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Category Archive: Financial Management

Doug Austin

Profit Drain – How many dollars are slipping away from your operation?

auto mechanic with clipboard at car workshop

If you keep up on recent automotive news, you have probably come to the conclusion that new car sales in 2017 are forecasted to plateau. Sales will flatten out, and margins are likely to continue on the same trajectory—flat or shrinking. These realities will challenge most of the dealerships who try to improve profits by only selling more new vehicles as their primary profit driver. That top-line sales strategy has worked well for many dealers since the downturn, but many have successfully focused on working both sales and expenses to enhance profitability issues when sales flatten out. In fact, many dealers have realized the untapped potential for big profits right in their own dealerships that are available today.

In the spend management space, we are accustomed to working with dealership spend data, supplier pricing for supplies and services, and multitudes of benchmarks. The following was true eight years ago and according to our internal calculations, it is still true today, though the data has changed slightly:

  • Dealerships spend money in up to 130 expense categories every month.
  • Single-point dealerships average 400+ suppliers to support those 130 expense categories.
  • Multiple-point dealerships can have 800+ suppliers supporting the organization.
  • Dealerships will spend between 4.5% of sales to 9% of annual sales on services and supplies.
  • 94% of dealerships do not have a formal purchasing department.
  • Aberdeen Group (procurement authority) says that if you centralize sourcing and purchasing, you can save up to 25% of your spend in new found savings through leverage and focus.
  • Our internal metrics demonstrate 23% cost savings to validate Aberdeen research in the dealer space.
  • Supplier reductions of 45% of total suppliers are quite common—reducing back office support.

What does this all mean?

  • Dealerships are spending too much on supplies and services.
  • Supplier pricing is generally too high, which accounts for the 23% savings opportunity year-after-year.
  • Dealers are using too many suppliers, impacting price and back office administrative costs.
  • The de-centralized purchasing strategy—using managers to fill the role of purchasing—is not working.
  • Unless dealerships re-think and alter their current purchasing strategy, they will continue to pour money down the drain every day and lose a great source of new profitability.

New profit opportunities.

Based on the data and benchmarks available, dealerships can get a pretty good idea of new potential profits—or lost savings—by reviewing the data in the chart below:

 

Annual Revenues

$25MM

$50MM

$75MM

$100MM

$150MM

Supply/Service Spend as % of Sales

 

8.0%

7.5%

7.0%

6.5%

6.0%

Annual Spend for Supplies & Services

 

$2,000,000

$3,750,000

$5,250,000

$6,500,000

$9,000,000

*Savings Opportunity at 20% – Year One

 

$400,000

$750,000

$1,050,000

$1,300,000

$1,800,000

*Savings Opportunity at 20% – Year Two

 

$400,000

$750,000

$1,050,000

$1,300,000

$1,800,000

Total Savings Opportunity

 

$800,000

$1,500,000

$2,100,000

$2,600,000

$3,600,000

*Year One and Year Two savings are achieved by negotiating a competitive price, then locking those rates in for 24 months or more. Contracts are not necessarily required to achieve this.

Reasons for doing nothing.

I have scratched my head over the years wondering why only 5% of dealerships centralize their procurement and 95% of them still do nothing. As best as I can tell, dealerships do not change their approach for the following reasons:

  1. Owners and management do not realize the potential benefits of changing their approach.
  2. Not enough time to attack their expenses in a methodical manner.
  3. Unsure of where to begin—expense management can be complex with many moving parts.
  4. Too focused on top line sales to drive profits—sales-driven companies are not comfortable in the operations space.
  5. Perceived internal threat—if new savings are generated, those responsible might appear as ineffective managers.

Reasons for taking action, now!

  1. Margins are being compressed and profits are or will be shrinking, therefore it is the obligation of management to be proactive and move.
  2. Taking action today will protect the business when the next downturn occurs—and it will occur.
  3. The cost savings achieved are not transitory; they can be sustainable if approached correctly.
  4. The cost savings dollars are significant, as demonstrated above, and can have a positive impact on the business.

Suggested next steps.

