∙ Outstanding contract stipulations for subprime or special finance deals ∙ Overaged new and used vehicle inventory ∙ F&I product penetration, including service contracts and other protection products Service ∙ Customer receivables aged more than 30 days ∙ Warranty claims aged more than 30 days ∙ Accounts receivable extended beyond established credit guidelines ∙ Open repair orders outstanding for more than seven days. We frequently find repair orders left open for employees, friends or family members to avoid showing unpaid repair work in accounts receivable. ∙ Hours per customer-pay repair order and effective labor rate Parts ∙ Open parts tickets more than seven days old ∙ Customer-pay special-order parts (including required deposits or prepayments) ∙ Inventory with no sales activity for 12 months or longer ∙ Manager review of DMS-generated stock orders ∙ Phase-in and phase-out inventory criteria ∙ Parts returns processed within factory-protected guidelines ∙ Wholesale customer receivables aged more than 30 days Accounting ∙ Monthly reconciliation of all bank accounts, finance reserve accounts and floorplan accounts ∙ Timely reporting to department managers on past-due balances, missing documentation and other outstanding issues ∙ Monthly reconciliation of parts inventory in the DMS to the general ledger Few employees enjoy bringing problems to ownership’s attention. However, avoiding difficult conversations only allows small issues to become significant financial risks. By regularly reviewing the key metrics and risk areas that affect your dealership, management can identify the root causes of problems, improve communication, reinforce accountability, and adjust policies and procedures before issues impact profitability. The most successful dealerships aren’t those that never encounter problems. They’re the ones that identify them early, assign clear ownership and take action before those problems become expensive surprises. Tasha Sinclair, CPA/ABV, is a principal of Tetrick & Bartlett PLLC and has been providing accounting, tax, valuation and consulting services to automobile dealers since 2002. Tetrick & Bartlett PLLC currently serves over 50 dealers in West Virginia, Virginia, Ohio and Pennsylvania and is a member of the AutoCPA Group, a nationwide organization of CPA firms specializing in services to automobile dealers. Tasha can be reached at tsinclair@tb.cpa or (304) 624-5564. WVADA NEWS 22
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