Article

How to Improve Your Accounting Department

December 2012, Auto Dealer Today - WebXclusive

by David Keller, CPA, CFE - Also by this author

Letter to the Dealer




The dealership office is normally the “forgotten” department of the store. The office staff normally feels as if no one cares about them. They don’t produce gross profit for the bottom line, so why should you spend any time with them or tell them you appreciate them for what they do for the store? They are always telling you what everyone else is doing wrong and complaining about all the work they have to do.

Well, if I were you, I would keep listening to them and pay attention. They are the “police force” of the dealership that watches your back and keeps everyone from taking advantage of you. They keep watch on your money, your assets, personnel, vendors and customers. They pay your bills, complete payroll, listen to all the managers complain about what you won’t do for them, clean up all the paperwork from all the other departments and try to show you a profit at month’s end on your financial statement, even though their job is not to create sales or gross profit.

Sometimes doing all of the above wears down the morale of the office staff. Most office staff work very hard to complete everything on a timely basis and as accurately as possible. They feel underappreciated for the work they do to “clean up” the other dealership employees’ and managers’ messy paperwork.

The best thing you can do is reinforce the great job your accounting department does. Meet with them on a regular basis to find out what everyone else in the dealership is doing or trying to get away with. Sit down with them to review your expenses each month and ask them what needs to be done to reduce or eliminate those expenses to increase your profits.

Your accounting office doesn’t produce gross profit but they can let you know the gross profits in the various departments are not up to standards or meeting industry minimums. The accounting office can help you reduce the number of low- or lost-gross-profit transactions which take place each month.

There are many ways to improve your office. One of the first things you can do is keep everyone who doesn’t need to be in the office out of there. Constant interruption causes concentration to decline and it’s not what you want to happen when someone is handling your money.

Another thing you can do is review what paperwork the office staff is always cleaning up for the other departments. One of the gripes I hear most from the office staff is the condition of the car deals which arrive in the office. They seem to be missing some stip or signed document to get the deal funded in a timely manner. Most of this is due to either the sales or F&I staff not doing their job as best they can. F&I managers need to be good at selling and getting the deal closed for you to make money, but you also need to collect the contract proceeds in a timely fashion in order to stay in business and pay off the floor plan within guidelines to avoid audit problems.

Your office can tell you when the service department is not closing their repair orders and not submitting timely warranty claims. There is normally a time frame to submit and obtain payment from the factory for the warranty claims. When you don’t collect it, your office will charge it off to policy expense. You may not see this expense itemized on your financial statement because it is normally buried among other expenses you don’t study very closely.

Writing off unapplied time or excess work–in-process can cost you “lost gross profits.” Any time you write off could have been turned into labor sales, which would have produced gross profit for the service department. Any adjustment besides a small one should be reviewed each month to figure out why you have it. Doing so can increase your profits.

Having your office manager run and review various reports for the parts department, which your parts manager doesn’t have time to do, can alert you to problems early so they can be addressed and corrected. These may be problems with overage inventory, excess inventory, excessive negative parts on hand, a large amount of non-stocking parts, and discrepancies between the parts counter pad and the general ledger, etc.

Another problem I see frequently is the office continually having to answer phone calls intended for other departments. Again this breaks concentration and can contribute to mistakes and inefficiency in the office. I know it sometimes can’t be avoided due to the lack of adequate staff, the cost to hire a receptionist or the time of day, but you should take a hard look at what this is doing to your accounting department. It could be just as easy to make sure a salesperson or manager is available to answer the phones during heavy peak periods.

I know I am partial to the accounting department, but someone has to tell their story. Use their abilities to the fullest to aid in increasing the profitability of your store. Let them know you care about their contributions toward your bottom line and your well-being.

Vol. 9, Issue 9

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