If you and your management team are ready and serious about generating new profitability and stemming the loss of profits, consider the following actions:

  • Leadership: Meeting of the minds. Gather your management team together and get some consensus around your objective of improving profitability and how you can achieve the results outlined above.
  • Assess your spend. Identify how much you spend annually for supplies and services (see above) from your DMS data and then determine who in your organization is managing that spend.
  • Gap analysis. Review your processes and controls today. Do you have purchasing policies? Do you track contracts? Do you have a list of preferred suppliers for each category? If not, you need those tools in place to guide the organization.
  • Develop a plan. You are not going to manage 130 expense categories effectively and generate the profit potential without a plan—let’s be honest. You need to centralize your procurement function; either hire someone—or some group—to assist you in organizing your internal resources so that they have matrix responsibility for generating cost savings. Assign each category to someone on your team and assign a due date to get your resources aligned and your plan established.
  • Execute the plan. Business school taught us the fundamentals of management: Plan, Organize, Direct, and Control; you do this every day in other parts of your business. Now might be a good time to do the same thing with your expenses.

Expenses: The last business goldmine.

Based on the research of outside consultants and what we see in our spend management practice, that statement is true. If you are serious about driving new profitability in your business, now might be a good time to do so. If it is not a good time, then just realize that you are pouring dollars down the drain every month and will continue to do so until you change your approach and strategy.

Permanent link to this article: http://blog.ncm20.com/2017/04/profit-drain-how-many-dollars-are-slipping-away-from-your-operation/

Jeff Lampton

We Learn Our Bad Habits in the Good Times

benchmark_review

Since the great recession, new vehicle annual sales had a steady increase, climbing from 10.4 million units in 2009 to 17.4 million units to finish 2015. The seasonally adjusted annual rate (SAAR) peaked at 18.2 million units in September 2015, plateauing at that number for the fourth quarter of 2015. Since then, the industry has experienced a steady decline in the SAAR for September 2016 finishing at 16.9 million units.

Good times, relaxed practices

Year-over-year new vehicle sales increases have allowed us to let down our guard. Dealers have been afforded the opportunity to relax their attention concerning their expense structure, and have done so. But relaxed standards come with a steep cost: they become our bad habits.

Sales-to-expense formula

Now is the time to refocus, review and “remember, remember” 2008: People are a dealer’s biggest expense on the income statement, but they are also your biggest asset! Utilize your people as a resource to identify opportunities to reduce expenses.

Keep this simple formula in mind:

form1

Here’s an example. The average NCM member (all brands) is at 3% net to sales. If a dealer has an increase of a $100, it requires a sale of $3,333 to compensate for it.  Conversely, saving $100 in an expense is the same as making a $3,333 sale.

Form2

Create a culture of expense awareness

table

Click to enlarge. Small changes in expenses have a surprisingly large effect on your budget. Always be mindful of how much more you need to sell to offset increased costs.

Understanding this equation is important.  Sharing it to educate your people is more important.  This is a number that is surprising and eye opening for most employees; it will have an impact on them.

Everyone can affect expense change. Employees who are not in income producing positions may feel they can’t change the bottom line, but they can. Those who are in sales positions can identify efficiencies as well and still keep their focus on selling. Solicit and encourage all employees to share their observations, ideas and suggestions. Recognize and reward for ideas that reduce an expense or gain a process efficiency that the dealership implements.

If it has been awhile since you had a meeting with your managers to review current vendors and bills, now is the time! (Check out what can happen when you let expenses go unmonitored.) Sit down and walk through each and every bill. A detailed list of expenses and vendors provided by your accounts payable person can be used as a source document for the meeting. Providing your managers this information for their review in advance of the meeting will help facilitate the discussion. In lieu of this, simply take the stack of payables checks to be signed to the meeting, Sign the checks during the meeting after one of your managers approves the payable. (If you need a tool to help you better manage expenses, I recommend that you take a look at LiveAudit®.)

If you’re an NCM 20 Group member, take a look at the library of ideas you and your peers have presented at other meetings. This is a great resource, and one section of the library is devoted to and collects expense saving ideas. Log into the Members’ Portal to access your library.

Here are the key takeaways. People are all dealers’ biggest asset, use them! We learn our bad habits in the good times. Don’t forget 2008! The little things do matter! Now is the time!

