Auto Dealer Monthly, May 2015

ACCOUNTING ARE YOUR EMPLOYEES PICKPOCKETING YOUR PROFITS Lax policies and unauthorized charges discounts and freebies could be nipping away at your bottom line I have been known to ask dealers Do allow your employees to put their hands in your pants pockets Th e most common response is Are you nuts or an emphatic No way In fact many dealers employ pickpockets and in many cases neither party realizes it A pickpocket is a person who takes money or valuables from someone without alerting the victim or at least not until its too late Some dealership pickpockets commit their crimes intentionally others are simply following poor policies Before you say Not at my store ask yourself the following questions 1 ARE EMPLOYEES REQUIRED TO COMPLETE PURCHASE ORDERS If you allow managers and staff to make purchases without completing purchase orders its equivalent to letting them reach in your pocket and take as much money as they want Th is is especially true if your store operates primarily on a cash ondelivery basis rather than utilizing vendor credit COD orders are oft en completed and paid for in a too short of a window for you to notice or question the purchase Furthermore if you require purchase orders but allow the same individual to match delivery invoices and authorize payments they still have access to your pockets Th e most accountable solution is to limit the number of individuals who can issue purchase orders Next make sure a diff erent person is matching packing slips and invoices to purchase orders for payments Finally limit the number of individuals who can make those payments 2 CAN NUMEROUS EMPLOYEES SIGN CHECKS OR MAKE ELECTRONIC TRANSACTIONS You know as well as I do that no one will watch your money as closely as you will As the number of authorized check signers and account users increases so does the opportunity for misappropriation of your funds More and more transactions are made electronically today Its not uncommon for a dealership bank statement to be 50 100 or even 200 pages long To complicate matters many entries lack key transactional details If signers do not have a vested interested in the store they wont watch the dollars leaving 22 AUTO DEALER MONTHLY MAY 2015 like you do In short you must make sure you are reviewing your bank statement every month and questioning unusual transactions And once again limit the number of people who are authorized to spend your money 3 CAN PART PRICING BE OVERRIDDEN OR DISCOUNTED Discounting parts is like a slow leak You dont really notice it until your tire goes fl at In the parts department your gross profi ts could be losing air So who is discounting your parts and who is benefi ting from it You must review your parts gross profi t on a regular basis and examine price overrides to ensure your staff isnt overdiscounting 4 ARE YOUR SERVICE TICKETS CLOSED TO COUPONS DISCOUNTS OR OTHER INTERNAL ACCOUNTS Its one thing to run a promotion and monitor its performance Its quite another to review your trial balance service department or parts department reports and see dollars being written off that were never authorized Th e most typical scenario is a coupon that fi nishes its planned run but is never removed from the system It becomes too easy to continue giving it to those who shouldnt have it Most systems will even allow you to identify who is doing the discounting and where they are charging it Have you reviewed these reports lately 5 DO EMPLOYEES GET DISCOUNTS YOU NEVER APPROVED Many employees enjoy free or heavily discounted services from your store But unless you approve them in advance you may have ha you hand com emp do e neith By Harlene Doane ISTOCKPHOTO COM SDOMINICK