An American Folk Tale with a New Twist

An American Folk Tale with a New Twist

We’ve been thinking about the new salesperson, actually gathering feedback from a number of good folks out there in distributor-land, plus tracking distributor trends.  The combination of all this information and a hearty blast of spicy food sent me to bed with my head spinning – leading to some tremulous dreams.

Dreams can be mighty strange, but I thought I would share this one.

Remember the American Folklore tale of John Henry?  OK, maybe not – let me refresh you.  Here’s the scoop from Wikipedia:

John Henry is an American folk hero.  He worked as a "steel-driver"—a man tasked with hammering a steel drill into rock to make holes for explosives to blast the rock away. He died during the construction of a tunnel for a railroad. In the legend, John Henry's prowess as a steel-driver was measured in a race against a steam powered hammer, which he won, only to die in victory with his hammer in his hand.

My dad used to sing the Ballad of John Henry.  Here’s Johnny Cash’s version:

http://www.youtube.com/watch?v=gM7ra-wRVaM

Now the distributor tie in…

According to Modern Distribution Management Magazine’s Tom Gale, over 21,000 vending

machines were installed by distributors in 2012.  Let me repeat – 21,095 vending machines selling our kind of stuff were placed into customer facilities – mostly by the humongous distributors (Fastenal, MSC Industrial Supplies, etc.).

New age vending machines communicate sales data and other information back to the distributor’s computer system for inventory management and they allow customers to track precisely who used the equipment.

Vending machines solve customer accounting issues.  They don’t solve problems with applications, early wear and tear, or make suggestions for better application of problems.  But, they don’t cost 150 grand to train, they never take vacation days and they never jump ship taking customers with them.

Here’s where you and I come in.  If we are going to add value, solve problems, and all the other stuff we do on a regular basis, we better get darn good at it.  And we better make sure we tell the story in real financial terms, because if we’re just filling bins and fulfilling orders – there’s a machine waiting to take our place. 

Your thoughts?

The New Salesman: Territory Management via the Calendar

Whichever method you choose to do so,
making time to manage your calendar is important.

Calendar Management Equals Territory Management

Braving the risk of conjuring up some unpleasant memories from your grammar school days, let’s start our discussion with a pop quiz.   Ready… here goes.  True or False?  Everybody knows how to use a calendar.  My own experience is this; everyone recognizes a calendar when they see one.  Outlook has a calendar built in to the software.  Most smart phones have a built in calendar as well as over 14,000 calendar apps available (yes, we checked.)    Google has a calendar that can be utilized by both desk top and mobile users.  But still, very few people know how to use a calendar.

A sales manager who assumes their new people know how to use a calendar is in for a life of disappointment and frustration.   A few months ago, we did a cross compiled survey of distributor salespeople and regional managers from the distributor’s top supply partners.  Our goal was to measure the ability of distributor salespeople to make use of selling resources available through their partners.  The results were disturbing.

Even with long windows of notice, very few salespeople were able to schedule customer appointments with any degree of efficiency.  An amazingly large percentage of the total were basically “flying by the seat of their pants,” calling on customers without an appointment.   An even greater number scheduled their time less than two days in advance.  Over a quarter of them appeared to not schedule their day until they arrived at the office.  Obviously for that new guy, this is a habit that should be avoided at all costs. 

Create the habit of setting appointments-scheduling time to schedule time
So what makes for a good use of a person’s calendar?  Appointments are a fantastic start.  Realizing that new salespeople have a difficult time making the connection leading to appointments, this one can be tough.  However setting appointments is a skillset that must be developed.  Experience dictates many new guys fail to schedule time for making appointments.  The best time to making appointments is Monday morning and Friday afternoon.  So the first bit of calendar training comes in scheduling a time for actually setting up these appointments.

Let’s not sugar coat it; early on, setting appointments is a double dose of tedium and rejection – almost totally thankless work.  Given this little dash of unpleasantness, the new seller falls into more pleasant tasks.  Pleasant translates as “easy,” however, easy does not mean money making. Things like answering emails, reviewing quotes, answering incoming customer calls typically handled by inside sales staff and updating files quickly fill the time.