How do you control your dealership’s expenses? Share below. Learn more about Jeff Lampton and how his NCM colleagues can help your dealership through 20 Groups and in-dealership consulting

 

Permanent link to this article: http://blog.ncm20.com/2016/10/we-learn-our-bad-habits-in-the-good-times/

Dustin Kerr

Watch Out For Tax Season Temptations

Car taxes  design

It’s that time again. Right now, buy-here, pay-here dealers are in their busiest time of the year: tax season.

Although most dealers will tell you that tax season is not nearly as crazy as it used to be, there’s no denying that it’s still a major event in our business. BHPH dealers are likely to sell more cars—and collect more cash—in the next couple of months than any other month for the rest of the year.

Tax season means buyers, but what kind?

Sadly, it’s not all good news. It’s during tax season that we put our worst performing paper on the books. Flush with income tax returns, people walk into our dealerships with $1,000, $2,500, maybe even $4,000 or more down. And, just as giddy as our buyers, we completely forget about our underwriting guidelines and the fact that we are still going to have to collect on this account for the next two to three years.

Now, some dealers simply don’t care how well the paper performs. They feel that the cash down overshadows the risk of bad underwriting. And, many argue, they will just get the car back quickly if the customer defaults.

Now, I don’t entirely disagree with this philosophy. There is a certain point where the amount of cash down mitigates the risk involved. However, I always tell my consulting clients that there’s a way to do both—get the large cash down payments and properly underwrite each loan to ensure the highest probability of success.

And that approach, I think, is better.

 

Don’t lower your standards

The first thing we need to do? Slooowwww dooowwnnn! Hey, I get it. This time of year is very hectic, not only with sales but also with collections. It’s very likely we have more people in our lobby right now than any other time of the year.

When things start to get a little crazy, though, usually the first thing to suffer is attention to detail. Go back and look at the applications that were collected during tax season the last couple of years and compare them to applications collected during the rest of the year. If yours is like most dealerships, you’ll see a significant difference in the quality of information collected.

You need to discuss this situation with your staff ahead of time. Make it very clear that incomplete applications will not be accepted. (And, I mean be stern about it: It’s non-negotiable!)

Remember, you have to collect on this account for the next few years. A quality application is the first step to making sure you can do that.

The next thing I usually see that sets us up for failure is a complete disregard for payment to- income percentages. We all know by now, or should know by now, that accounts with payments greater than 25 percent of net income perform at a much worse rate than those with payments below 25 percent net income.

I’ve found that dealers and managers forget this rule when a large down payment is made. The attitude seems to be, “If they have skin in the game, they’ll make all the payments.”

Sad news, friends, but this just simply isn’t the case with most customers.

 

Don’t forget that tax money is free money

Here’s an important lesson I’ve learned after reviewing hundreds of thousands of loans over the years: The down payment amount has very little to do with how well a loan performs.

As far as our customers are concerned, that sizeable tax return is just free money. This sudden windfall isn’t a result of careful budgeting or pinching pennies for a down payment. No, it’s a bonus with very little emotional attachment.

Don’t compromise your payment to income standards just because the customer has a big down payment. Remember, all that tax money will be spent very soon, and they will only have their weekly paycheck available to make their car payment.

 

Don’t forget the delivery and closing process

Another area I see slip during tax season is the closing process. I consider the application and closing to be the most important aspect of the collections process. And, if you’ve ever read my articles, watched my BHPH Tip of Month video segments, or attended one of my training or consulting sessions through NCM, you know that I firmly believe that an improperly closed loan is a charge off waiting to happen!

In this busy time of year, it may seem like a simple solution to ask our commissioned sales team to close the loan instead of a manager or a collector. Sure, it might speed up the process, but the whole point of having a manager or collector close the loan is to double check and ensure that the salesperson hasn’t missed or skipped an item because they were afraid of losing a deal.

Don’t do be tempted to “streamline” the close; you’ll just pay for it later. Keep your processes intact, and have a dedicated person or team well-trained in the closing procedure review every application. And never let them veer off track just because you are busy.

 

Make the most out of tax season

I know how exciting this time of year is, but you can’t afford to be burned. Remember, these could be the worst-performing deals you make all year.

Make sure you have a great application process in place, follow your payment-to-income guidelines and don’t short-cut your closing procedures. If you do these three things, you can enjoy the cash windfall of February and March without the headaches that come in July and August.

Article originally published in the January/February 2016 issue of the BHPH Report. Be sure to check out the full issue!

