{"id":2484,"date":"2017-03-22T09:00:35","date_gmt":"2017-03-22T13:00:35","guid":{"rendered":"https:\/\/www.autoraptor.com\/?p=2484"},"modified":"2017-03-22T09:00:35","modified_gmt":"2017-03-22T13:00:35","slug":"auto-dealership-accounting-mistake-costing-ton-money","status":"publish","type":"post","link":"https:\/\/www.autoraptor.com\/blog\/auto-dealership-accounting-mistake-costing-ton-money\/","title":{"rendered":"This Auto Dealership Accounting Mistake Could be Costing You a Ton of Money"},"content":{"rendered":"

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Auto dealership accounting isn\u2019t just about the bills you have to pay\u2014it\u2019s the money you\u2019ve earned as well<\/h2>\n

Don\u2019t you love the incentives offered by auto manufacturers? These spiffs<\/a>\u00a0help your direct marketing efforts, light a fire under your salespeople, and pull in some sizable amounts of cash in the process. If you\u2019re like most dealerships, factory incentives are the largest receivable for your entire business.<\/p>\n

But when it comes to these prime money-makers, are you taking full advantage? Or are your auto dealership accounting processes<\/a> leaving thousands of dollars on the table?<\/p>\n

An article in Dealer Magazine<\/em>, \u201cUnpaid Incentives: What You Don\u2019t Know Is Hurting You<\/a>,\u201d shines a light on problems with auto dealership accounting and large overage balances on dealerships\u2019 factory receivables incentive schedules. You\u2019re doing some of the work to cash in your incentives, but you may not be doing everything necessary to get what you deserve.<\/p>\n

Two types of factory incentives and two ways to get them<\/h3>\n

In the world of manufacturer incentives, you\u2019re likely looking at two different kinds on a regular basis:<\/p>\n

1. Cash incentives\"auto<\/strong><\/p>\n

You have a fixed amount of time to sell certain cars eligible under a marketing campaign. You\u2019re paid an incentive for each eligible car sold, and sometimes if you exceed a sales target, you\u2019ll get a higher discount per vehicle.<\/p>\n

2. Dealer holdback<\/strong><\/p>\n

Depending on the manufacturer, you get back a percentage of the MSRP or invoice price after a particular vehicle is sold. Manufacturers like Ford and Chrysler will usually do about 3% of the car\u2019s sticker price.<\/p>\n

Marketing and selling those targeted vehicles is only the first part of the game, though. Once you\u2019ve made the sale, you usually have to actively pursue the money you\u2019re owed. The manufacturers can\u2019t make it that easy, right? Depending on the manufacturer and the rules of the incentive, there are a couple of ways to initiate that payment:<\/p>\n

1. You file a claim\"auto<\/strong><\/p>\n

Once you\u2019ve checked the eligibility of a vehicle, you submit a claim against an incentive program. This is done online, and you\u2019re able to check the claim status as well. Once the manufacturer settles the claim, you get paid.<\/p>\n

2. The manufacturer manages everything<\/strong><\/p>\n

Instead of you actively submitting a claim, in this scenario, the manufacturer takes note of eligible vehicles sold, calculates payments, and issues them to your dealership.<\/p>\n

The incentive process may seem pretty cut and dry, but it\u2019s not. Too many auto dealership accounting offices aren\u2019t staying on top of incentive programs, and the money is sitting on paper instead of being of value in a bank account.<\/p>\n

The money your auto dealership accounting department is missing<\/h3>\n

The article in Dealer Magazine cites the biggest mistakes costing you money are unclaimed incentives, unresolved rejections, and chargebacks that aren\u2019t researched and reversed. How does this happen? The author reveals a few primary ways:<\/p>\n

1. Putting someone inexperienced in charge\"auto<\/strong><\/p>\n

Incentives are complicated and shouldn\u2019t just be handed off to any interns, part-time workers, or temps that have no clue what they\u2019re doing. The amount of money you could be making (and missing) is far too great to put it in the hands of someone who doesn\u2019t have extensive experience.<\/p>\n

2. The person in charge leaves<\/strong><\/p>\n

You did the right thing and had an experienced, senior staff member in charge of managing incentives\u2014but then they retired or got a new job, and you didn\u2019t have a Plan B in place. Incentive management is a weekly task, so for every week you don\u2019t get someone new in that position, you\u2019re losing money.<\/p>\n

3. There\u2019s no ownership or accountability<\/strong><\/p>\n

The controller or office manager needs to be involved, and there should be weekly or bi-monthly meetings to review balances and delegate ownership. Schedules must be fully and accurately reconciled<\/a> every single month to make sure as many incentives as possible are being paid.<\/p>\n

The bottom line is that at least one employee needs to be in charge of the incentives program and staying on top of every single minute detail. Any unpaid balance over 60 days old is\u00a0a concern to\u00a0follow up on right away. And if your dealership is raking in more than $200,000 in incentives, you may want to consider investing in an outside professional who can keep everything compliant and every dollar possible in your pocket.<\/p>\n

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