What Is House Account?

A detailed exploration of house accounts, primarily managed at a firm’s main office or by an executive, distinguishing them from salesperson-handled accounts in the territory.

A house account is an important concept in accounting and finance, referring to accounts that are managed directly at a firm’s main office or by a senior executive instead of being handled by an individual salesperson operating within a designated territory. These accounts are distinct due to their high value, complexity, or the strategic importance they hold for the organization.

Types of House Accounts

Executive-Managed Accounts

These are accounts personally overseen by senior executives within the company. The involvement of top-level management indicates the account’s criticality and ensures dedicated attention and strategic handling.

Main Office-Handled Accounts

Accounts managed from the firm’s headquarters as opposed to regional offices or field sales teams. This centralized approach can be due to the account’s complexity or the need for cohesive management.

Special Considerations

Handling house accounts requires unique considerations due to the following factors:

• High-Value: Often these accounts are substantial in terms of monetary value, requiring experienced oversight.
• Key Relationships: Maintaining key business relationships is crucial, necessitating skilled management at higher organizational levels.
• Strategic Importance: The strategic importance of these accounts often impacts the overall business direction and success.

Examples of House Accounts

• National Retail Chains: Managed centrally due to the significant business they bring.
• Major Suppliers: Often considered house accounts due to their importance in supply chain logistics.
• Government Contracts: Handled at the executive level due to their scale and complexity.

Historical Context

The concept of house accounts gained prominence with the growth of large corporations in the 20th century. As businesses expanded, managing key accounts centrally became essential to maintain consistency and leverage strategic opportunities across vast geographic territories.

Applicability

House accounts are prevalent in various sectors, including:

• Finance: Large institutional clients or major investors.
• Retail: National and multinational retail chains as key accounts.
• Manufacturing: Critical suppliers and large purchasers of goods.

Comparisons

House Accounts vs. Field Accounts

• House Accounts: Managed by executives/main office, indicating higher complexity and strategic importance.
• Field Accounts: Typically handled by salespersons within specific regions or territories, often smaller in scale or less complex.

Related Terms

• Key Account Management (KAM): The process of managing relationships with high-value clients.
• Centralized Management: A management structure where decision-making authority is concentrated at the top level.

FAQs

Why are house accounts managed at the executive level?

House accounts are managed at the executive level due to their strategic importance, complexity, and high value. Executives have the experience and authority to make critical decisions that significantly impact the firm’s success.

How do house accounts differ from regular accounts?

House accounts are distinguished by their management level, typically handled by executives or main office personnel rather than regular sales representatives, due to their higher stakes and strategic importance.

Can house accounts transition into regular sales accounts?

Yes, house accounts can transition to regular sales accounts if their importance or complexity decreases over time, necessitating less direct oversight from senior management.

References

• Johnson, K. (2020). “The Strategic Importance of House Accounts.” Journal of Business Management.
• Smith, L. (2019). “Centralized Account Management in Large Corporations.” Finance and Accounting Review.

Summary

In essence, house accounts are a cornerstone in major corporations for managing high-value, strategically significant clients or contracts. Distinguished by their management at the main office or by senior executives, house accounts ensure focused attention and facilitate strategic, centralized decision-making crucial to the firm’s broader success.