Daily Practices for Outlasting Economic Difficulties
When an economic downturn hits your dealership, it can feel like the end of the world. It’s easy to get caught up in worst-case worries, survival strategies, and frenetic forecasting, and to forget about essential dealership functions. The key to getting through an economic downturn, however, is the precise, daily performance of seemingly minor operational activities. In other words, you’ll need to stop acting like it’s the end of the world and start working like it’s the end of the month—every single day. Keeping an end-of-month mindset is the best way to cut unnecessary expenses, free up cash flow, and account for every single dollar, every single day.
Reconcile Bank Accounts Daily
In a downturn, cash flow is king and you need to stay liquid. Every penny counts when sales are slow and cash is tight, which means that you need to pay extra attention to your receipts and outlays. Reconciling bank accounts daily may seem like a small matter of matching records, but it can tell you so much about your business while painting a crystal clear picture of your financial position. What needs to be paid now and what can wait? What’s outstanding and waiting to be cashed? What contracts are you waiting for from banks? Are you paying cars off quickly to your floor plan vendors? If you’re already a Dealertrack DMS customer, the bank reconciliation tool helps you reconcile all of your transactions in the DMS and lets you compare quickly and easily with your bank statement. Don’t wait until the end of the month to reconcile bank accounts. Instead, make it a priority to do it every single day and with every account to avoid critical cash flow problems.
Post All In-Process Car Deals Daily
When business is booming, it’s understandable for completed car deals to pile up before the end of the month.. But, when times are tough, waiting until the end of the month to post deals prevents you from knowing exactly where your dealership stands from a financial standpoint. Even worse, when unposted deals sit around, your contracts in transit can start growing , even as floorplan vendors continue to collect from you. Under normal circumstances you can likely cover this, but when cash flow is squeezed, this is especially problematic. Make it a priority to get all of your car deals posted as soon as possible. Also, don’t forget to stay on top of fleet deals, wholesale deals, dealer transfers, and other volume deals that can multiply cash flow problems by many times.
Clean up Vehicle Inventory Daily
Of course, a lot of your balance sheet is tied up in vehicle inventory and it’s critical to know exactly where to stand. To succeed in an economic downturn, you need to know exactly what you have at all times. If you aren’t already, begin performing regular physical inventories, touching every vehicle, and ensuring that the DMS is correct and that inventory reports are clean and accurate. Use the Inventory Exceptions Report to review and clean up anomalies. To preserve cash and save floor plan costs, be sure to actively manage your older inventory regularly, then have a plan for getting rid of stagnant units.
Clean Up Inventory Schedules Daily
Just as important as reconciling inventory reports every day, is the daily practice of cleaning up inventory schedules. Schedules are complex, and keeping them clean isn’t always a top priority for dealerships. Under normal circumstances, dealerships often put this mundane task off until the end of the month. But, in order to get an accurate picture of your balance sheet, you’ll need to do it regularly during the downturn. Just remember that cash is king and you can’t make good decisions when you don’t know your true cash position.
The current landscape poses unique challenges for dealerships, and many will be tempted to shift priority from routine tasks to big-picture planning. But instead of worrying that it’s the end of the world, work like it’s the end of the month every single day. Pay regular attention to details that can impact your cash flow and your ability to make smart financial decisions. Adopting an end-of-month mindset is just a small step in a larger process of reimagining your business environment to be more efficient. Dealertrack DMS can help streamline your dealership processes and operations so you can keep your dealership strong during difficult times.
Communicate Your Plan
Routine tasks sometimes require routine, mundane measures to get the job done right. As you approach month-end, record everything that needs to be done, then circulate your list digitally and check it twice with your managers. In the days leading up to the end of the month, meet with your managers to make sure everyone is on the same page. In today’s environment, video conferencing platforms like Zoom, GoToMeeting, and Microsoft Teams, can be a great way to host month-end meetings when not everyone can gather in person. These meetings not only ensure that every department is prepared, they prevent loose ends from tying up your resources and delaying your processes. It’s a simple, but important step to maximize efficiency at a time when details matter.
Take Inventory of Assets
The primary purpose behind month-end closings is to put your finger on the pulse of your dealership, determine its health, and make adjustments where necessary. During times of economic downturn, this process becomes more important than ever. Start by taking inventory of your physical assets. This includes new and used vehicles, as well as fixed operations and parts. Make sure all your sales are final and your expenses are recorded, then reconcile your physical assets with what you show in your books. This simple process ensures that mistakes don’t carry over from one month to the next, and gives you an updated picture of your dealership.
Month-end is a time to look for bigger-picture business trends. If anything is missing or out of place, track it down and find out what went wrong. This ensures continuity from one month to the next. But it also allows you to look at the finer details of operations and make comparisons that might otherwise go unnoticed. Look at your expenses to see whether they’re high or low for a given month, and try to find explanations, and ways to improve for the coming month. This type of cost-cutting vigilance will be especially important in the coming months as current events continue to put pressure on profits. Looking for trends on a monthly basis helps you to continue positive trends, reverse negative ones, and gauge the overall health of your dealership.
Measure Performance against Key Objectives
You’ve taken inventory, you’ve analyzed trends, now it’s time to measure your performance as a dealership. Add statistical memos and postings to your financial statement to get a more detailed view of your business . Then, measure your performance against your business goals. This last step can be key to evaluating your business in the current landscape and giving feedback to managers and employees about what’s working and what can be improved.
If all of this sounds like a complex, detail-driven process, you’re right. Month-end is a full-dealership, every-department, all-hands-on-deck coordinated effort. But that doesn’t mean it can’t be efficient. Take advantage of the resources provided by Dealertrack DMS. Stay in touch with your Performance Manager in the days leading up to month-end. Ask questions about how to make your processes more efficient, and for specific ideas to identify areas of improvement.
The coming months may place strain on your dealership, but by being efficient and paying close attention to the small, routine details, you can get a better view of the big picture to ensure the health and continuity of your dealership.
Helping our clients maintain business continuity is a top priority. Visit our Business Continuity Tools & Resources Center for more.
Subscribe to our Blog
Sign up today to receive updates on the latest news.
Please enter a valid email address.