“Direct reimbursement plans gives the sales manager some control over both the magnitude of sales expenses and the kinds of activities sales people will be motivated to do. On the other hand, managers can discourage their subordinates from spending time on unimportant task by refusing to reimburse expenditures for such activities” (Johnston & Marshall, 2009). For example, with a direct reimbursement plan the sales force representative would meet with potential clients for lunch or dinner at a more convenient time for the client. As oppose to meeting a potential “client” at an entertainment activity that does not fall in accordance of the company’s moral codes and ethical standards at the company’s expense. “Some firms limit the total amount of expense reimbursement either by setting limits for each expense item (such as forty dollars per person maximum for restaurant meals) or by providing each sales person a predetermined lump-sum payment to cover total expenses” (Johnston & Marshall, 2009).
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For an organized sales representative they will be able to manage the reimbursement money and take care of their clients. The disadvantage of the limited reimbursement plan are the pre budgeted amounts on the entertainment items. Forty dollars per person can really limit how a client perceive the company to be if you spend too much the sales representative can appear arrogant and highbrow, if they entertain on a restrictive budget they can appear cheap and
For an organized sales representative they will be able to manage the reimbursement money and take care of their clients. The disadvantage of the limited reimbursement plan are the pre budgeted amounts on the entertainment items. Forty dollars per person can really limit how a client perceive the company to be if you spend too much the sales representative can appear arrogant and highbrow, if they entertain on a restrictive budget they can appear cheap and