Comments Off on Who is monitoring your digital media content?
By Sam Flores
Dealerships operate under severe scrutiny in one of the most regulated industries. The digital age has brought about even more regulations, and even more risk to dealers. Whereas you only had to monitor radio, television and print ads, today, web-based marketing has exploded and so has the risk of non-compliance. Dealers need to constantly monitor their advertising on their websites as well as the information being published on 3rd party sites. But advertising is not your only concern.
The rise of social media has also become a new opportunity to market the dealership. And this too has brought on significant risk. Who monitors the content? Is it professionally acceptable? Who uploads the content? Who is monitoring access? Is there an action plan in place if misleading or harmful information is posted?
Monitoring the content is important and should be the ultimate responsibility of a senior manager that understands the company culture, regulatory [...]
Comments Off on WardsAuto MegaDealer 100 – Numbers Go Up and Up
By Phil Villegas
As seen on WardsAuto
In 1994, when WardsAuto began its list of 100 megadealers, it was a compilation of super-regional groups. The largest then was Hendrick Automotive, with 66 stores and $1.8 billion in revenue.
On the 2018 WardsAuto Megadealer 100, $1.8 billion alone won’t get you in the Top 25. (Hendrick is No.6 this year with total revenues of $8.6 billion. No.1 AutoNation took in $21.5 billion.) For the complete list,click here.
Unlike in 1994, when there were no public dealership groups yet, today’s compilation of megadealer owners includes publicly traded companies and private-equity firms.
The functioning dynamics and playing field of the Mega 100 has changed drastically from the inception of the list. It used to represent a reflection of top dealer groups that expanded based on reinvesting their capital into additional [...]
Comments Off on Who needs hackers when physical data is so easy to obtain?
By: Sam Flores
Every dealership runs the risk of someone obtaining unauthorized information which could be potentially harmful to the store or more importantly, its customers. You might think potential breaches in data security these days is isolated to hackers gaining access to your computer systems. But a great deal of risk still exists from the deficiencies in the security of physical sources of information, such as copies of credit applications left on a sales desk, drivers licenses left on the copier, deal files left in an unlocked F&I office. I am surprised at the number of times I have walked into a dealership storage room or office containing easy access to sensitive information simply because it appeared as if “I belonged” or was permitted to be there.
Simple tips to minimize the unauthorized access include: ensuring than all offices and storage areas are kept locked and displaying sufficient and appropriate signage instructing dealership visitors [...]
Comments Off on It’s not only about identifying vehicles on the schedules or floorplan
By Phil Villegas
We often come across dealerships where the process of taking monthly physical inventories is a bit relaxed. When asked about their physical vehicle inventory procedures, we are often told:” Yes, we do physicals…our sales department handles that” or “Our bank does a floorplan check monthly” or “Yes, we have a porter touch all the cars.” While these might be elements of verifying the vehicle inventory, these approaches do little to identify any missing cars.
We typically recommend:
Have an individual who is independent of the sales department write down/scan all cars present on the lot. Do not provide an accounting schedule or other listing of inventory to those conducting the physical.
The results of the physical inventory should be reconciled with accounting schedules to identify both vehicles missing from the lot and vehicles missing from the schedules.
A reconciliation summary of the status of all missing units should be properly investigated [...]
Comments Off on The Importance of Monitoring DMS User Profiles
By Sam Flores
How often do you review your company’s DMS user security profiles? You might be surprised at the access some of your employees may have. I have seen cashiers having the ability to void and adjust cash receipts, and accounting clerks with access to payroll information!
There are several reasons why employees could obtain system access to functions or information outside of their scope of work. For example, an employee may have been granted temporary access to perform a vital function in response to another employee calling in sick for the day; or helping cover extra work load during month-end. After the chaos settles, it is very easy to simply forget to change the user’s security profile back to what it originally was!
Many new hire employee profiles are created by simply using an existing employee’s profile and copying the template to a new user ID. New employees often wind up having more [...]
Comments Off on The costly proposition of understaffing the accounting department
By Marilou C. Vroman, CPA, CPE
We often encounter dealers who ask: how many people should we have in the accounting department? As retail automotive advisors, we love to reference NADA, which has a guide of 15 total employees for every one accounting staff. Our answer is typically: NADA guide, plus one.
The accounting department is a cost center which is typically difficult to calculate an ROI. However, in an environment where cash is king and profitability is everything, justifying additional headcount is often frowned upon. Why would we want to add more people?
Accounting staff are often playing catch up, feverishly billing the stack of deals that comes up the last day of every month, preparing commissions, meeting tax deadlines, processing timely payroll and so on. We find the pressure on staff to just “clean” the schedules each month is often so great that thousands of otherwise collectible dollars are written off with little [...]
We’ve discussed in the past that one of the greatest benefits of working at a dealership is having the ability to buy a car that would be considered below market price. However, should selling a car through the dealership also be a perk? We are not talking about traditional traded-in vehicles as part of a normal sale but rather the consignment or pre-trading (a car that is traded in and sold before the new vehicle is acquired) of employee vehicles.
While nowhere as common as employee purchases, we occasionally come across transactions where dealership employees will sell their personal vehicle through the store. When we have come across these transactions, it’s very rare that these transactions have been carried out with the transparency and level of documentation we would expect with an employee or third-party transaction.
For starters, we typically see personnel from the sales department consigning their vehicles. We have yet [...]
I was at a dealership last week to get my car serviced and overheard a customer yelling that she was not pleased with her “complimentary” car wash. Apparently, the carpets were dirty as if they hadn’t been vacuumed. The porter explained that they must have gotten dirty as the car was brought up. “Where are the paper mats?”, she asked.
Many dealers appear to be cutting back on simple things like the paper mats, in hopes the customers will not notice – but they do. The problem is that the dealer is not making money on this complimentary wash. What should be a good gesture in the name of good customer service can become a potential customer complaint.
Every dealership is faced with getting costs under control while still providing the best possible customer care. Fortunately, there are ways for dealers to provide better service without spending a dime. Speaking from [...]
In visiting multiple dealerships I’ve found varying degrees of internal control. Some dealerships are highly intensive with strict protocols, processes and procedures where others are a bit more “relaxed” and “go with the flow.” It should be no surprise that the more relaxed dealership environments are more likely to be subject to fraud than those which are more structured.
One area we see frequent internal control weakness is in the transaction approval process. Dealers hire managers and staff to act on their behalf and in their best interest. Trust is implicit when hiring personnel. That said, would you leave a blank check in the middle of the showroom floor for someone to spend freely without explanation? We see this happen every day.
For example, the used car department sends countless vehicles into the shop to have items repaired or accessories installed. We typically expect to see a vehicle get ready form [...]
Comments Off on Safeguarding your credit card terminals from inappropriate behavior
By Phil Villegas
There are multiple fashions by which individuals can take funds from a dealership. Nearly every position within a dealership has a way of monetizing inappropriate behavior. Most dealerships will attempt to implement safeguards in key areas of risk, particularly over cash, whether it be two signatures on all checks, segregation of duties on deposits, or review of bank reconciliations. However, there is one area of cash controls that I commonly find does not have an adequate level of internal controls, and that is over credit card refunds.
Many dealerships allow for customer credit card refunds on nearly any terminal without any system of internal control. We’ve seen multiple occasions where these credit card terminals have been used to embezzle funds from dealerships by individuals giving refunds on personal cards. In all cases, we found that some basic internal controls could have prevented this from occurring.
To safeguard against credit card refund abuse, [...]