Every business faces unexpected events which can strain its bank balance; the trick is to be prepared for them. Stop-sell orders could destroy your annual forecast for new and used sales. A tornado or a hailstorm could put a dent in your vehicle sales, and tie up cash while you wait for the insurance check. A significant increase in the factory Customer rebates, along with an aggressive sales campaign, could boost your sales to the point where you are stretched for cash because your profits came from factory money and, IT\u2019S NOT HERE YET \u2013 but everyone wants to be paid\u2014NOW! These are just a few of the potential times when all of a sudden, \u201cWhere did all our cash go?\u201d The financial statement\u2019s balance sheet shows the two main areas to look for that money – Receivables and Inventories.<\/p>\n
When it comes to the financial statement, most managers see their role to make the profit and control the expenses. Cash flow is low on the list of priorities, after all, isn\u2019t that accounting\u2019s responsibility? Actually, cash flow should be everyone\u2019s responsibility. For subscribers to the Profit Blueprints\u00a9 system we analyze key accounts to save you time in monitoring your asset accounts. Not only do we track the monthly balance; we put it into perspective by comparing the balances to the appropriate sales accounts and show you how much cash, if any, is tied up in frozen assets.<\/p>\n
To keep frozen assets in check, be familiar with the schedules and the accounts to understand where cash could potentially be hiding.<\/p>\n
VEHICLE INVENTORIES<\/strong><\/p>\n \u2022 Review the aging of your inventory, always be looking for \u201ca sale\u201d for the older vehicles. What are we doing to sell the five (or 10) oldest vehicles?<\/p>\n \u2022 For new vehicle inventory, review the combination schedule that includes the inventory detail and the floor plan amount to confirm all vehicles are floor planned. For most dealerships, vehicles are floor planned. If that is your policy, make sure dealer trades are either sold or floor planned promptly.<\/p>\n \u2022 Look at your day\u2019s supply of vehicles, either on the last page of your Profit Blueprints Report or on your own internal spreadsheet. Keep in mind handling costs and missing out on potential bargains are just two of the costs you pay if your inventory is too heavy.<\/p>\n \u2022 Walk the lot; inspect the vehicles for faded stickers and cleanliness. Ask the question, \u201cIf I were a potential customer, would this vehicle appeal to me?\u201d Don\u2019t let \u201cugly\u201d vehicles take up space and tie up your money.<\/p>\n \u2022When short of cash – floor all of the used vehicles that you can, then pay them off when you get caught up in the bank.<\/p>\n Bottom-line:<\/strong> Don\u2019t fall in love with a used vehicle and hope to sell it, if it hasn\u2019t sold after 45 days. Sell it, free up the cash and move on to a better return on your investment.<\/p>\n RECEIVABLES<\/strong><\/p>\n Confirm that you will be paid, before you extend credit. Review the following Receivables Schedules weekly and follow-up with past due amounts. SALES PROCESSES<\/strong><\/p>\n \u2022 Move the deals from Finance to Accounting quickly. Eliminate bottlenecks and monitor pending deals daily. The faster the deal gets to Accounting, the faster contracts are cashed, the faster the trade-ins are sold, and the faster the cash gets to the bank.<\/p>\n \u2022 Make the decision on trade-ins when the vehicle is brought into inventory. Retail or Wholesale \u2013 those are your choices.<\/p>\n Each department manager has the responsibility to keep the cash flowing. Review your responsibilities for your department\u2019s cash flow. With good processes and continuous monitoring, the bank account will be flush and you can focus on selling more vehicles and controlling expenses.<\/p>\n","protected":false},"excerpt":{"rendered":" Every business faces unexpected events which can strain its bank balance; the trick is to be prepared for them. Stop-sell orders could destroy your annual forecast for new and used sales. A tornado or a hailstorm could put a dent in your vehicle sales, and tie up cash while you wait for the insurance check. […]<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[13,5,11],"tags":[15,14,21,16,18,22,17,20,19],"class_list":["post-19","post","type-post","status-publish","format-standard","hentry","category-dealership-accounting","category-dealership-balance-sheet","category-dealership-sales-department","tag-balance-sheet","tag-best-practices","tag-cash-flow","tag-days-supply","tag-floor-plan","tag-frozen-assets","tag-parts-inventory","tag-receivables","tag-work-in-process"],"_links":{"self":[{"href":"https:\/\/www.profits4dealers.com\/blog\/index.php?rest_route=\/wp\/v2\/posts\/19"}],"collection":[{"href":"https:\/\/www.profits4dealers.com\/blog\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.profits4dealers.com\/blog\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.profits4dealers.com\/blog\/index.php?rest_route=\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.profits4dealers.com\/blog\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=19"}],"version-history":[{"count":3,"href":"https:\/\/www.profits4dealers.com\/blog\/index.php?rest_route=\/wp\/v2\/posts\/19\/revisions"}],"predecessor-version":[{"id":22,"href":"https:\/\/www.profits4dealers.com\/blog\/index.php?rest_route=\/wp\/v2\/posts\/19\/revisions\/22"}],"wp:attachment":[{"href":"https:\/\/www.profits4dealers.com\/blog\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=19"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.profits4dealers.com\/blog\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=19"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.profits4dealers.com\/blog\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=19"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}
\n\uf0fc Customer deposits, full payments and drafts
\n\uf0fc Finance Contract Receivables
\n\uf0fc Factory Rebates and Incentives. These could easily get out of hand or charged back if we have sloppy paper work. Clearly defined processes and continuous updates to staff will help collect and keep the factory money.
\n\uf0fc Finance Reserve Receivables. This should be reconciled when paid or the amount due is acknowledged by the finance source. If there is a shortage, ask the finance manager to determine why and then adjust accordingly.
\n\uf0fc Service Contract\/Programs Refunds. Any money you are expecting should be on a schedule. When you refund a Customer, make sure you follow through and get your portion refunded also.<\/p>\n