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Trimming the fat from the month-end close

By Phil Villegas

With the new year, comes new year’s resolutions. Usually these are personal in nature, looking to improve certain aspects of our lives leading to people setting goals to improve their well-being, whether related to better ourselves physically, emotionally or our financial well-being. The new year provides a clear and definitive break point in which to embrace change, and this is by no means limited to individuals, this can also include our businesses.

If there was one common resolution I would like to see embraced by the general dealership population, it would be that of a 5-day (or better) month-end close. Despite advances in DMS software and business process flow management, one area that I still see as somewhat archaic is the 10 days or more month-end financial statement close. This practice is still very common in many dealerships, with the exception being some mega-dealers and public dealership groups.

I attribute most stores not adopting a shorter financial statement closing period as either a culture and/or a leadership issue.  No valid reasons prevail on why a dealership’s financial statements can not be produced within five business days. Many stores simply embraced the 10-day closing culture since most manufacturers do not require their dealer statements for 10 business days. Changing this culture requires major leadership effort in getting all departmental managers and accounting personnel on the same page.

We’ve had the ability to work with a few dealers that have embraced this challenge and moved to a 5-day closing.  In our experience with these groups, the first month was the toughest in getting all personnel on board with the strict deal cut-off timing and other deadlines for the newly adopted close, but shortly thereafter, every subsequent month-end fell into order and in turn improved the dealership’s physical, emotional and financial well-being!

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