 

Permanent link to this article: http://blog.ncm20.com/2016/04/bhph-tax-season-temptations/

Wayne George

Five Tips to Build Your Most Successful Forecast Ever

Take Notes

There are many dealerships every year that embark on forecasting exercises. There are many that do not because their past experience has not been that productive. Let’s explore some techniques and tips that can help you come up with numbers for 2015 that will make your goals much more achievable.

Tip #1: Start with the end in mind.

By working backwards when building a forecast, you will be forced to address some issues that normally are overlooked. If we start with the desired Net Profit for the store, we can work backwards from there. If 2014 will result in net profits of $1.5 million dollars, the first approach to forecasting 2015 will be to dissect how we got to $1.5 million. Here are some questions that will need to be answered very honestly and candidly:

What percent of the gross produced did we retain? Were we a 30% net to gross store or did the $1.5 million come to the bottom line after we spent 85% of the gross (15% net to gross)?

Is any sub-par retention of gross an expense control issue or is it a result of sales and service volumes and lagging gross production?  (Hint – we all know it is usually a little of both).

If you are already netting out at 35 – 40% net-to-gross, then how much more can be produced? Small increases in sales and service volumes will produce huge increases in net dollars.

Did your management team have any input in setting the 2014 goals? Were all of the goals reasonable or was there some “fantasy” in the numbers?

Tip #2: Determine the total store net profit that should be produced before all “other Income” is accounted for. This becomes the objective for all departments in total.

Once you have decided on a reasonable Departmental (Operational) Net Profit number, assign each department their share of profit they will be responsible for generating. Now it’s time for the hard work. Each department head should be tasked with an exercise that has them identify any expenses that can be eliminated or reduced from this year’s operations. This will create your operating budget for 2015.  Now that you have that expense budget, you can start forecasting for sales and gross numbers. Then, run a test and see if the sales and budget will reach the desired net.

This is now the critical stage. Be very suspect of any increases in sales volumes, sales grosses, service volumes and gross, etc. If those numbers were that easy to do, why would you not already  be hitting them? Be relentless in your questions. Make the team develop action plans with timelines that will support their numbers. If the 2015 market is similar to this year, we know we can’t get better by just continuing to do the things we are currently doing; some things will need to change.

Tip #3: Give the forecast enough time.

Start this process well before December 31st. Be prepared to meet with your team over a few weeks. Break it up in steps that can be digested and allow time for buy-in. Defensive postures will diminish with time. Be sure their action plans are reasonable and measurable.

Tip #4: Set some stretch goals.

The forecast should not be the destination, but just a stop along the way. Ask your team for some stretch goals after the forecast is done. Don’t mention this until the last meeting when the numbers are finalized (this will help prevent sandbagging). Then reward them for achieving both sets of numbers.

Tip #5:  Review and adjust accordingly.

Once every three months there needs to be a formal “Forecast Meeting” where all of the agreed to objectives are reviewed. Adjustments are OK if warranted by a sudden shift in the market. But, if it is due to poor execution of their plan, it will require a separate conversation.

Make the numbers crystal clear, create the plans to reach them, execute the plan, and then hold everyone accountable.

Good selling.

Permanent link to this article: http://blog.ncm20.com/2014/11/five-tips-to-build-your-most-successful-forecast-ever/

Scott Norman

Today’s Hot Topic: Expense Control

Hot topics for Twenty Groups change as much as the seasons change. Recently, the hot topic has been expense control. I decided to recap some ideas that have been discussed over the past few years at some of my meetings in hopes they might refresh your memory or provide you with a different approach to expense control.

As we all (should) know, at a profit to sales percentage of 3%, $1 saved is worth $33 in sales. For instance, if you spend $25 on a policy adjustment the dealership must sell $833 to cover that expense.  The table below shows this impact at several levels of expense:

coins

   Expense Dollars      To Cover Expense  
$5 $166
$50 $1,667
$100 $3,333
$250 $8,333
$500 $16,666

Payables Meetings

Pick one day a month for your meeting with all department heads. Have the payables clerk provide you with the payables folders or invoices for all the checks you will sign during the meeting. As you sign each check, discuss whether the expense is a necessary one and if so, would another vendor be able to provide the same service at a better price.

