14 minute read
OPINION
TAXING QUESTIONS
With the increase of national insurance contributions (NICs), some businesses with employed sales representatives will be looking at the viability of inviting the employees concerned to become self-employed sales agent, writes Stephen Sidkin – but what issues should they consider?
THERE CAN BE TAX SAVINGS FOR BOTH PARTIES
By STEPHEN SIDKIN www.agentlaw.co.uk
A change in the status of the sales force needs to make commercial sense –for the business and the sales force. For both, there will be an issue of “how do we make it work?”.
The business can be expected to want to include in any agreement with the newly appointed agent some provisions which will give it confidence that the agent will service customers and seek new customers in ways consistent with the business’ objectives.
An agent can be expected to look for some form of financial assistance, as most agency models work on a commission basis with a time lag between the taking of an order and the customer paying. Different financial schemes – ranging from a temporary monthly retainer to the payment of advance commission – can be put in place to bridge the initial time gap following the commencement of the agency, so as to ensure that the agent is not financially disadvantaged.
The agency agreement The change in status will mean replacing the employment contract with an agency contract. From a legal perspective, there is a material difference – an employed sales representative will move from being an employee to self-employed. Whilst this may seem to be a statement of the obvious – and is the key to addressing the increased NIC cost mentioned above – an agency agreement should address issues which are different to those found in employment contracts.
The scope of the appointment of the agent must be stated – what the extent of the agent’s entitlements and responsibilities is, in terms of: geographical territory; products; new products in the future; and customers and channels to market. What’s reserved to the business should also be stated.
What would be the duration of the agency? In a situation where the status of the employed sales representative is changing, it would be unusual for the duration to be fixed. Instead, it can be expected that the agency will be continuous subject to either party being required to give a specific period of notice (for example, three months).
Various obligations on the agent can be expected to be included, such as: providing the business with details of customers contacted or to be contacted; transmitting orders obtained and generally acting as a conduit between the business and customers; attending sales meetings and possibly trade shows; and providing market reports.
Correspondingly, obligations on the business can be expected, including: supporting the agent with samples, information, PoS materials and technology (for example tablets); and how and when commission is to be paid.
The Commercial Agents Regulations The Commercial Agents Regulations have been in existence for years, but still urban myths abound about them. The regulations govern the relations between businesses and their agents. Whilst the regulations are pro-agent, there are ways in which they can and should be balanced, given the intended relationship between the business and its agents.
These include: providing for the above notice of termination to be given and expire at any time; stating that, subject to meeting various requirements under the regulations, the agent will be entitled to an indemnity (and not compensation) following termination of the agency; and addressing the provisions in the regulations that specify that actions taken by the agent before termination and resulting in orders after termination will not result in the payment of commission by the business to the agent (this is particularly important where a new agent is succeeding an old one, and the business could face having to pay two lots of commission for the same sale!).
Take-home points A business/agent relationship is symbiotic – the better the business does, the better the agent does, and vice versa. Whilst the change from an employed sales force to self-employed agents may be considered as resulting in the business having less control over sales, this can be addressed in the agency agreement – as can, to a large extent, the pro-agent regulations. Finally, there can be tax savings for both parties
ABOVE AND BEYOND
This month, industry consultant Gordon Hecht asks why there’s so little recognition for the hard-working and multi-talented retail salespeople of the furniture industry …
SHOULD BE
By GORDON HECHT gordon.hecht@aol.com
iStock.com/jorgesa
Pick any day on the calendar, and you’ll probably find that it’s dedicated to some event or cause. These national days celebrate everything from pizza to ‘talk like a pirate’, to ice cream. Some of those days spill into the workplace too – in the US, we have National Bosses Day, and National Administrative Assistants Day.
I’m not sure if there is a day to recognise the service of our frontline sales teams, but there should be. We need a National Commissioned Salesperson Day.
Having invested a lot of the early days of my career as a commissioned salesperson, I can relate to the many tasks that retail sales associates (RSAs) need to be proficient at to walk the tightrope of performance-based pay – often without a safety net below.
Really good commissioned salespeople ensure a good or great customer experience, because their paycheck depends on it. For them, it’s a case of take care of your customers and you’ll eat steak. Fail and you’ll eat beans. We could probably solve a lot of the world’s problems if we put our governments on commission!
