Protecting – and growing – your bottom line

The dealership market is extremely competitive, with approximately 17,000 franchised new vehicle dealers in the United States — not including the many used vehicle, boat and recreational vehicle dealers. That competition poses constant challenges to your bottom line. But outside of striving to provide top sales and support service to your customers, there’s not much you can do about it: your competition isn’t likely to shutter just to make things easier for you. 

Fortunately, you DO have control over the following four ways to protect your bottom line … and one key way to improve it:

Protect

Fraudulent banking transactions

Your CFO, controller or accounting manager should review your bank account on a daily basis. Thieves are constantly looking for ways to steal your money and fraudulent online transactions are on the rise. Diligently monitoring your bank account(s) is the only way to minimize potential loss.

Your accounting management should review every bank transaction daily to assess their validity. It can be very easy, for example, for an employee to make their car payment online and bury the payment in your general ledger.

Additionally, consider utilizing a separate bank account strictly for electronic cash disbursements. Maintaining a minimal balance is this account will prevent unauthorized electronic withdrawals from your general checking account.

Company credit cards

Develop and enforce strict policies stating what types of expenditures are permitted on company credit cards. Prohibit any personal use on these cards. Monitor transactions and enforce timely submission of receipts.

Receivable status reports

Your accounting department should provide frequent receivable status reports detailing outstanding balances, account aging and problem accounts that have not been collected. These reports should be reviewed with departmental management to ensure timely collection and improved cash flow.

Financial statement trend analysis

Review your monthly financial statements with your CFO, controller, and/or accounting manager and compare the current month and year-to-date activities with prior months and prior year statements to determine upward and downward trends. These trends will aid your dealership in assessing areas that are improving or are in need of improvement. Additionally, by recognizing trends early corrective action can be taken on a timely basis. Consider utilizing manufacturer performance reports to assess your dealership’s performance against other dealers in your market.

Improve

20 Groups

Profitability and operational metrics are frequently discussed at “20 Group” meetings — meetings that provide dealerships with the opportunity to share ideas among their peers from across the nation. Typical areas of focus at the meetings include economic trends, operational policies and procedures that can improve sales and profitability, and manufacturer relations. Consider involving your accounting and departmental management in your 20 group meetings to gain their input regarding your operations and profitability

Published in Dealerships

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