Here’s a better way.  Prior to that Monday morning or Friday afternoon scheduling session, the salesperson (and their manager) divides the territory into quadrants.  The salesperson uses the quadrants along with a list of people he would like to meet for an appointment – this includes their company, the customer’s quadrant location and phone number.  To maximize face-to-face selling time, calls are made to the customers by quadrant with the idea of filling in activities in a particular quadrant by day.  This eliminates back tracking and reduces time spent zigzagging all over the territory.

Whenever possible, the first call should be made as close to 8:00 as possible and the last call should be set at 3:00.  This gets the salesperson into their territory as soon as possible.  3:00 may seem like an early end to the day, but as an experienced sales person can attest, “I hate to visit after 3:30 because the customer is ALWAYS in a hurry.  This means we have to skip over important details and end up either rescheduling or doing more follow up by phone and email, which takes away from my time with other customers.”

Our experience indicates the most efficient way to handle making appointments is to use the business land line for outgoing calls and a cell phone as the number for customers to return the call.  Using this technique, voicemail messages result in calls back to the cell number – where they can easily be converted to appointments.   Once the first and last selling times are scheduled, the rest can be filled in with a comment like this one:  “I will be in your area on Wednesday.  I have an appointment at 8 but could stop by later in the morning if you are available.”   Once an appointment is set, a follow up confirmation email is a great reminder for the salesperson and the customer.  Sending an invitation for the appointment will assure that both parties will be reminded.

Block out the calendar for better efficiency
We already talked a bit about setting appointments for 8 and 3 but there’s more to it than this.  Over the years, we have seen dozens of otherwise good salespeople fall into the habit of stopping by the office each morning to “take care of a few things”.   Even when they arrive well before the start of working hours, they find themselves “stuck” in the office. 

Phone calls from customers, “drop by stops” from supply partners, and conversations with their support staff cause them to stay in the office far later than anticipated.   By blocking off their calendar with an appointment at 8, they get out of the office and into the field every morning.  Setting up an appointment at 3, keeps the new guy working throughout the day.  Drop by calls and reactive calls to customer issues might fill the rest of the time but at least the first and last bit of the day are proactively focused.  He will eventually find that having an appointment at 8:00 will lead the way to appointments at 9:00 and 10:00 and so on.

If no appointment or customer can be found, the nation’s network of Starbucks (and similar establishments), offer a quiet haven for answering emails, returning phone calls or building proposals.  In my mind, all of these make for better time usage than a long drive back to the office just to do “paperwork”.

Blocking out time on a calendar is also beneficial for those that help indirectly with selling.  Whether it’s an assistant/receptionist, inside salesperson, management, or even a spouse, sharing a calendar that gives an accurate picture of your day can help others know if and when to forward calls, schedule meetings, or expect your return to the office.

Create a system for follow-ups
Salespeople are faced with an avalanche of dates.  When a customer needs something tomorrow or next Friday, typically there is no problem.  But when a customer says, “We decided to postpone this project for 90 days…” problems occur.  Rather than leave these important dates to the customer to remember, or counting on an iron clad memory to recall, why not tag the item for later action?  Without sounding like the grandpa character from a cartoon show, back in my day a major breakthrough skill was the creation of a follow-up file.  Quotes, important customer information and reminders to call customers were gingerly placed in a follow-up file with a date written across the top.  At the beginning of each week, I went through the follow-up file to pull out everything I needed for the following week.  I personally still use this system even for non-selling activities, but I also use my Outlook reminder, which is synced with Google, that sends me a text reminder.  I know some more advanced CRM systems allow the placement of reminders and other tasks, including some with email reminders.  However this follow-up is done, we cannot count on a new salesperson to come onto the job with these skills.  And, they’re too important to overlook.

If your company doesn’t have a prescribed process for handling tasks and reminders via a CRM system, develop a paper based system.  Build in a methodology of measurement.  If a new salesperson has been working for 60 days and doesn’t have a single reminder set up, then a “management moment” might be highly recommended.

Calendar management is closely linked to territory success.   Returning to our earlier premise – most people don’t know how to work a calendar.  Invest early for future dividends; error on the side of safety.  During the first 120 days, spend some time teaching, measuring and managing your new folk’s use of the calendar.

