National Accounts — How Do You Create a Program That Really Works?

This article is intended to help everyone gain a better understanding of National Accounts Programs, including the motivation for creating one and the steps toward a successful process. While it is not intended to definitively answer every question regarding national accounts, it serves as a set of guiding principles for those in the company who are responsible for the success of the program. It is written for salespeople, branch managers and national account representatives, not the company’s executive management team. However, keep in mind that executive management needs to be committed to the program and would benefit by understanding the process and concepts.

Regain Power by Offering Competitive Advantage

National accounts, by definition, have significant size and buying power which provide leverage in demanding lower prices. In addition, because of their complexity and demographics, they are often more difficult and expensive to service. Consequently, most national accounts are the least profitable.

In response, you need to make a concentrated effort to effectively rebalance the shift of power by offering significant competitive advantages that make your products and services more critical to your national accounts. Without creating competitive advantage, you will be tied to the downward price spiral that eats margin and effectively negates any understanding by your customers that “price is not the same as cost.” A structured national accounts program with definitive guidelines is the first step toward gaining competitive advantage.
There are four basic broad categories of added value that create competitive advantage:

1. Processes that streamline your customers’ productivity, improve quality, take transaction costs out of the supply chain and provide measurable savings (unrelated to price).

2. Administrative and technical support that can reduce your customers’ internal costs enough to affect bottom line operating costs.

3. Sales and marketing support that can increase your customers’ top line.

4. Technology that is core to your customers’ business results, yet is beyond their internal capabilities.
Your national accounts program should refocus your efforts on all of these issues.

Four Fundamentals

The ultimate success of a national accounts program depends on the hard work and team participation of all company employees involved in the process.
There are four basic fundamentals of success in any national accounts program:

1. Knowledge – Study the internal processes of your company and/or the internal workings of your national accounts program if you already have one in place.

2. Understanding – Research the business environment in which your company operates and the resulting defined objectives for a national accounts program.

3. Clarity – Identify the big picture of market and customer demand and direction. This should be a true understanding of what your corporation is trying to accomplish in total.

4. Commitment – Secure the commitment of your entire company.


It is essential to outline the objectives of your program, the process involved, and the direction to take in order to receive help and support when necessary. If you have no program in effect, it is critical to develop this process.

Second, activity measurement and open communication (both up and down the chain of command) are absolutely critical for success. Accountability is an absolute necessity and it must be clearly defined. Support from your company’s information management system can provide the fundamental elements of success for the national accounts program. A weak information system could leave dangerous voids or even misrepresent the true picture of the national accounts program.


Understanding brings the field view (external view) closer to corporate headquarters. An internal company survey may provide the necessary clarity as to how a national accounts program is perceived. Input from local account representatives and branch managers is very important. Your company needs to explore how things are being done and how an existing program is perceived. Most importantly, input from the field with recommendations is essential. If you currently have no program, the survey is even more critical to the initial development stage of a new program.
Understanding actual needs of the national account is also critical to the success of your program. To get a better understanding, ask the following questions:

o What do national account types really value?

o What motivates our suppliers to negotiate special terms for these accounts?

o Do these accounts view our company as partners?

o What do we know about their business?

o Are we truly the primary source of supply?

o Can we create a win-win situation?


Everyone must have a clear understanding of exactly what you are trying to accomplish. Recognizing the volatility of the environment is a valuable piece of the puzzle. Your company needs to catch up to the pace of change within the distribution industry to maintain competitive advantage. Remember, “Perceived value drives expectations” and “Performance value drives customer satisfaction.”

Raise your customers’ perceived value high enough and you create “competitive advantage” which is the first step towards rebalancing the shift of power inherent in any national accounts program.