Last century (okay, 25 years ago) I took my kid to my store on National Take Your Child to Work Day. He experienced my entire 12-and-a-half-hour retail day – store hours of 10am to 9pm, that started an hour before unlocking the doors and 30 minutes after the last shopper left the building.
His eyes got to see all the jobs that a retail salesperson must do. After the work day, he commented: “Wow, I thought all you did was sit around and drink coffee all day.” (Not true, sometimes we drink tea.)
Sure, RSAs are expected to greet shoppers and convert them to buying customers. But here are some of the roles of the retail salesperson not mentioned in the job description …
Merchandise locator: Showing and selling is difficult enough. During and after the sale, a good RSA needs to be an inventory control expert too! They have to know what’s in stock, what’s on the road, and sometimes help shift merchandise from customers wanting delayed delivery to other customers needing immediate gratification. Most RSAs are paid on delivered sales, and they want merchandise delivered asap.
Credit counsellor: Consumer financing has played a role in retail for a long time. Today, it’s everything from credit and debit cards to promotional terms, second-tier credit, no credit check leasing, and borrowing from relatives. RSAs need to know when to start the credit check process, how to introduce alternative financing, and how to build sales tickets with free promotional terms.
Some retailers pay their RSAs based on the finance discount rate, meaning sales written with 60-month terms pay less commission than sales with 12-month terms. Top RSAs know how to downgrade and upgrade the terms to make the most sense to their shopper.
Customer service associate: Whether your organisation has five members or 5000, when there’s a problem with an
order, the first point of contact is the salesperson. After all, that’s the fella or gal that sold them the stuff! RSAs must juggle valuable selling time with issue resolution time. Often, the issues that appear are out of the control of the RSA, and still they figure a way to resolve the problems and still save the sale. RSAs not only need to be able to sell merchandise, they need to be adept at selling solutions to problems as well.
Psychologists: You don’t have to be crazy to work in sales, but it helps! Every shopper that walks into your store carries a full set of Louis Vuitton baggage in quirks, defects, and personality dysfunctions. RSAs work through shoppers’ self-imposed boundaries and hang-ups. They solve issues for 45-year olds who still need their mum’s approval to buy something, to imaginary doctor recommendations on comfort levels, to helping shoppers who haven’t purchased since Madonna’s last hit record adjust to sticker shock. Even if your store doesn’t sell upholstery, your RSAs are still providing complimentary couch time.
IT department specialist: When I started selling, PoS systems included a four-part carbon paper sales order and a 19 cent Bic pen. We wrote sales by hand and counted out the cash or rubber stamped the check. Even if you’re still writing out sales slips, chances are good that your salespeople are entering it into some sort of computer, or the RSA is entering a credit application or utilising a bank card terminal. Some RSAs record their guest log into a terminal. Others do all the above.
Electronic sales processing is great. You couldn’t build your empire without them. But BTW, those same systems break! On almost every RSA team, there is that one special salesperson who knows how to get things back online or knows a better workaround. They are either fixing the system for themselves or someone else to quickly process an order.
Housekeeping department: When I was a knee-high sprout and left a mess in the house, my mum would remind me that “it’s the cleaning lady’s day off”. Most of the stores I visit these days don’t have a housekeeping department. Shoppers haven’t gotten that news, and still leave displays a mess, not to mention leaving coffee cups, gum wrappers and other flotsam on floors, tables, and other sample merchandise. That stacks another duty on the sales team. It’s up to them to clean and straighten the showroom to return it to A1 condition.
We’ll never see everything that RSAs do on a job description, and it’s not likely we’ll ever celebrate National Commissioned Salesperson Day. That doesn’t prevent you from honouring the efforts of your sales team today. You can never tell someone that they do a good job too many times.