A final note: Paper calendars have provided a reliable reminder system since people started setting appointments.  As great as electronic devices are, they are prone to bugs, often need to be charged, or require certain signals to work.  A paper calendar is never a bad option and is always a good back up, even if it’s just printed from said electronic device. 

Distributor Planning Made Easy. Check out our Distributors Annual Planning Workbook:

http://amzn.com/1481196448

Product-mix decisions when capacity constraints exist

By Jackie, Researcher

Topic: Education

Area of discussion: Management and Cost Accounting

Chapter: Measuring relevant costs and revenues for decision-making

The primary objective of this posting is to critically describe the key concept that should be applied for presenting information for product-mix decisions when capacity constraints apply. In this discussion, I have taken a past year question from CIMA Cost Accounting 2 and prepared sample solutions with detailed workings to aid illustration purposes. Personally, I like this question because it is very tricky as ‘duo ranking system’ applies due to the nature of allotment and the presence of ‘market commitment’ in this question.  

Suggested answers with workings:

Solution for a(i):

Note: Variable costs are quoted per acre, but selling prices are quoted per tonne. Therefore, it is necessary to calculate the planned sales revenue per acre. 

Solution for a(ii):

Ordinarily, the allocation of scarce resources will strictly follow the ascending order of rankings (in term of contribution amount); starting with the product that gives the highest contribution per limiting factor and then, leaving behind the balance of scarce resources to be taken up by other products that give lesser contribution per limiting factor. However, ‘market commitment’ exists in this case. So, the ‘market commitment’ will be the first one to get allocated. For profit maximization purposes, ‘market commitment’ has to be filled up with the product that gives the lowest contribution per limiting factor and the balancing figure to be taken up by other products that give a higher contribution per limiting factor. Also, due to the ‘market commitment’, the nature of allocation of scarce resource (i.e. land space) has been splitted into two.

Solution for b(i):

‘No market commitment and the land could be cultivated in such a way that any of the above crops could be produced’ simply means that the clause (i.e. the land that is being used for the production of carrots and parsnips can be used for either crop, but not for potatoes or turnips. The land being used for potatoes and turnips can be used for either crop, but not for carrots or parsnips. In order to provide an adequate market service, the gardener must produce each year at least 40 tonnes each of potatoes and turnips and 36 tonnes each of parsnips and carrots.) was not in effect anymore.

Solution for b(ii):

Note: To get 100 acres, sum up all the area occupied (i.e. 25 + 20 + 30 +25); while the contribution of £960/acre is taken from solution for a(i).

Solution for b(iii):

There are two ways to calculate this. The first one is to calculate the BEP in acres by dividing the fixed costs with the contribution per acre, and then used the computed figure to further multiply with its sales revenue per acre. (i.e £54,000 ÷ £960/acre = 56.25 acres, then 56.25 acres x £1,620/acre = £91,125). The second one is shown below by dividing the fixed costs with the contribution/sales ratio. Both methods are well explained in Cost-Volume-Profit analysis’ chapter.

Additional readings, related links and references:

Throughput accounting and TOC, one step beyond limiting factor analysis. The time frame is so short until all operating expenses are treated as fixed including direct labour; only direct materials are treated as variable. http://www.accaglobal.com/content/dam/acca/global/pdf/sa_nov11_throughput2.pdf

Reframing the Product Mix Problem using the Theory of Constraints
http://www.orsnz.org.nz/conf34/PDFs/Mabin.pdf

Product Mix: Determining My Winners and Losers

http://aggie-horticulture.tamu.edu/ornamental/economic-fact-sheets/product-mix-determining-my-winners-and-losers/

Limiting factors analysis

http://www.accaglobal.com/content/dam/acca/global/PDF-students/2012s/sa_jan10_coulthurst.pdf

Short-term Decisions Overview and Product Mix Decisions 

http://www.youtube.com/watch?v=gUKXLihYxzw

Fair Value Vs Historical Cost

By Jackie, Researcher

Topic: Education

Area of discussion: Financial Accounting and Reporting

Chapter: Accounting Concepts

  

The objectives of this posting are: to critically compare and contrast the usefulness of fair value and historical cost (in different conditions); as well as to identify, explain, and analyse the benefits and limitations of both fair value and historical cost.

