “customer focus”.

• Alarms and tones which interrupt, startle, and distract customers and clients
• They are not totally reliable when you need it
• They are battery operated, increasing the unreliability.
• Smart phones, PDAs, tablets, and laptops can create customer jealousy.  Many customers personal and business budget constraints keep them from having some expensive items.

Productivity Suffers Too!

Productivity woes as a result of smart devices happen whether you are talking about customers or sales professionals.  There is no clear measure for it, but it does happen.

Anytime appointments are missed, contact information lost, and files misplaced, there are hits against productivity.

In meetings, more frequent breaks have to be taken for people to access their phones, Blackberries, and even office devices.  In this day and age, questions can’t wait, answers can’t be delayed, and everything happens at the speed of light.  People are pressed to answer because answers and responses are expected.

Driving Danger

One of the other problems with these electronic devices is that once people believe that they have to provide ‘instant’ responses because it is expected, the real problem can happen.  The real problem is employees checking devices while they are driving.  As everyone knows, this is illegal in most states.

If you listen on any topic, let it be this one.  If you get a ticket for texting while driving, or using a cell phone without a hands-free device when it is illegal, there are organizations that may not hire you if you are in outside sales.  That is whether you have a company car or not because of the exposure that an employer has for gross negligence. Gross negligence is a blatant violation of a legal duty with respect to the rights of others.  It warrants large jury awards when it is proven.

Do the Right Thing

As a sales professional ‘do the right thing’ regarding your electronics.  Turn off ringers, and even vibrate modes while with customers.  There should be no distractions.  Use devices in the sales process only when it makes sense, and when your company requires it.

Whether with a customer, your boss, your coworker, or anyone else, your objective is to give them your attention.  Your electronics can wait!

Avoid violations while driving that can affect your record on a near-permanent basis.  Impress your buyer with your knowledge and skills, and remember that neither relationships nor sales are made with electronic devices.  They should just make life easier for you.

Your comments are appreciated