Vendor Book

Create a book of all approved vendors and establish the policy that any purchase of supplies or services covered in the book are purchased from only those vendors. You also want your payables personnel to review all invoices to be sure the approved vendors continue to use the pricing they quoted when the original bids were taken.

Charitable Request Form

Create a form that each solicitor for a donation must complete for their request to be considered. Only the serious solicitors will take the time and effort to complete the form and return it, thus discouraging “drop-bys.”

Expense control begins with being aware of what goes on in your dealership. For example:

  • Open your mail. Frequent questioning of payables will reveal some “sweetheart” purchases. Review all invoices.
  • Review petty cash receipts.
  • Get bids on everything. (See Approved Vendor Book above.)
  • Invest all excess earnings into new vehicle inventories through your cash management account.
  • Don’t give up on fixed expenses. Simple water, compressed air and heat leaks can
    be plugged. Ask your insurance carrier for a print out showing your reserves for past liabilities.  These liabilities may be obsolete and costing you premium dollars. Review all of the “named perils: for which you are covered to determine if there are any from which you may be virtually risk free.
  • Review your computer hardware maintenance coverage. Is it cost effective considering the cost of replacement equipment? PS never cancel the maintenance on your computer’s CPU.
  • Never give anything away. Charge something for everything. It may surprise you to know that a customer who is clamoring for a 100% adjustment will pay 25% and be entirely satisfied.  If you do have to give 100%, do it loudly. Let everyone know you gave something for nothing.

To involve your employees in expense control, consider taking the agreed upon forecasts and offering all employees a percentage of every profit dollar over that forecast as a bonus in equal portions to each employee. This should make everyone very profit and expense conscious.

Lastly, be consistent in your expense control awareness. Don’t make it a hot topic one month and not the next. One of the many tools available in NCM’s axcessa™ program is the ability to trend and drill down into expenses.

axcessa_cta

Permanent link to this article: http://blog.ncm20.com/2013/11/todays-hot-topic-expense-control/

Scott Norman

What Should My Controller Be Doing?

calculator-plusThat is a question that arises frequently in NCM 20 group discussions. To answer completely would take several articles; however, the first and most important answer to that question is, “Monthly reconciliation of your Balance Sheet accounts.”

Your Balance Sheet, the front page of your operating statement, shows accounts listed as either Current Assets or Current Liabilities as well as Long Term versions of Assets and Liabilities. The Current portions should be supported with documentation that supports the balances they contain, thus verifying each account’s accuracy. There is no reason you should not have a schedule to verify accuracy or timeliness of each of these accounts. Monthly reconciliation of each account may require you to physically touch each asset or you settle it with a simple reconciliation form.

Following is a quick checklist of Current Assets and Liabilities that should be corroborated at the end of the month.

CASH – Starting at the top, everyone should reconcile their Bank statements monthly. For internal control purposes the dealer should physically receive the statement and the reconciliation should be done by someone other than the person making deposits and writing checks. Currently many clients perform a daily reconciliation using “positive pay” and a download from their bank. Using a schedule, you can quickly see which checks have cleared and if there are any problems with deposits.

CONTRACTS IN TRANSIT – As a scheduled account, this should be easy – Either the contracts have been sent for collection or they are still in the office. Can you verify where each contract is? Are there any contracts over seven days old? Do you log any returned contracts?

VEHICLE & FACTORY RECEIVABLES – These schedules are aged for a reason!  Are there amounts due that are so old as to be uncollectible? Even though this account is scheduled, your assets may be inaccurately stated if they contain uncollectible balances. Is there documentation on all balances?

SERVICE, PARTS & BODY SHOP RECEIVABLES – Do you have separate accounts for each Department so the Managers can track and collect their responsibilities? Are past due receivables being reviewed and a reserved set up for their potential un-collectability? The ONLY Body Shop Receivables should be from Insurance Companies with which you have a DRP or Pro Shop Agreement!  All other Customers need to pay by Cash or Credit Card BEFORE Release! If you do write-off a balance in a vendor’s account, do you keep track of that amount? Consider a zero-balance schedule, controlled by the vendor number and the offset control number is the year written off or Department written off against.

WARRANTY/SERVICE CONTRACT RECEIVABLES – A warranty schedule will help you quickly review this account. Do you have any claims with an outstanding balance where only partial payments were made? What about the remainder? Are there claims over 30 days? Can they all be supported and justified?

