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.

Your outside  sales position comes with some assets that are not always thought of as benefits.

Items such as:

Company Vehicle & Company Fuel Card
Company Credit Card
Company Issued Smart Phone or PDA
Company supplied laptop Computer

There are other items as well and the premise is the same with all of these devices.  They are designed to help you be the best that you can be in the sales position, reducing the need for inside assistance, reducing administrative costs, and increasing convenience for the user.

These items present some significant opportunities for unintended neglect as well as abuse and should be managed carefully.

Most long term sales professionals know how these items play into performance evaluations, company policies, and continued employment, yet a recap could never hurt as there are always new professionals entering the workplace.

Electronic Devices – Your Responsibilities and Changing Times

The world is changing, and you have no choice but to be a part of it.  Your access to company and customer data is an important convenience, and it creates some rather interesting changes as compared with a few years ago.

Your laptop computer or even  a pocket-sized device can easily come up missing and could potentially contain the following information that you currently may take for granted:

• Privileged company information (Your company’s trade secrets)
• Customer/Client information (contact lists, phone, addresses)
• Customer Confidential Information (Credit card, financial, and other)
• Your company’s system access information

The information above, as well as  other important information that could be on drives, media cards, etc, can send your company’s IT professionals into “Def Con One” in terms of actions to protect customer’s privacy and your company’s systems and information.

Losing your laptop or Blackberry/iPhone/PDA sends into action a wave of activities designed to protect that information.  This could include “wiping” which is the remote erasing of all of the data on either device.  This falls under the category of “better safe than sorry.”

Depending on what industry you are in, there is also the possibility of federal laws being violated.  If you are in the health or medical industry, which includes health insurance, your responsibilities are even more strenuous, because of health information privacy.

Losing your brief case would be tough, and would potentially put some information in the hands of some who might read it or use it incorrectly.  Losing your PDA creates a different exposure that includes the possibility of improper access of gigabytes of information (thousands of briefcases) and a gateway to other information.

The most important action you can take if you make the mistake is to inform your IT department immediately after the problem happens.  Before that, take all necessary steps to protect it.

Company Vehicles & Fuel Card

Fewer companies provide the benefit of company vehicles now, and that is fitting.  The “tests” that qualify sales professionals, even though they are in outside sales are strenuous, and limiting.

If you do have a company vehicle, you should recognize that not only is this a company asset, but also your company is watching everything you do with it.  Fleet companies and your own HR department are doing what they can to insure that this company asset that could easily be valued up to $25K to $40K is protected and maintained correctly.  It only makes sense.

With this in mind:

• Respect and follow all maintenance schedules. These are recorded and the paper trail is easy to follow.
• Use your fuel card correctly.
• Document according to policy.  Maintain confidence by following the rules to the letter.

Above all, treat the vehicle as if it is your own.  Keep it clean in appearance and it will be noticed.

Company Credit Card

More mistakes happen with company credit cards than you might believe.  Sometimes the mistakes are harmless errors, but some are as a result of mistakes of character.

You can know your company’s expense and credit card policies to the letter, yet there is another test that is even simpler.  If you are in doubt, do not use your company credit card.  This short section is less a review of company expense policy than how you actually use the card.

Remember, if you use the card once for a personal expense that is not business related, you have crossed a boundary that breaks a confidence.  Improper use goes past using the card for personal expenses it also includes using it in the “wrong” places.  I am totally amazed at any sales professional who uses the company credit card at a “gentleman’s club” or any like establishment.  What more indicting activity can you have on your judgment than to use a card with your employer’s name on it at an establishment like this?

Be smart and careful with this valuable asset.  Many organizations require that you use the credit card for any business expenditure.  This increases control, and makes it even more necessary to be discrete.

In Summary

Always know the policies of your operation, and always use common sense.  Improper use usually comes from improper judgment and an ignorance of the ground rules.

Protect your electronic media with your life.  You don’t want to have that information floating around out there, but you really don’t want to undergo the “Spanish Inquisition” that will result from losing it when your IT department and your manager begin their query.  Care is necessary as anyone can lose one of these devices.  What happens if you lose two of them?

Your comments are always welcome.