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How do you manage the accounting for Sales Territories and Regions?

In a fast growing and new organization our sales team is regularly restructured to accommodate changing needs in the field. Part of this change is a regular realignment of territories within regions. How do you organize and report on selling expenses in the GL or reporting systems that accommodates these changes whilst dealing with the issues of ensuring matching moves of budgets and history? Thanks.

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Topic Expert
Keith Perry
Title: Consulting CFO and Business Operations A..
Company: Growth Accelerator
(Consulting CFO and Business Operations Advisor, Growth Accelerator) |

Anon,

Having been in that situation, my advice is...don't touch the GL. Salesforce et al provide a set of tools designed specifically for this purpose. Managing a GL in a fast growing organization is not easy, even for a talented team. Adding the kitchen sink to the mix is a recipe for work (in the bad sense of the term).

There is also the issue of figuring out whom to pay for what, which is a nightmare when regions shift. Xactly et al provide tools to manage this problem.

What you won't solve (and I had this problem on my first consulting gig at 17), is that when you shift regions, you either need to start allocating based on estimates or aggregating. Neither is a good option, but my advice is keep all the granularity you can in the systems (not in the GL), so as to preserve the ability to have granularity in the reporting when you need it.

The last hurdle, which encompasses the prior two, is that an effective VP of Sales is going to want a mini-P&L. Basically, a by-region reporting of revenue per dollar invested. The GL and GAAP cannot do this (pretty much by definition), so again Salesforce or similar can structure this for you, with some minor programming.

Cheers,

KP

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