Fair Value

Fair value is also known as “market value” or “current value”; it is a rational and unbiased estimate of the potential market price of a good, service, or asset.

Arguments in support of fair value concept

1. It is recommended to use fair value concept during inflation period or when the currency is unstable or fluctuate.
2. It is also suitable to be used when there is an active and observable market; such market usually exists in popular and densely-populated area where there will be a lot of buyers and sellers trading daily.
3. Depending on the nature of the assets, this valuation method is suitable for assets that undergo appreciation (i.e. value goes up) instead of depreciation (i.e. value goes down). For example: land and buildings, livestock and raw materials. Assets that follow this concept are required to undergo revaluation process after a specific time (if needed) and also test for impairment (if any) before the assets values are to be displayed in the financial statements (inside the annual reports).
4. It upholds the accounting qualitative characteristic: relevance.
5. Information about the assets values is updated. Hence, it is useful for decision making purposes (especially for potential buyers) 

Arguments against fair value concept

1. Valuing assets using current market price is very subjective. It involves a lot of predictions, assumptions and careful analysis in order to get an estimated figure. However, not everyone can agree with that figure as the figure is usually open to dispute or debate as it involves a lot of judgements, thoughts and opinions which can be either personal or professional. Furthermore, the amount has not been “realised” yet (i.e. not incurred yet). Thus, it cannot be fully trusted.    
2. Unlike historical cost, those estimated figures are usually given in a “range of values” instead of one clear-cut value for each asset.
3. In reality, active and observable market is highly dependent on location. Therefore, if the assets (usually properties) are situated in an isolated location, it is very hard for the property agents to estimate the price of the properties because there is insufficient data to be used as comparison and analysis purposes.
4. Some experts believe that as compared to historical cost, fair value concept is easier to be manipulated by unethical corporate directors and managers.
5. It will be quite troublesome sometimes, because the preparers of financial statements are required to make some changes to the subsequent recording and readjust the depreciation amount. Thus, a lot of paperwork and additional disclosures are involved.

Historical Cost

According to the historical cost concept, assets are shown at the original cost price (i.e. the figures shown during the initial recording of those particular assets at the date of acquisition). 

Arguments in support of historical cost concept

1. It is suitable to be used when the currency is stable.
2. Depending on the nature of the assets, historical cost is suitable to be applied to any assets that undergo depreciation instead of appreciation. For example: plant and machinery, motor vehicles and office equipment. Assets that follow this type of valuation method are required to be depreciated accordingly usually per annum by using appropriate depreciation methods such as straight-line, reducing balance or sum-of-digits methods. Assets values that are displayed in financial statements are also known as Net Book Values (NBVs). NBVs are computed by using initial cost less accumulated depreciation.
3. Valuing assets at their original cost is very objective. Everyone can accept and agree on it because it is based on a factual occurrence. Not only that, it also has a very concrete support in term of nature of evidence such as printed receipts, legal documents and purchase agreements.  
4. It upholds the accounting qualitative characteristic: reliability.
5. It gives one clear-cut and precise value for each asset.
6. It is convenient and easy to use. It does not required active and observable market nor additional disclosure simply because there is no real change. 

Arguments against historical cost concept

1. Information about the assets values is outdated. Accountants called it as “sunk cost”. Thus, it will not be helpful in decision making processes anymore.
2. During the period of rising prices, using historical cost accounting might poses adverse effects on financial statements as well as some financial ratios. For example, in the Statement of Comprehensive Income (i.e. the Income Statement), the understated depreciation will cause the profit to be overstated. Meanwhile, in the Statement of Financial Position (i.e. the Balance Sheet), the cost of assets, accumulated depreciation of the assets and net book values of the assets will be all understated. On the other hand, financial ratios like ROCE (Return On Capital Employed) and ROA (Return On Assets) will be overstated. This is because the numerator tends to be overstated and the denominator tends to be understated. Ultimately, it makes the figures to be “unpresentable” and “unreflective” to the current situation. Not only that, it also poses risk and danger to the users of financial statements (especially for the shareholders and potential investors) as the information is misleading.

