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CPA Cites 5 Ways to Save Big Bucks
In any given dealership, $50,000-$100,000 a year can come from improved cash management, says Seattle CPA Jeff Forsberg of the Peterson Sullivan firm. Here's how: Deposit excess cash in competitive interest-bearing accounts or pay down the floorplan line. contracts every 3 days or sooner (10 days for vehicle receivables). Encourage customers to use debit cards. Pay vendor charges on time (but not
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In any given dealership, $50,000-$100,000 a year can come from improved cash management, says Seattle CPA Jeff Forsberg of the Peterson Sullivan firm. Here's how:
Deposit excess cash in competitive interest-bearing accounts or pay down the floorplan line.
“Turn” contracts every 3 days or sooner (10 days for vehicle receivables).
Encourage customers to use debit cards.
Pay vendor charges on time (but not too early) to avoid late charges.
Defer payment of dealership income taxes by taking advantage of IRS “interest-free loans,” including last-in first-out (LIFO), trade discounts and deductions of prepaid accounts for tax purposes.
Another savings: work to eliminate theft and mismanagement of assets. “Internal controls should be reviewed on a regular basis by management,” says Forsberg, a member of the AutoCPA Group. “Probe constantly for weaknesses. Don't wait until losses occur.”
Dealership CPAs should “look under the hood” for costly practices, such as missing employee, customer and vendor names on compute schedules; old customer-deposit credits that offset aged vehicle receivables; and “shell activity” resulting from used-vehicle writedowns and writeups.
Office staffers who do monthly financial statements should be regarded as members of a “profit retention center,” says Forsberg. He urges that statements be completed no later than the fifth working day of the month and serve as “a road map to improve dealership profits if information is complete.”
“It's no accident that great accounting records are found in the most successful dealerships,” he says.
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