Dealership finances can be complex and there is a lot to manage. In uncertain times, this is even more important and it’s a challenging time for many but there are some simple things you can do to improve dealership finances.
In this article we’re going to share 5 simple ways that dealership CFOs can improve their financial situation.
We are in uncertain times and in uncertain times we need as much help and understanding as possible from all stakeholders.
Dealerships can suspend business and temporarily send staff home but what about suspending other costs?
Inventory is the largest item in on the dealership’s balance sheet, some of it is fully paid up, but most of it is financed by banks or OEM schemes.
Our advice is to contact your funders and ask for free stocking for the time your business is closed, also seek to increase the term of your existing stocking loans by at least 30 days.
Neither you nor your funder is in it for just a quick buck, you have a long term relationship with them, so seek their help.
But dealerships can help funders to help themselves. Whilst we would all prefer customers to be flooding into showrooms, this quieter period is a perfect time for housekeeping.
- Conduct a thorough stock take of all vehicles on site and reconcile it against the Vehicle Stock Book and “Work In Progress’ lists. This will identify any vehicles that have been delivered but not invoiced, then raise and issue the invoices immediately to improve cashflow.
- Are there vehicles onsite that have been invoiced at the end of the prior month? Those vehicles attract VAT, and depending on where we are in the calendar, payment may be due: reverse these invoices to further improve cash flow.
- Check all of the vehicles onsite against your funding lines, frequently audits will find vehicles that have been swapped with other dealers but remain on original funding lines in error.
- Check all vehicles onsite against online listings, ensure every vehicle that is physical, is advertised. There will be many customers who now want to research or shop online that will take virtual tours of your dealership, so ensure that they have the largest choice possible.
- Once you have fully reconciled your substantive audit, update your dealer management system accordingly and share your stock list with your funders. Transparency helps build trust. When a funder sees you have nothing to hide and are on top of your business, they are more likely to support it.
With uncertainty around the economy, it’s more important than ever to control costs. We hope you found these 5 tips for controlling dealership business costs relating to financing helpful. If you’re interested in learning how digital audit can help your business operate more efficiently, we would love to show you what our software is capable of.
Take a moment now to request a demo from one of our experts who will gladly share all the ways that auditing has helped other dealerships cut down on losses and increase profits.