1. Monitor expenses
Controlling expenses and spending is critical to sustaining profitability. It must be monitored and kept to a minimum. Only essential items and value-added services should be purchased or used. Review the last three months on your check register to determine if any expenses can be reduced, re-timed, restructured, or eliminated. It will require an objective view to seriously make any changes. Adequate employee levels and compensations should also be reevaluated. The use of expense reduction and performance management tools is an option for validated solutions.
2. Financial analysis
Pay closer attention to your operating reports, financial schedules, manufacturer reports, and financing institution statements. Every dollar counts more than ever. Do not assume anything; analyze everything! There could be cash opportunities in all departments. For example:
- • Review the age-analysis summary of all receivables—factory incentives, warranty receivables, and customer pays. Require monthly reconcilements. There should be no outstanding balances over 30 or 60 days, respectively, as it affects your cash flow. Get unpaid balances paid, versus write-offs.
• Review warranty claims, “paid percentage,” for excessive reject levels (should not be under 90 percent) and cost-per-vehicle serviced; compare to your zone peer group.
• Resolve all rejects and erroneous charge-backs.
Have adequate processes, checks and balances, and separation of duties in your operation. Review all staff job responsibilities. Know where your risks are, reduce them, and manage accordingly so that you protect yourself and your business. Ensure full compliance with manufacturer programs, policies, and procedures, as well as your company guidelines. Conduct periodic and detailed reviews of deal jackets, bank statements, invoices, and payroll records. Have accountability for staff errors and questionable actions.
4. Continuous training
Sales staff should use idle time to complete product training, know inventory and timing, refine selling skills and techniques, improve computer and automotive Website skills, learn new F&I tools, and examine industry trends. Business office staff should be rotated and crossed-trained for solid coverage during vacations, leaves, or down-sizing. It can reduce errors and prevent items from “falling through the cracks.”
5. Resolve issues
Keep employees and managers engaged in solving issues and improving operations. Have regular staff meetings to challenge employees and brainstorm. Make it competitive and fun. Ownership of work products often creates acceptable resolutions and achieves positive results. If you are part of a 20 Group, implement new information acquired from those sessions.
6. Archive files
Keep records well organized, current, and readily accessible. Consider available technology to scan files and documents. It could save you money. Be sure to consult with your manufacturer beforehand however.
Drastic times require drastic measures, so be creative and use all your time wisely. It can pay off in many ways.
____________________________________________________________________________________________________________________________________________________
Sherralyn Peterson is an automotive incentive specialist with 30 years of automotive experience. She helps dealerships maximize profits, minimize risk, and enhance cash flow. For more information, call 312-310-8380, email speterson@sherralynpeterson.com This e-mail address is being protected from spambots. You need JavaScript enabled to view it , or visit http://www.sherralynpeterson.com.
