If you hire a controller from outside automotive, expect a steep learning curve
How many times has this happened? The Controller you’ve been relying on for years decides to quit. After an exhaustive search for their replacement, you hire a strong accounting leader with great soft skills but lacks automotive experience. You decide, let’s hire based on fit and we can teach the “automotive thing.”
Sounds like a great plan, right? The candidate is excited. Day one comes. They sit in the chair, and realize: “holy smokes, the automotive industry is completely different from what I’m used to.” Different software, different financial statements, different accounts, reporting requirements, deadlines, and the list goes on and on.
I’ve consulted many dealers on this subject and truthfully, have experienced this anxiety firsthand. It’s scary! You quickly start to question your skill set: Do you belong there? Should you continue? Maybe it’s best for everyone if you just give up?
Here’s what I’ve learned and what I coach my clients on:
Reporting and Metrics:
OEM statements are focused on operational excellence rather than measuring financial health. They spend pages detailing revenues and costs related to selling, servicing and financing vehicles. They don’t focus on cash changes.
They detail a complex inventory system and provide operational details like headcount, hoist utilization and labour hours. Simply put, they are fundamentally different from traditional financial statements.
Dealer statements get submitted to manufacturers monthly who use this information for their own purposes, mainly counting how many of their units are sold throughout the country.
Benchmarks differ from city to city but in general, the more cars and F&I products you sell and service, the better positioned you are for success. You must continue to report to lenders and your internal stakeholders too, so you must balance your month end processes accordingly.
New KPIs must be tracked. Important ones these days are used-to-new ratio, absorption rates, inventory turns, technician efficiency, productivity and proficiency to name a few. There are more, of course.
You will need to speak the correct jargon quickly, or you risk losing credibility. Partner with internal and external consultants who can help guide you through this learning process, I’m happy to help on this journey so feel free to reach out!
Compliance and Internal Controls:
Gaining “comfort” on your numbers remains the name of the game. Routine and repetitive tasks are still at the core of running a successful accounting department. Frequency levels are still daily, weekly, monthly, quarterly and annually.
Below are a sample of recommended tasks to ensure you are in control at your dealership:
- Perform bank reconciliations and post missed transactions daily;
- Post parts invoices and OEM discretionary monies daily;
- Post deals daily; including new, used and wholesale transactions;
- Reconcile contracts-in-transit, vehicle receivables and cash clearing daily;
- Post visa transactions and reconcile statements weekly, especially for your licensing card;
- Perform monthly vehicle counts. This is especially important for used and wholesale vehicles that have a high probability of going missing;
- Perform a monthly floor plan reconciliation. Make sure you are paying out your loans when deals are posted to ensure you are in compliance with your lender’s requirements;
- Chattel new and used vehicles daily to ensure you are optimizing your cash position; and
- Quarterly, perform a parts inventory account to ensure your shrinkage rates are in control.
While this is not an exhaustive list, it should give you a good indication of the tasks you and your team need to perform. The key, of course, is to have good people on your team.
They must be hard-working and willing to roll up their sleeves and learn. Remember, while things may look and feel a little different, the core accounting principles that you learned all those years ago hold true.
If this is something you would like to discuss further, feel free to reach out directly. The needs of every dealer will be different, and we can develop a game plan that works for you and your team.
Good luck!