HOLDBACK RECEIVABLES – Again, as a scheduled account this should be easy. Depending on when the holdback payment is due the balance will fluctuate, but there should never be any holdback receivable older than the last payment. Since the factory pays you by VIN, shouldn’t this schedule be controlled by VIN? Is yours controlled by stock number?

FINANCE RESERVES RECEIVABLES – Side-by-side schedules are useful when you have numerous finance sources. This of course implies that you have a separate GL account for each finance source that pays you a reserve, and you should. If your bank notifies you about the reserve amount when the deal is funded, adjustments should be made at that time by the appropriate office personnel, not F & I staff. Shortages/overages should be reviewed with the Finance Manager to determine why the difference between bank and book.

VEHICLE INVENTORIES – Are both new and used inventories verified by physically touching each vehicle?  No cheating by handing the manager a list. They should start with a blank sheet of paper and list each stock number as they come to the vehicle. Also, this is the perfect time to verify that all proper labels are affixed. Do you verify for each vehicle on the inventory schedule that you either have for new inventory a MSO/CSO, or for used inventory a title or copy of a current payoff check? Are Dealer Exchanges/Trades in inventory floored? See Floorplan Notes Payable below.

PARTS, TIRES AND ACCESSORIES – Here, a schedule won’t do, so utilize a monthly reconciliation form to track variances. Your Parts Management Report will never reflect the same balance as the General Ledger. There are too many variables – work-in-process, parts returns, un-posted invoices, etc.  To account for the variance each month complete a reconciliation form. If you need a form, please call the NCM Institute at 866.756.2620. Use your system’s management reports to track aging or inactive inventory.  A low days supply may not necessarily mean your inventory is clean and usable. What about your Special Order parts bins, are they filling up?

SUBLET INVENTORY – The schedule should be compared to your Open Repair Order report. Any discrepancy should be handled immediately. If you have credit balances, determine why you are not receiving or posting the vendor’s invoices on a timely basis.

WORK IN PROCESS –  This account can either be scheduled and compared to the Open Repair Order report, with variances being researched and adjusted, or a simple reconciliation form can be completed and variances researched and written off, with the Manager’s approval. The Service Open R.O. list should be reviewed weekly with no R.O. over three days without explanation, none over five days without “family history.” In Body Shop, five days, two weeks. A Work-in-Process schedule is recommended if you frequently have to write off large balances and it cannot be determined what is causing the discrepancy.

BODY SHOP MATERIALS – A physical of the Body Shop Materials should be done on a monthly basis by the Manager. To reconcile to the General Ledger Balance you must estimate the material used on Open Repair Orders, add that to the physical balance and reconcile the number to the General Ledger Balance.

PREPAID EXPENSES – Documentation should always be available to corroborate the balance in these accounts. Only those expenses where the benefit extends over more than one month should be set up in this account.

FIXED ASSETS – Annually, you should physically inventory your capital assets to verify the equipment/furniture is still in use and can be accounted for.

ACCOUNTS PAYABLE – All debit balances on this schedule should be researched. One useful way of monitoring this schedule is not to post current month’s invoices until you’ve paid most vendors. When the schedule only has a few balances from the previous month it is easy to spot irregularities.

FLOORPLAN NOTES PAYABLE – This account should be on a side-by-side schedule with the appropriate inventory. Any time there is a balance in one column and not the other, the discrepancy must be researched. Either you have unfloored inventory or a floorplan payoff has been missed.

MISC. PAYABLES – Tag, Vehicle Payoffs, Service Contracts, etc. should all be scheduled, current and verifiable.

TAXES – All taxes should be sufficient to cover the liabilities and paid in a timely manner. Verify by comparing any return or payments to the month end balance.

ACCRUED PAYROLL – This account should reflect payroll due for unpaid time at the end of the month and is usually reversed at the beginning of the next month. Accruals for monthly commissions should have documentation to confirm the appropriate amount is being accrued.

Verifying all Balance Sheet Accounts involves cooperation from all departments and should be taken seriously every month. Dealers and managers often do not grasp the significance of the balances in these accounts. The question we should be asking ourselves when we see a balance in an account is, “Is that a reasonable number?”

