Automotive Updates

Automotive Consultants, Automotive Dealership Consulting Firm, Enterprise Management Services, Mergers & Acquistions, Litigation Support

By Marilou Vroman, CPA, CFE

Remember a time when journal entries were hand written on green ledger paper and were reviewed and approved by the controller prior to posting?  In a time when our DMS systems have enabled ease of journal adjustments through source journals we have found more opportunity for theft and income manipulation than ever before.

During our internal audits we often review adjusting journal entries very closely; we have found there is an inverse relationship between the cleanliness and “health” of a dealers financial records and the volume of journal entry adjustments that occur within the dealers books.  In a perfect world, there would be very few adjustments since every transaction would be recorded correctly up front.  Since we are not in a perfect world, it’s important to know who is adjusting the books, why those adjustments are being made and whether the adjustments have been properly approved by department management.

In [...]

By Sam Flores

As we close yet another year, it is important to “review and measure” your dealership’s overall performance to gain a better understanding of the things that worked and didn’t work for you and your operations, so you can make the necessary adjustments now to lead to greater success in the future. Did your company meet its goals? What objectives were missed? Were there any obstacles that kept you from succeeding?  Does your team know what your objectives are?

A “review and measure” approach should be conducted annually, both for you and your employees.  I cannot stress enough the importance of employee evaluations.  When done correctly, the personnel  evaluation should reflect a clear outline of the characteristics which make for a successful employee within your company, but not just any company – YOUR company.  It should not be solely a critique of an employee’s performance on their anticipated job duties, but rather, a [...]

By Phil Villegas

After many years of the stability and brand performance parity, I sense we are going into a very interesting era for automotive dealers. While in my opinion there is a lot of fuss over “Mobility” and the virtual doom it has in store for a large percentage of the dealer network, I feel there is a more traditional and imminent threat to dealers before autonomous, subscription or ride-sharing services put a dent in the industry.

My primary concern relates to what appears to be a likely recession to come within the next few years.  While there are varying schools of thought of whether a recession is likely, the reality is we currently find ourselves not too far from being in longest economic recovery in US history, close to 10 years.  Despite this extended economic run, we are seeing other signs that bolster recessionary concerns like:

 

  • Slowdown in U.S. retail vehicle [...]

By Marilou C. Vroman, CPA, CFE

The fact that you are now reading this article means you already embrace the value of this week’s tip.   We’ve all been there – you start your day with a to do list a mile long and wonder how you will make it through.  Deadlines, making deals, meeting objectives, pressures coming from all directions.  Your day is spent just keeping up.  For many months I was so busy, I would see the latest issue of Automotive News or Journal of Accountancy land on my desk only to see it be covered by the next month’s issue, and the issue after that. You’re shaking your head thinking “well that sounds familiar.”

There came a day during a business lunch where I was among several dealers discussing a hot topic stemming from an OEM playing a strong hand with the franchisee’s and I really had nothing to say.  It was not [...]

By Sam Flores

Are you sure you have the right people in the right seats?

It has been my experience that when people are hired, they are usually brought on board to fill a need, a specific function or set of related functions left vacant or added due to growth. But how close are these functions really related? Are they simply bundled together because these were left to delegate after the main functions were handed out?  Many times, we as managers, focus on the set of tasks that need to be done, and assign them based on complexity to the most experienced employees.  We tend to distribute functions according to skill set until the most basic tasks are left for the newest employees.  This approach is not necessarily the best solution because I have found even the least experienced employees can excel in certain areas where even the most experienced may not.

Instead of focusing [...]

By Phil Villegas

During my career I’ve been part of dozens of dealership buy/sell closings, and they all have a common thread in that each closing is entirely unique yet will undoubtedly have a certain level of stress associated with it.

To put it simply, the largest stressor of any closing is that one or both transacting parties want to screw the other over.  Call it financial discretion or competitive gamesmanship, either way, this approach by many dealers at a closing can often be counter-productive, not to mention very costly if the parties are not properly prepared.

From the calculation of vehicle credits, identification of incentives, validation of fixed assets, valuation of miscellaneous and parts inventories, to the determination of liabilities to existing customers and vehicles that have already been reported as sold, there are several areas for either a buyer or seller to easily be taken advantage of.

Many dealers approach the closing quite [...]

By Marilou C. Vroman, CPA, CFE

As I made the passage from working as a Controller / CFO in dealerships to the exciting world of automotive retail consulting, I was introduced to a concept about the quality of services early on. This concept resonated with me because it applies not only to dealer advisory services but also to every aspect and department of a dealership.

In simplest terms: “We offer three types of services – Good, Fast and Cheap, but you can only choose two. Good and Fast won’t be cheap. Fast and Cheap won’t be good. Good and cheap won’t be fast.” This is so true!

In your service department, if a technician is more concerned with flagging maximum hours without concern for the quality of their work, you will likely see more comebacks. In the accounting department if you want to save on overhead and understaff, or hire under qualified personnel, you probably [...]

By Sam Flores

What do you do when you observe, or are put into a situation that you believe is illegal or, at the very least, unethical?  What if the person responsible for the situation is a superior?

A clearly defined employee handbook outlining expectations and well documented policies helps minimize ambiguity that may result in “personal interpretations” of the company’s rules and regulations.  But who is ultimately responsible for ensuring that rules are followed? Most Controllers I speak to face this same dilemma.  Many times, I’ve heard, “We get blamed for everything.” Although this may be a bit unfair, and at times not totally true, the accounting department is typically held to a higher standard.  Controllers are, in many ways, expected to be the stop gap to rule breaking.  They typically ensure the rules are followed.  We have all experienced at one time or another, the penalties that can come from non-compliance.  But no [...]

By Phil Villegas

We can all agree there is already more than enough paperwork in current vehicle deal files, with the average vehicle retail sale having between 50 and 100 documents with the deal jacket.  While the last thing any of us would want to do is add another document to the deal file, there is a one document that we routinely find missing that can help protect the dealership;  the Third-Party Funds Authorization Form.

It is almost a daily occurrence at many dealerships where the funds being used for a down payment or the purchase of parts and/or service come from an individual other than the person named on the deal, parts ticket or repair order.  While 99% of these payments may be innocent and well-intended in nature, it’s the one’s that are remitted maliciously that can really cost a dealership.    Check and credit card fraud are as pervasive as ever, despite advances in [...]

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