Each customer can be assigned a territory, though it's not required. This allows you to separate your customers into groups based on where they are located which is useful for reporting purposes.

When adding a territory, give it a Code (up to 4 characters) and a Description (up to 40 characters). For example, it could be 'NS' and 'Northern Suburbs'. Depending on the area your business services, make the description appropriate. If you only service a single city, then 'Northern Suburbs' would be fine. If your customers are in multiple states or countries, the description should be more specific such as 'Sydney - Northern Beaches' or 'USA - West Coast'. If your customers are generally all local then setting territories might not be useful.

Once you have added territories, you can assign them to customers in the Customer Setup section.

After adding a territory it's code can't be changed, though it's description can. A territory can't be deleted if customers have been assigned to it - change the customer's territory to a different territory first then you can delete the territory.