Additional readings, related links and references:

“Causes and consequences of choosing historical cost versus fair value”; this journal’s discussion is mainly on real estate. (IAS 40 – Investment Property) 

http://www3.nd.edu/~carecob/May2008Conference/Papers/RiedlMRS03062008.pdf

Historical cost vs. market (fair) value. Emphasize more on theories. http://commerceducation.blogspot.com/2011/04/historical-cost-vs-market-fair-value.html

Does fair value accounting for non-financial assets pass the market test? http://faculty.chicagobooth.edu/valeri.nikolaev/PDF/FairvaluePaper_RAST_Conference.pdf

Historical cost vs. fair value. Examples are given with calculations too.

http://business-accounting-guides.com/historical-cost/

The fair move: The trend towards fair value accounting http://www.usc.edu/org/InsightBusiness/ib/articles/articlescontent/08_4_Nishan%20Perera.html

Conceptual Framework For Financial Reporting

By Jackie, Researcher

Topic: Education

Area of discussion: Financial Accounting and Reporting

Chapter: Frameworks

The objectives of this research are to find out and critically explain: the brief history of what had happened in the past in financial reporting when the framework is not developed yet; what is a conceptual framework?; the functions of conceptual framework and benefits of having it; the limitations and barriers in establishing a global conceptual framework; and some proposed solutions on how to set up an international conceptual framework.

Research question:
Discuss why there is a need to have an international conceptual framework and the extent to which an international conceptual framework can be used to resolve practical accounting issues.

Research Essay

INTI International College Subang

                Historically, in the late 1960s, a plenty of negative feedback and complaints have been lodged by the unsatisfied companies’ stakeholders against the misleading accounting treatments and approaches which were best described as being unclear, irregular and confusing. For example, at that particular time, all the accountants were not using the similar or standardised methods to compute profits. As a result, the calculated profits tend to vary among each other and subject to manipulation too (Wood & Sangster 2005, p.106). Alexander and Nobes (2010, pp.71-79) state that the factors leading to the variation in international reporting approaches are the manners in which companies are financed by the providers of finance, the nature of national legal system in influencing the financial reporting’s regulations, the correlation between the tax and reporting systems, the competence of the accountancy profession and the development of accounting theories, as well as the globalisation of capital markets around the world. In actual fact, explicit detailed framework is still absent in most of the nations. Hence, financial statements are hardly comparable internationally as accounting is performed differently in different place (Alexander & Nobes 2010, p.36). Fortunately, this has hastened the development of conceptual framework as a solution to handle this situation. For instance, the establishment of IASB Framework in 1989, followed by subsequent changes to the requirements of particular IFRSs, and then recently the collaboration between the IASB and US FASB in running a project which aims to revise and conform their conceptual framework. Ideally, conceptual framework is a statement of generally accepted accounting principles (GAAP) which form the frame for reference for financial reporting; it provides the basis for evaluation of existing practices and the development of new accounting standards as well as forming ground for transactions’ treatment, measuring bases and communication to the respective users (Scott 2011, p.1). It is considered as the most appropriate treatment for certain transactions under the supervision of professional bodies and researches (Thomas & Ward 2012, p.38).

             Generally speaking, it is extremely crucial to have a proper international conceptual framework as it offers numerous benefits and carries out significant purposes. Firstly, it assists the IASB and International Financial Reporting Interpretations Committee (IFRIC) members in the development of future IFRSs and reviews existing standards by setting out the underlying concepts. This can be seen in Ernst & Young 2012’s publication regarding to the IFRS update of standards and interpretations. For example, one of the upcoming changes is effectively starting from 1 January 2013, entities are required to disclose information about rights of set-off and related arrangements like collateral arrangements with the aim of evaluating netting effect of arrangements towards an entity’s financial position under IFRS 7 Disclosures – Offsetting Financial Assets and Financial liabilities – Amendments to IFRS 7.