And while you’re applauding, don’t forget that your factory reps, advertising salespeople and most outside suppliers are your own personal psychologists, cleaning crew, merchandise locators, credit counsellors and IT specialists, putting in extra effort to keep your business relevant and successful
Storm the market with Furniture News
Want to make a splash in the furniture industry? You’ve come to the right place. As winter nears and momentum builds to the January shows, November’s issue explores some of the season’s key buying trends – from eco-friendly furnishings and practices to top garden goods – and meets the British bed industry’s finest. November’s issue offers the following special features:
ECO CONSCIOUS The latest sustainable developments, plus a focus on the move towards greener upholstery BED SHOW Our complete review of the NBF event, plus a celebration of 2021’s Bed Industry Award winners OUTDOOR FURNITURE With garden furniture booming, we take a look at what’s new
RETAIL FINANCE The PoS finance providers supporting more flexible purchasing paths
We also present the latest in Bedroom, Dining, Living and Trade Services products and services. Whatever the weather, make sure you’re home and dry with Furniture News. DON’T MISS OUT ON GETTING IN! Call Sam Horscroft on 07764 650655 or email sam@gearingmediagroup.com
BOOKING DEADLINE: MONDAY 14TH OCTOBER
TALKING TRADE
Furniture manufacturers can access invaluable expertise via a new webinar series hosted by the British Furniture Manufacturers (BFM) – but this is just part of an enhanced package of online services for members, explains MD Nick Garratt …
By NICK GARRATT www.bfm.org.uk
We’re delighted to launch the webinar series, which follows recent major investment in digital offerings including a new website, with individual profile pages for each member.
The topics covered during the webinars will help those in our industry to protect and support their businesses, providing an informed overview of a range of issues that can present challenges to member businesses on a daily basis – and we’re grateful to our partners for sharing their expertise.
The first session, taking place on Wednesday 6th October, kicks off with the topic ‘Doing business with the EU and Northern Ireland, postBrexit’, delivered by Jason Croke, VAT & customs director at chartered accountants Rayner Essex LLP.
It will cover importing goods from the EU to the UK for B2B and B2C, postponed import VAT accounting and duty deferment accounts, as well as exporting goods from the UK to EU for B2B and B2C, import duty, commodity codes, incoterms, rules of origin and Import One Stop Shop (IOSS).
The webinars are free to attend for members, who can simply book their place online. Each guest will give a halfhour presentation, and the sessions end with a Q&A session.
The webinar series follows a major investment in the digital realm by BFM in recent months, following the launch of our new website, which provides each member with a profile page dedicated to their business and offers customers an easy-to-search showcase of the best of British furniture and homewares. The service is of particular note for smaller manufacturers, who can take advantage of raising their profile in an engaging format.
We also launched a new Legal Hub in June, giving members a free toolkit offering legal and business advice on key topics such as health and safety, employment, contracts and data protection, as well as featuring policies, forms and guides created by qualified solicitors and business experts.
Since 1947, we’ve represented the interests of the British furniture industry, with a membership ranging from rural craftspeople to major household names.Today, we issue industry-specific updates to members, to keep them abreast of developments in the sector, as well as providing a dedicated hotline and an online members’ area information service, which is constantly updated.
We continue to develop a package of services that meet the needs of our members and champion the nation’s furnituremakers to the wider industry and to customers across the UK – the webinar series adds another layer of support, bringing expertise in specific fields to members in a way that is accessible to all, and I’m pleased that further events are planned going forward
INDUSTRY PARTNERS
THIS MONTH, WE’RE ASKING …
Adam Ashborn (Reborn Marketing & Design) All pieces of furniture have their rightful place in my home
Adam Hankinson (Furniture Sales Solutions) It’s actually our ‘plaid’ Brintons carpet that runs throughout the house. I love the tartan effect, and everyone who visits compliments us on it
Andy Stockwell (Gardiner Haskins) Probably the picture that we don’t have on our living room wall. We’ve been looking for the right picture for maybe three or four years. We’ll know it when we see it
Anne Davies (Room to Grow) Definitely my artwork and photos. I think these can add so much personality and really make a house a home
WHAT ACCESSORY/ FURNISHING ACCENT MAKES THE BIGGEST IMPACT IN YOUR HOME?
Lee Ness (Global Upholstery Solutions Lighting, for me
Mike & Karen Rowley (Core Products) An acrylic river-inlaid oak dining set from Kelston House, accented with Georg Jensen crash silverware
Mike Murray (Land of Beds and AIS) A wonderfully comfy new sofa, purchased during lockdown so as a family we could all snuggle up and watch a movie
Steve Adams (Mattress Online) Not sure it’s an accessory, but my pool table made a positive impact on lockdown boredom
Emma Leeke (Leekes Retail) Currently my wine fridge …
Peter Harding (Fairway Furniture) Curtains and flooring set the tone for any room – they are the canvas on which the rest of the room is painted
Royce Clark (Grampian Furnishers) Wall art in my own home, although I don’t have too much of it!
#385 October 2021
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