A real-world guide to data sharing for reps and manufacturers.

Call reports, sales reports — reports, reports, reports.

I think we can all agree reports can be useful. Visibility, benchmarks, sales numbers — you name it. There’s a lot to be gained from effective and accurate reporting. There’s intelligence to be gained and strategies to be formed.

But time in front of a spreadsheet is time away from the road. Manufacturers want numbers. Reps just want to sell.

Where’s the balance?

Well, You Can Start With the IRS

After all, a manufacturers’ rep is an independent contractor. And performance requests, reporting and evaluations should be treated as such. Crossing the boundaries on this relationship status could have great implications from an IRS perspective.

“In determining whether the person providing service is an employee or an independent contractor, all information that provides evidence of the degree of control and independence must be considered.”

Common Law Rules

Facts that provide evidence of the “degree of control and independence” fall into three categories per the IRS:

1. Behavioral: Does the company control or have the right to control what the worker does and how the worker does his or her job?
2. Financial: Are the business aspects of the worker’s job controlled by the payer? (These include things like how the worker is paid, whether expenses are reimbursed, who provides tools/supplies, etc.)
3. Type of Relationship: Are there written contracts or employee type benefits (i.e., pension plan, insurance, vacation pay, etc.)? Will the relationship continue and is the work performed a key aspect of the business?

Maybe you’re reading these bullets and thinking, “well — reps don’t meet most of these, so we’re fine.”

Businesses must weigh all these factors when determining whether a worker is an employee or independent contractor. Some factors may indicate that the worker is an employee, while other factors indicate that the worker is an independent contractor. There is no “magic” or set number of factors that “makes” the worker an employee or an independent contractor, and no one factor stands alone in making this determination. Also, factors which are relevant in one situation may not be relevant in another.

The keys are to look at the entire relationship, consider the degree or extent of the right to direct and control, and finally to document each of the factors used in coming up with the determination.

MAFSI recommends all members consult with their tax professional for further clarification on these issues. In addition, we encourage reps and manufacturers to have meaningful dialogue on all partnership issues including reports. Both parties should review these types of requests jointly to determine if they are a productive use of the rep’s and manufacturer’s selling time.

If you ask, or are asked, for reports — keep in mind the following three pointers.

1. Ask the 5 W’s

• Who needs to be reporting? Who is reading it?
• What information needs to be reported?
• Where do I send this report?
• When do you need the report?
• And most important — Why. What’s the purpose of this report? And how is it beneficial to both the rep and the manufacturer?

2. Quality vs. Quantity

Quantity:

• Frequency of reporting should be taken extremely seriously. Every moment in front of a spreadsheet is time off the road. Be it 10 minutes, or two hours — that’s time away from potential customers and potential sales. Moreover, and as outlined above, frequent reporting can be an issue when it comes to the IRS tax code.
• Are your own internal processes being met? Asking for frequent reports when production is behind or deadlines are being missed may be met with frustration by the other party. In other words, be mindful of your own house, before considering someone else’s.

Quality:

• Clarify why you want the information. Explain how the report is being used and what decisions are being made based on its contents.
• To that end, don’t hold on to information and then make decisions. Entrust an open dialogue, and know the other party only wants you to succeed.

To ensure everyone is getting the math right, (and the subsequent decisions) review the data with your rep or manufacturer, and verify its accuracy. Your numbers might not align, and the other party may not know everything happening internally at your organization.

3. Other Reports vs. Good Reports

• How does this report affect morale? Is it truly a recap of open opportunities, or simply a rehash of old failures? Salespeople love to sell, and love to succeed. Though it’s not always a bad idea to talk about missed opportunities and determine how they can be better handled in the future, simply reliving dead leads doesn’t do much to encourage the other party’s future success.
• Reports like a review of the territory landscape can be tremendously helpful to both reps and manufacturers. Understanding all the players, the business they’re doing, and the best way forward, is a worthwhile and insightful report.
• Mutual sales and marketing plans are also worth the time, especially when segment focused (i.e., if the plan is school-focused, reps and manufacturers can work together to adjust for the school season by adjusting production capabilities and any necessary personnel). In which case, both parties will be better equipped to handle the increased influx of orders.
• Manufacturers spend a lot of money on trade shows, and gather as much information as possible to help and justify the expense. Sharing a list of leads with reps and asking for updates about those leads are great ways to share an open, fruitful dialogue — all while building both businesses.

Reps want to know what their manufacturers think of them, and vice versa. Be it a rep firm evaluation, or feedback from a rep council, understanding the perceptions of the other party cannot be underscored enough. Each party wants to understand the opinions of the other, and adjust their businesses accordingly.

Bottom Line

Like almost all things in life, communication throughout the reporting process is key. By keeping an open dialogue, sharing the information you know, and ensuring its accuracy, reporting can be a tremendously insightful, strategic and helpful resource to both reps and manufacturers.

MANA welcomes your comments on this article. Write to us at [email protected].