                Secondly, framework is also utilised to help the board of the IASB in promoting harmonisation of accounting regulations, standards and procedures in financial statements’ presentation by providing a basis in reducing the number of alternative accounting treatments permitted by IFRSs (Thomas & Ward 2012, p.40). Framework provides a sense of direction in resolving accounting questions without the necessity for an increment in specific standards. Similarly, this also means that it can avoid the preparers, auditors and financial statements’ users from exerting unnecessary pressure by requesting for more detailed standards. Besides, unpleasant situation like the need to answer each accounting question at a sudden for a particular purpose can also be prevented (Alfredson et al. 2007, p.63). Consequently, the risk of over-regulation will be mitigated and the issue of ‘overloaded standards’ can be potentially reduced (Riahi-Belkaoui & Jones 2000, p.134).

                Thirdly, framework serves as a ‘point of references’ to the preparers of financial statements by assisting them in applying IFRSs and IASs, including the handling of accounting transactions that have yet to form the subject of an accounting standard (Scott 2011, p.2). Frankly, it is difficult for any accounting standards to give clear-cut and precise answers to all accounting questions; situation will be worsen if the standards or interpretations do not even exist, or have not be formed specifically to deal with those issues yet. Hence, a sound judgement is crucial in answering such technical problems. Luckily, boundaries to apply sensible judgement were established in the framework which ever concern with the preparation of financial statements (Alfredson et al. 2007, p.63). 

             Fourthly, framework aids the users of financial statements in interpreting the content contained in financial reports prepared in conformity with IFRSs by increasing users’ understandability as presentation is done in simpler and summarised manner which is suitable for “layman usage”; technical jargons are minimised plus additional notes and disclosures are inserted to give extra explanations. Riahi-Belkaoui & Jones (2000, p.134) claim that this will indirectly lead to a better communication among all the stakeholders since all parties are using a common set of definition and criteria. Alfredson et al. (2007, p.64) add that it could even enhances the public confidence towards the financial report too.

                In addition, sometimes standards development (especially national standards) is subject to political interference. Experts believe that a framework can decrease political pressures in making accounting judgement as well as potentially reduce the activities of lobbies and interested parties (who may have personal interest’s motivations) in influencing the standard-setting process (Riahi-Belkaoui & Jones 2000, p.134). This is because whenever there is a conflict of interest between user groups in deciding which policies need to be chosen, policies taken from a conceptual framework will often be less open to criticism as it eliminates personal biases and external pressure.  

               Dangerous situations will arise if there is no conceptual framework.

            In the absence of a conceptual framework, standards tend to be produced in a ‘fire-fighting’ approach where serious defects in accounting standards were often produced as an end results. This means that countries or standard setters will only address or respond to problems when a catastrophic corporate scandal or failure arises, rather than being proactive in determining best policy, developing and maintaining a coherent set of rules (Scott 2011, p.2). For example, during the 1980s it became fashionable for organisations to value their brand names and incorporate them into their balance sheets; the ASB’s predecessor body was completely unprepared for this and struggled hardly to develop a standard. Apparently, it is enormously difficult task as there was no universal agreement about such fundamental issues as the reason for preparing financial statements as well as the definition of what constituted an asset (Ciancanelli et al. 2009, p.37).

             Scott (2011, p.2) argues that the lack of conceptual framework will cause proliferation of ‘rules-based’     accounting systems whose primary objective is that the treatment of all accounting transactions are ought to be dealt with by detailed specific rules or requirements; such a system is very prescriptive and rigid, but has the attraction of financial statements being more comparable and consistent. Real life example can be seen in USA where the Financial Accounting Standards Board (FASB) has produced a huge number of highly detailed standards and indirectly created a financial reporting environment governed by specific rules rather than general principles as cohesive set of principles were not in place. 

           Likewise, this also means that fundamental principles can be dealt more than once in different standards (duplication) and consequently, provoking problems especially in relevant to contradictions and inconsistencies in basic concepts. This can be seen in the arguments, disputes, and conflicts in between relevance and reliability, especially in property and real estate industry. For instance, there is always a tension in deciding the most appropriate way to record the value of assets, such as land and buildings in balance sheet. Some accountants suggest that it is better to use current valuation method or market-based price approach as it is more reflective and would gives more relevant information as compared to original cost due to appreciation (an increase in value of assets over time). However, some accountants disagree as they believe original cost or historical cost method could be more reliable, as current valuation method is just an estimation or prediction only, which might not be completely accurate and hence, cannot be fully trusted (Alexander & Nobes 2010, pp.40-43).