While the knowledge aspect of the national accounts program is heavily weighted toward internal perspective, clarity needs to be weighted toward your external environment. You must be clearly aware of market dynamics, including technology and other external forces shaping your particular industry and driving behavior of the national accounts customers. You must evaluate events and trends using an anticipatory perspective in relationship to your competition. You need to ask yourself these questions:

o How is the industry different today regarding what is expected from a national accounts program?

o What will be considered by 2007?

o What are our competitors doing in serving national accounts?

o What technologies offer the most potential, both as products and tools?

o What actions are our competitors taking to gain advantage?

o How will our suppliers react to our strategy?


A National Accounts Program cannot be treated like a member of the “flavor of the month” club. Everyone needs to take it seriously. Commitment is required by everyone. This is not something you dabble in. That is why it is important to put the time and attention into the planning process before getting wet. Understand your objectives.

The only reason a company should embark on a national accounts program is to obtain sales and market share that in total is profitable for the company and meets the criteria of corporate strategic objectives.

The corporate objectives of the national accounts program may be outlined as follows:

o Develop a national presence in the marketplace

o Enhance the company image and credibility

o Develop impressive client references

o Support growth with preferred vendors

o Create synergy with the corporate mission statement

o Rebalance the shift of power and profitability in the national account program

One of the core problems facing many national accounts programs is the need to overlay a centralized sales function on an established decentralized sales force. In the past, your processes and systems may not have enabled customers, prospects, or even your own field sales representatives to make informed, favorable decisions.

How Do We Get Started?

Step 1: Define the Players

Clearly define independent responsibilities of each player contributing to the success of the national accounts program.

Director of National Accounts

o Serves as liaison with national account at corporate level.

o Approves and helps establish “Rules of Engagement.”

o Provides support to local management.

o Monitors the activity between national account representatives and local branches.

o Determines qualification criteria. Reviews qualification process.

National Account Manager

o Supports/initiates implementation of national account program.

o Calls on national account corporate purchasing.

o Responds to issues and requests from the customer and company personnel.

o Meets and interacts with your customers’ top decision makers.

o Helps customers, even in areas unrelated to company products and service.
o Communicates effectively with local branch management and local account representatives.

Branch Manager

o Manages activity of local account representatives.

o Supports both corporate and local national account sales efforts

o Monitors national account activity, service level, and provides guidance to local account representative

o Reports progress.

o Interacts with Director of National Accounts on any and all national account issues.

Local Account Manager

o Manages consigned inventory

o Grows sales of non-contract items

o Interacts with national account manager

o Services account according to contract rules of engagement

o Provides Branch Manager with monthly status report.

Step 2: “The Tiger Team”

A tiger team is a select group of top-level employees, selected by executive management, who are committed to the objective of refining the development of the national accounts program. This team consists of the following personnel:

o Director of National Accounts

o Several national account representatives

o A regional manager

o Several local sales representatives

The tiger team should be split into two groups:

Group 1: Director of National Accounts

Several national account representatives

Group 2: Regional manager

Several local account representatives

With a two-day retreat as the setting, each group will separately establish the following during the first day: (This is a brainstorming session designed to cover any and all ideas.)

o Measurement criteria for individuals and accounts

o Priorities

o Action items

o Accountability

o Objectives

o Rules and responsibilities of all players

On the second day, the groups will merge and compare notes to establish a united refinement plan to go forward. This documented plan will be submitted to executive management for approval. Upon approval, it is highly recommended that the intent and objectives of the program be properly communicated to all employees. (E-mail [email protected] to get a sample national accounts program communication message.)
Then, a six-month audit should be conducted to follow-up on progress and action items. This should ensure the program is progressing and that objectives are met. (E-mail [email protected] if you would like a suggested listing of qualification procedures.)