One last thing, does your CFO prepare for you each month a Cash Flow Statement? In Accounting classes this goes by several names such as Sources and Uses of Cash. It is a report that verifies the change in your cash balance for an accounting period by showing you where cash was used or cash was generated as it shows you the changes in the balances of the accounts on your balance sheet.

Historically there has been little training in the understanding of not only the Balance Sheet, but the rest of the operating statement itself. NCM holds Principles of Financial Analysis training where all of these accounts and topics are covered. Click or call the NCM Institute for more information at 866.756.2620.

financial-analysis

Permanent link to this article: http://blog.ncm20.com/2013/09/what-should-my-controller-be-doing/

Rebecca Chernek

To Women With a Passion for F&I

woman_FandIEMBRACE CHANGE

The glass ceiling for women’s acceptance in the finance industry was shattered over a decade ago.

According to the 2012 Catalyst Census of Women Executive Officers and Top Earners, which counts the number of women in upper management in Fortune 500 companies, women comprise over 18% of all executive officers in the finance industry, and 19% of board directors in the finance and insurance industries in Fortune 500 companies.

BUT . . . that glass ceiling is only slightly cracked for F&I women in the automotive industry.

Why is this true? It’s no secret that the auto industry worldwide has been male-dominated since the birth of the four-wheeled, horseless carriage. Ownership of auto makers is passed down to the sons and to their sons in Japan, Germany, France, Sweden and in Canada; this practice has been followed for generations even in the United States.

Some 95% of the country’s 20,000 auto dealers who belong to the National Automobile Dealers Association are male.

While a very small percentage of women have the financial means to become the owner of a GM, Ford, Chrysler, Saab or Toyota franchise, an increasing number are rising in the ranks to positions of valued leadership and respect in these manufacturers’ offices.

This includes the position of F&I manager at a local franchise dealership.

Why should this perk up your interest?

Because if you have the inborn drive to set goals, to meet and beat challenges along the way, and to be a leader as well as a team player, you can be one of the women to shatter the glass ceiling in what still remains a prominently male domain.

Challenges will be part of your F&I experience in a car dealership, but the field is wide open and you could become a role model for many more women in finance to follow in your footsteps.

It is part of car “culture”—still in practice, spread like dandelions in your front yard, and written about by every journalist on the subject—to repetitively say that many women start out in car sales and with their awesome success are asked by the dealer to step into the position of finance manager, but few stay.

The reasons given are always the same: no training for the position; no ongoing training; little cooperation from the predominantly male sales personnel; long inflexible hours; continued disrespect and a lack of dealer willingness to change the culture to be more inclusive of women outside office workers, or to change former methods to reach out to women buyers in the community. When lumped together, they discouraged open dialogue and widened the unspoken impression that female finance officers are inadequate.

Here’s some advice given by two widely-dissimilar women. Former First Lady Eleanor Roosevelt, who is still famous for her role as women’s advocate, said, “No one can make you feel inferior without your consent.” Dolly Parton, who is one of the most successful female recording artists of all time and an astute businesswoman, said, “If you want the rainbow, you’ve got to put up with the rain.”

In other words, take a position as F&I manager at a car dealership with your eyes wide open and fixed on your ultimate goal: to not only meet the culture challenges, but rise above them so fast and with such dignity that you become an influential member of the dealer’s inner circle. One that has numbers to prove your value and leadership skills that have every member of the sales team eager to become your best friend.

Study; ask for training; provide it for all the sales staff and have weekly meetings with them to share successes and failures; learn not only the names of the office staff, but exactly what they do and how and why. That’s what leadership in the finance office requires. More than words. More than overblown reactions to a culture that is waiting for you to show them how to embrace change. It requires a concerted plan and actions that drive your ultimate success. Oh, and see that the dealership’s bottom line soars and those males in sales see their paychecks grow like a snowball rolling downhill.

Then the statistics will change and the article topics will reflect it.

THINK BIG. Start small.

Rebecca Chernek is the principal of Chernek Consulting, an F&I training and consulting agency in Atlanta. Her ”Closing Tools Mastering Menu Sales Workshop” will be offered in Chattanooga,Tennessee July 15-17, 2013 at Woople Headquarters. Contact Becky Chernek for details at 404-276-4026.

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