             Nevertheless, the capabilities of conceptual framework in solving each practical accounting issue will still   remain a question; Bullen and Crook (2005, p.1) voice out that the existing FASB Concepts Statement and IASB Framework for the Preparation and Presentation of Financial Statements can solve part, but not all of the problems. Even though, framework has succeed in supplying the fundamental principles for making a selection between alternatives as well as provides definitions which have formed the basis of accounting standards’ definitions, it would still be unlikely that it can answers all practical accounting questions. This is because in reality, financial statements are prepared for a variety of purposes and used by different kind of users. For example, banks and suppliers are interested in the company’s liquidity ratio and statement of cash flows to assess whether they will be paid; potential investors are interested in future growth prospect and earning ability such as Earnings Per Share (EPS) and Accounting Rate of Return (ARR); while managers of the firm will use it to measure performance and make financial decisions. Thus, it is uncertain and doubtful whether a single conceptual framework can suit all users. In addition, there is no clear indication or guarantee that conceptual framework will definitely ease the task of preparing and implementing standards than without having a framework.

                All in all, the duo efforts of IASB and US FASB in running a joint project with the intention to adopt one global conceptual framework is utmost important. Although there is still some minors flaws, it is undeniable and proven that the conceptual framework can eventually produce fruitful outcomes in promoting unity, handling controversial issues, and help decision makers to make a selection. Hopefully, they will consistently update, improve, and refine the framework from time to time in order to cope with the frequent changes in business environment, globalisation, and users’ needs.

Extra:

For more information and details about the collaboration between FASB and IASB, you may visit this website: 

http://www.fasb.org/cs/BlobServer?blobkey=id&blobwhere=1175818825710&blobheader=application%2Fpdf&blobcol=urldata&blobtable=MungoBlobs

Note: The picture below is a screen shot of that particular website.

References

Alexander, D & Nobes, C 2010, Financial Accounting – An International Introduction, 4^th edn, Prentice Hall, London.

Alfredson, K, Leo, K, Picker, R, Pacter, P, Radford, J & Wise, V 2007, Applying international financial reporting standards, John Wiley & Sons Australia Ltd, Milton.

Bullen, HG & Crook, K 2005, Revisiting the Concepts: A New Conceptual Framework Project, viewed 15 November 2012, <http://www.fasb.org/cs/BlobServer?blobkey=id&blobwhere=1175818825710&blobheader=application%2Fpdf&blobcol=urldata&blobtable=MungoBlobs>

Ciancanelli, P, Dunn, J, Koch, B & Stewart, M 2009, Financial and Management Accounting, University of Strathclyde, e-book, viewed 15 November 2012, <http://www.scribd.com/doc/54424572/7/The-statement-of-principles-for-%EF%AC%81nancial-reporting>

Ernst & Young 2012, IFRS Update of standards and interpretations in issue at 31 March 2012, viewed 12 November 2012, <http://www.ey.com/Publication/vwLUAssets/CTools_InterimUpdate_Apr2012/$FILE/CTools_InterimUpdate_Apr2012.pdf>

Riahi-Belkaoui, A & Jones, S 2000, Accounting Theory, 2^nd edn, Nelson Thomson Learning, Southbank Victoria.

Scott, S 2011, The need for and an understanding of a conceptual framework, viewed 14 November 2012, <http://www.accaglobal.com/content/dam/acca/global/PDF-students/2012/sa_oct11_framework.pdf>

Thomas, A &Ward, AM 2012, Introduction to Financial Accounting, 7^thedn, McGraw-Hill, Berkshire.

Wood, F & Sangster, A 2005, Business Accounting 1, 10^thedn, Prentice Hall, Harlow.

The New Salesman: Supply Partner Relationships

Knowing the ins and outs of key Supply Partner relationships
can jump start the New Salesman's selling efforts. 

Know your friends – Relationships with Critical Supply Partners

 

They say no man is an island. I believe no salesperson is an island. The only time the Lone Ranger is a constantly successful hero comes in the pulp-fiction westerns on TV. In reality, sustainable success only comes as the result of building a number of alliances. We have talked about product knowledge, building relationships with customers and setting expectations. Let’s shift our time toward building profitable alliances with the strategically important vendors – we call them Supply Partners. 