Step 3: Communication

Establish communication processes and trust-building techniques for existing and prospective national accounts. Tips include:

o The sharing of relevant information will begin the trust building process. The company should take the lead.

o The beginning dialogue should focus on the long-term strategic initiatives of the respective companies. Understanding each other’s drivers, challenges and strategies will build the foundation for future communications.

o The customer needs analysis and account planning process are excellent vehicles to build trust and open communication.

o Customer and supplier executive interaction fosters trust and will have a cascading effect, driving both organizations toward more effective communication.

o The data and information to be shared should be identified in a cooperative environment. The focus should be on information that will lead to improvement and efficiencies for both the customer and the company.

o The capture, storage, retrieval and communication of information to be shared must be considered when building the infrastructure systems.

o The customer and your company’s national and local representation must develop the rollout plan jointly.

o Internal champions/coordinators of the rollout process must be identified and positioned by both the customer and the company.

o The plan should be developed and implemented using a team “project” approach. The ongoing monitoring and controlling activities should then be transitioned to others within the respective organizations.

o The rollout plan should address cultural, functional and training issues for both organizations.
The infrastructure system should have the ability to report information that is crucial to monitoring and controlling the ongoing application of these services.

Track the Process on the Web

It greatly enhances the communication process if national accounts programs are tracked on the web. As Akarin Weatherford, Chief Technology Officer of CEO Strategist LLC points out, this creates great opportunities to increase effectiveness within the organization:

o Communication channels widen as web application is leveraged to support the account management process. Collaborative tools allow managers, sales persons and account representatives to adequately share information between themselves about accounts.

o Managers can track and view the progress of sales persons and account representatives from anywhere with near 24×7 availability using a standard web browser from any PC or laptop connected to the Internet.

o A centralized web site to track the milestones within this process means that managers can capture a real-time picture of what is going on with the entire account management process and each individual account in order to make appropriate critical business decisions.

o Accountability and traceability for each manager and sales representative are established since all actions performed on a customer’s account are recorded by the web site.

Because of the distributed nature of national and local accounts, the best way to manage this process is through a web-based application. This means the following:

o No Need to Buy Special Computers or Software – Most managers, sales persons, and account representatives will already have what they need to participate: laptop/PC, web browser, and local internet service, meaning no long distance access charges (through AOL, Road Runner, AT&T, etc.).

o Information Technology Overhead Can be Cut – Maintain one software application at one location (on the server) rather than many software applications in many branch locations (on individual computers). If there are any updates to the web site, it occurs in one place and is automatically distributed to managers, sales persons, and account representatives the next time they connect to the site. You can shrink the IT staffing because the necessary support coverage is less.


The motivation and process for developing a national account program have now been outlined. As you go forward, remember these elements that will be critical to the program’s success:

o Gather All Input – A national accounts program involves many participants. It is not something you do to get customers. It is something you do with major national chains. The most successful national accounts programs have included executive and corporate input in combination with branch and local input. Most importantly, however, is the input of the customers themselves in the planning, implementation and measurement stage.

o Focus on the Process and Communicate Well – In a national accounts program the old cliché, “the plan is the sale” and “the sale is the plan” is clearly applicable. What is presented and sold to the national accounts are not only the results, but the process used to accomplish those results. Products, services, results, measurement and follow-up are individual elements in the national accounts program that guide and direct the process of the transactions and the relationship.

o Involve the Team – National accounts planning must be a team project. The program and the transactions it encompasses have to become the product of the company and each individual national account, including local account managers, branch managers and the national accounts team. Involvement of the executive staff is also critical to success.

o Build Measurement and Accountability into the Process – The measured results become benchmarks that are established in the plan. A national accounts program without measurement and accountability is deficient. Of course, two primary measurements are (1) profitability and (2) success in selling non-contract products. Other milestones may include geographic penetration, growth and product replacement.

Rectification Of Accounting Errors

Accountants prepare trial balance to check the correctness of accounts. If total of debit balances does not agree with the total of credit balances, it is a clear-cut indication that certain errors have been committed while recording the transactions in the books of original entry or subsidiary books. It is our utmost duty to locate these errors and rectify them, only then we should proceed for preparing final accounts. We also know that all types of errors are not revealed by trial balance as some of the errors do not effect the total of trial balance. So these cannot be located with the help of trial balance. An accountant should invest his energy to locate both types of errors and rectify them before preparing trading, profit and loss account and balance sheet. Because if these are prepared before rectification these will not give us the correct result and profit and loss disclosed by them, shall not be the actual profit or loss.

