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  • Gram Bischof

Account Hierarchy

Account hierarchies are an important tool for organizing and grouping complex customers within your client base. While it is often assumed that an account hierarchy must be based on a legal entity, this is not always the case. In fact, there are several different types of account hierarchies that can be used, depending on the needs of your business and the structure of your client’s organization.


One of the key factors to consider when creating an account hierarchy is the grouping of contacts. An account is essentially a group of contacts and should be viewed mainly as just a set of those needed to accomplish whatever tasks and responsibilities are required. This will depend on the structure of your organization and the needs of your business. For example, you may want to group contacts by legal entity, department, or physical locations.


The second factor to consider when creating an account hierarchy is finance or billing. When a deal is closed, there should be some aspect of the hierarchy that allows for it to be billed correctly. This may involve determining who within the account will be paying for the goods or services being sold. It is important to ensure that the billing process is clear and efficient in order to avoid any confusion or issues.


There are several different types of account hierarchies to consider, each with its own advantages and disadvantages. One common type of account hierarchy is the entity structure, which is based on legal corporations and ownership. This type of hierarchy is often used by companies with multiple franchises, where the parent company owns the rights and marketing materials of the franchises.


LEGAL ENTITY STRUCTURE


Another common type of account hierarchy is the division structure, which groups entities by department or division. This type of hierarchy is often used by large companies with multiple products or lines of business. For example, Microsoft has various departments for different products, such as Microsoft Office, Azure, and Devices (such as the xbox). Amongst those divisions/departments you might have


sub-divisions and departments that can further be divided and expand the hierarchy.


DIVISION ENTITY STRUCTURE


When creating an account hierarchy, it is important to consider both the grouping of contacts and the finance or billing aspect in order to ensure that the hierarchy is structured effectively. By taking these factors into account, you can create an account hierarchy that meets the needs of your organization and helps you to effectively manage your contacts and billing processes.


A common example of billing oriented account hierarchy is franchisees. This model represents several independent legal entities that are grouped together based on how they combine resources. A good example would be national advertising for the brand that effectively services multiple entities but is paid by the parent company.


FRANCHISE ENTITY STRUCTURE


Finally, there is a location based types of account hierarchy. This model is largely utilized in retail and has importance to order fulfillment and storage. For example, a medical device company may need to ship and service devices at several locations all owned by a singular legal entity. This would introduce multiple locations under a parent account.



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