Nearly every distributor has special relationships with a handful of critical Supply Partners. Oftentimes, our business is so closely tied with these suppliers, that they receive special attention from our organization. Over the course of time, there are countless stories of salespeople short circuiting strategic relationships because they failed to understand just how important these people were to our business.  

Let’s start from the very beginning. The new salesperson must understand exactly who these critical Supply Partners are and why they hold that status. I believe a list is in order.  

Earlier we rambled on about setting expectations and building product knowledge. Hopefully, your plan for building product knowledge pushes these crucial Supply Partners to the forefront. Whenever there is a choice, the new sales guy should grasp the offering of the Supply Partner first. 

The relationship with the sales team of these key Supply Partners should be given a jump start. Here I recommend some type of joint introduction along with an explanation as to the place the new seller fills in your organization.  

The rookie seller should understand in no uncertain terms that their job is to create and nurture a one-on-one relationship with the person closest to your organization at this Supplier. Backward selling is definitely in order.  

In today’s distribution environment, overlapping distributors are found all too often. On the flip side, it is not uncommon for a distributor to have second or even third lines. Here’s the way it works. 

MFG A is our key Supply Partner for left handed widgets. Unfortunately, they are both high priced and have multiple distributors in the territory. To offset this weakness of MFG A the distributor has added El Cheapo widgets to their line card for cost sensitive customers. Sound pretty common? Here’s where distributors damage their reputation and upset well laid strategies.  

The new salesperson inadvertently introduces El Cheapo to a customer who should have gone to MFG A. Because of the mergers, acquisitions and other shifts in the way manufacturers are going to market, the real issue is much more complicated. Perhaps MFG A is strong in left handed widgets but weak in widget housings. The permutations are many and confusing to the new salesperson. 

Problems grow because very few distributors take the time to spell out exactly when and where the key lines should be used and under what conditions it is reasonable to substitute something else. Think about this from another level. Here stands a new employee. He or she has less than a year of experience with your company, yet is making decisions which impact the strategic direction of your whole selling effort.  

Let’s recap:

 

1) Who are our key Supply Partners?

 

2) What products do they make?

 

3) Here is the local rep, build an alliance with him to breed success.

 

4) Here is when (if ever) you substitute another product for the key vendor.

 

5) Here are the gray areas where you need to ask first.

 

6) An error with an important Supply Partner can cause harm to our business as a whole. 

Finally, it doesn’t hurt to explain the whole supplier stratosphere with your new sellers. Here is our own personal version from The Distributor’s Annual Planning Workbook:  

1. Profit Partners– these are the supplier who account for day to day profits. They work closely with your team to grow business today and provide the revenue flow that supports your business.

2. Strategic for immediate growth – these are suppliers that allow you to produce growth and revenue next year. Often these are product lines on the periphery of your current sales. For example, an electrical distributor might produce immediate growth by working with a vendor of electrical safety equipment. Just a little attention today could produce growth without a great deal of training and positioning. These will never make your top 10 suppliers, but adding a couple hundred thousand to the top line sale is not a bad thing. (By the way, I recommend setting a minimum growth amount to make this list. This varies from company to company but $100K in two years is a good starting point.)

3. Strategic for long term growth – these are accounts which drive your company into the future. They stand in place to be major producers sometime in the next 5 years. As our world changes these manufactures are emerging technologies which position your company over the longer haul. 

4. Customers want them so we keep them around – suppliers that you would like to convert their sales to something else but customers keep asking for the brand. Some manufacturers have strong brands but employee saturation distribution. They bring little strategic value to your company, the margins may be low, and they do little to improve your place in the market.  

5. Line fillers– we all have them. We take orders for their products but don’t really proactively sell their products. 

6. Don’t know why we have them – do little for us and occupy a small place in our catalog and on our shelves. We probably would have severed ties but just haven’t gotten around to it. 

The full version of this workbook can be purchased through Amazon.com at http://tinyurl.com/Dist-Annual-Planning-Workbook)

 

      

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Distributor Planning Made Easy. Check out our Distributors Annual Planning Workbook:

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