All errors of accounting procedure can be classified as follows:

1. Errors of Principle

When a transaction is recorded against the fundamental principles of accounting, it is an error of principle. For example, if revenue expenditure is treated as capital expenditure or vice versa.

2. Clerical Errors

These errors can again be sub-divided as follows:

(i) Errors of omission

When a transaction is either wholly or partially not recorded in the books, it is an error of omission. It may be with regard to omission to enter a transaction in the books of original entry or with regard to omission to post a transaction from the books of original entry to the account concerned in the ledger.

(ii) Errors of commission

When an entry is incorrectly recorded either wholly or partially-incorrect posting, calculation, casting or balancing. Some of the errors of commission effect the trial balance whereas others do not. Errors effecting the trial balance can be revealed by preparing a trial balance.

(iii) Compensating errors

Sometimes an error is counter-balanced by another error in such a way that it is not disclosed by the trial balance. Such errors are called compensating errors.

From the point of view of rectification of the errors, these can be divided into two groups :

(a) Errors affecting one account only, and

(b) Errors affecting two or more accounts.

Errors affecting one account

Errors which affect can be :

(a) Casting errors;

(b) error of posting;

(c) carry forward;

(d) balancing; and

(e) omission from trial balance.

Such errors should, first of all, be located and rectified. These are rectified either with the help of journal entry or by giving an explanatory note in the account concerned.


Stages of correction of accounting errors

All types of errors in accounts can be rectified at two stages:

(i) before the preparation of the final accounts; and

(ii) after the preparation of final accounts.

Errors rectified within the accounting period

The proper method of correction of an error is to pass journal entry in such a way that it corrects the mistake that has been committed and also gives effect to the entry that should have been passed. But while errors are being rectified before the preparation of final accounts, in certain cases the correction can’t be done with the help of journal entry because the errors have been such. Normally, the procedure of rectification, if being done, before the preparation of final accounts is as follows:

(a) Correction of errors affecting one side of one account Such errors do not let the trial balance agree as they effect only one side of one account so these can’t be corrected with the help of journal entry, if correction is required before the preparation of final accounts. So required amount is put on debit or credit side of the concerned account, as the case maybe. For example:

(i) Sales book under cast by Rs. 500 in the month of January. The error is only in sales account, in order to correct the sales account, we should record on the credit side of sales account ‘By under casting of. sales book for the month of January Rs. 500″.I’Explanation:As sales book was under cast by Rs. 500, it means all accounts other than sales account are correct, only credit balance of sales account is less by Rs. 500. So Rs. 500 have been credited in sales account.

(ii) Discount allowed to Marshall Rs. 50, not posted to discount account. It means that the amount of Rs. 50 which should have been debited in discount account has not been debited, so the debit side of discount account has been reduced by the same amount. We should debit Rs. 50 in discount account now, which was omitted previously and the discount account shall be corrected.

(iil) Goods sold to X wrongly debited in sales account. This error is effecting only sales account as the amount which should have been posted on the credit side has been wrongly placed on debit side of the same account. For rectifying it, we should put double the amount of transaction on the credit side of sales account by writing “By sales to X wrongly debited previously.”

(iv) Amount of Rs. 500 paid to Y, not debited to his personal account. This error of effecting the personal account of Y only and its debit side is less by Rs. 500 because of omission to post the amount paid. We shall now write on its debit side. “To cash (omitted to be posted) Rs. 500.

Correction of errors affecting two sides of two or more accounts

As these errors affect two or more accounts, rectification of such errors, if being done before the preparation of final accounts can often be done with the help of a journal entry. While correcting these errors the amount is debited in one account/accounts whereas similar amount is credited to some other account/ accounts.

