Treat Each Day Like it is the Last Day of the Month

Treat Each Day Like it is the Last Day of the Month

Whether you want to admit it or not, there is way too much “fat” surrounding the way you finalize transactions at the retail level. Blame it on complacency or tradition, i.e.,  “this is the way we have always done it,” but in the end it really hurts dealership performance in the areas of cash flow, asset management, management information and ultimately dealership profitability (the quicker you accelerate cash flow, the quicker you pay off floor plan and reduce this expense).

If you agree with the above, you need to figure out how you can infuse that sense of urgency typically seen at the month end throughout the entire month. Fundamentally, this requires three things: a change in perspective, a leadership shift in focus and most important, process management improvements. Here are a few tips to make it happen.

F&I managers should understand that in addition to doing a great job in presenting and selling products, they have another primary responsibility: the timely processing and collecting of money from car deals.  The timely processing of deals into accounting requires error-free and complete paperwork to allow the finance institutions to seamlessly approve and remit proceeds. This is squarely a responsibility of the F&I personnel.

There are a number of techniques that may work for you:

In many stores, the F&I managers will complete all of the day’s paperwork before they leave that night. When the accounting folks arrive in the morning, the deals are already in the office. This means deals could be finalized and funded before lunch, thereby possibly reducing cycle time by one day.

Make sure your F&I managers are experts at getting the deals structured to align with the banks they do business with. This ensures a high predictability of purchase, thus reducing bottlenecks. In some dealerships this is not regarded as a priority and, in turn, deals are constantly rewritten.

Make the sales and F&I staff is responsible for having complete paperwork each and every time. Sloppy paperwork results in efforts being unnecessarily redirected from selling to administration on something that is easily preventable. Start ranking your salespeople on this facet of their business responsibilities.

Track the date of delivery, the date into accounting and the date paid on each vehicle deal using a spreadsheet or a date and time stamp feature provided by your DMS system (if available).

Track your book to deliver percentage on a daily basis. If you are under, say 90 percent, at any given time in the month, start digging deeply into who or what is causing the bottleneck. Forge uncompromisingly past the excuses to the root cause issues.

Consider implementing an incentive program to kick off a book to deliver percentage initiative. This bonus could then be done away with after a couple of months once you have established the appropriate metrics for your dealership (remember, this is an incentive program not a permanent pay increase). For example, pay an F&I manager a flat dollar bonus should he or she attain an average of over x percent for all deals for that month. Then, raise the bar for the next month, and so on.

Have a “cash a deal” meeting every day before your “save a deal” meeting to review the paper flow laggards. At the beginning, you will probably be surprised at the lack of urgency in making sure everything is in order so the deals can be seamlessly worked and the money collected.

Track salespeople on the book to deliver percentage to see who does best and consider an incentive for that person. Raising awareness helps bring to “top of mind” necessary changes in habits.

Accounting office
There are certain responsibilities that are a necessity in the accounting office.

All deals delivered to the accounting office must be processed the same day (thus the importance of getting all deals into the accounting office in the morning). Should there be too many deals, which could happen after a busy weekend, a listing of the balance of all unprocessed deals held in accounting should be given to the general manager at the end of that day.

Create a list of all deals in accounting that exceed the bank’s turnaround time. Should the bank electronically transmit funds in say, 24 hours, then create a list of all transactions that exceed this 24-hour turnaround time. It is easy to make your book to deliver percentage appear impressive, while at the same time having deals regularly kicked back by the bank.

A regularly updated list highlighting the status of all deals should be kept by someone in accounting. This list forms the foundation for the daily “cash a deal” meeting.

Consider an incentive for the accounting contract desk based on improving the amount of time from the point of sale to the time proceeds are received. I know some dealers who share this incentive between the contract clerk and the F&I manager(s), and with great results.

Fixed operations
There are certain areas in fixed operations where time lags can be curtailed.

All internal repair orders should be closed immediately after the vehicle has been reconditioned and sent to the pre-owned sales area – no exceptions. This policy will reduce accounting issues surrounding pre-owned gross and commission calculations.

Manage the open repair order listing to ensure that the above takes place and if the dealership has a body shop, insist that completed work gets processed into accounting when the repair is completed as opposed to when the customer picks up the vehicle or when the insurance check is received.

Close all parts invoices daily.
Having these operational fundamentals in place in F&I, accounting and fixed operations will help to improve your month end close, lift your cash flow to a higher level and allow dealership personnel to concentrate on today’s business rather than having to spend their energies on the loose ends of yesterday’s business.

This article by Jeff Sacks originally appeared in Dealer Magazine.

Jeff Sacks, president of Jeff Sacks & Associates, is an auto industry speaker, consultant and trainer and is actively involved with dealership and OEM consulting and training.
His website is and his phone number is 800-867-2160.