Correction of errors in next accounting period

As stated earlier, that it is advisable to locate and rectify the errors before preparing the final accounts for the year. But in certain cases when after considerable search, the accountant fails to locate the errors and he is in a hurry to prepare the final accounts, of the business for filing the return for sales tax or income tax purposes, he transfers the amount of difference of trial balance to a newly opened ‘Suspense Account’. In the next accounting period, as and when the errors are located these are corrected with reference to suspense account. When all the errors are discovered and rectified the suspense account shall be closed automatically. We should not forget here that only those errors which effect the totals of trial balance can be corrected with the help of suspense account. Those errors which do not effect the trial balance can’t be corrected with the help of suspense account. For example, if it is found that debit total of trial balance was less by Rs. 500 for the reason that Wilson’s account was not debited with Rs. 500, the following rectifying entry is required to be passed.

Difference in trial balance

Trial balance is affected by only errors which are rectified with the help of the suspense account. Therefore, in order to calculate the difference in suspense account a table will be prepared. If the suspense account is debited in’ the rectification entry the amount will be put on the debit side of the table. On the other hand, if the suspense account is credited, the amount will be put on the credit side of the table. In the end, the balance is calculated and is reversed in the suspense account. If the credit side exceeds, the difference would be put on the debit side of the suspense account. Effect of Errors of Final Accounts

1. Errors effecting profit and loss account

It is important to note the effect that an en-or shall have on net profit of the firm. One point to remember here is that only those accounts which are transferred to trading and profit and loss account at the time of preparation of final accounts effect the net profit. It means that only mistakes in nominal accounts and goods account will effect the net profit. Error in the these accounts will either increase or decrease the net profit.

How the errors or their rectification effect the profit-following rules are helpful in understanding it :

(i) If because of an error a nominal account has been given some debit the profit will decrease or losses will increase, and when it is rectified the profits will increase and the losses will decrease. For example, machinery is overhauled for Rs. 10,000 but the amount debited to machinery repairs account -this error will reduce the profit. In rectifying entry the amount shall be transferred to machinery account from machinery repairs account, and it will increase the profits.

(il) If because of an error the amount is omitted from recording on the debit side of a nominal account-it results in increase of profits or decrease in losses. The rectification of this error shall have reverse effect, which means the profit will be reduced and losses will be increased. For example, rent paid to landlord but the amount has been debited to personal account of landlord-it will increase the profit as the expense on rent is reduced. When the error is rectified, we will post the necessary amount in rent account which will increase the expenditure on rent and so profits will be reduced.

(iil) Profit will increase or losses will decrease if a nominal account is wrongly credited. With the rectification of this error, the profits will decrease and losses will increase. For example, investments were sold and the amount was credited to sales account. This error will increase profits (or reduce losses) when the same error is rectified the amount shall be transferred from sales account to investments account due to which sales will be reduced which will result in decrease in profits (or increase in losses).

(iv) Profit will decrease or losses will increase if an account is omitted from posting in the credit side of a nominal or goods account. When the same will be rectified it will increase the profit or reduce the losses. For example, commission received is omitted to be posted to the credit of commission account. This error will decrease profits ( or increase losses) as an income is not credited to profit and loss account. When the error will be rectified, it will have reverse effect on profit and loss as an additional income will be credited to profit and loss account so the profit will increase ( or the losses will decrease). If due to any error the profit or losses are effected, it will have its effect on capital account also because profits are credited and losses are debited in the capital account and so the capital shall also increase or decrease. As capital is shown on the liabilities side of balance sheet so any error in nominal account will effect balance sheet as well. So we can say that an error in nominal account or goods account effects profit and loss account as well as balance sheet.

2. Errors effecting balance sheet only

If an error is committed in a real or personal account, it will effect assets, liabilities, debtors or creditors of the firm and as a result it will have its impact on balance sheet alone. because these items are shown in balance sheet only and balance sheet is prepared after the profit and loss account has been prepared. So if there is any error in cash account, bank account, asset or liability account it will effect only balance sheet.