One of the common questions we hear from BHPH dealers, aside from how to get financing, is “am I doing the accounting correctly?” Although BHPH dealers have very robust dealer management software to track inventory, sales and customer accounts, they must consistently input the right data to leverage the software’s functionality.
Dealer Management Software
Common problems we see in dealer reports when working with clients include improper set-up of the chart of accounts, incorrect discounts recorded in the book of notes, and inaccurate deferred income (which impacts accurate sales tax remittances). If the dealer has an RFC, we will find that notes are improperly recorded when passed back and forth between the dealership and the RFC after sales and repossessions. Inaccuracies can lead to tax noncompliance and penalties in addition to inaccurate financial statements.
When setting up dealer management software, there are few shortcuts in the beginning. Ideally, staff is properly and frequently trained on better ways to use the system. There are also standard forms that can be used as templates and customized to simplify documentation and reporting, such as:
- Sales applications
- F&I forms
- Disclosure forms
Sometimes the standard forms are just fine to start with, and as the dealership grows, staff may prefer customizing the reports for easier review and decision making.
Monthly or quarterly, the system should be reviewed for any recording errors or miscalculations, which will save the dealership time and money when it is time to remit/file taxes or report to financing partners.
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If you are looking for a strong CPA partner to assess your software, budget, KPIs or processes, talk to the business services group at Cornwell Jackson. We work with dealers on a monthly basis to keep their accounting and reporting organized for proper compliance, better cash flow and enhanced profitability. Plus, we understand the regulatory issues and competition that impact the bottom line of this industry.
Scott Bates, CPA, is a partner in the audit practice and leads Cornwell Jackson’s Business Services Department, which includes a dedicated team for outsourced accounting, bookkeeping and payroll services. He provides consulting to clients in healthcare, real estate, auto, transportation, technology, service, retail and manufacturing and distribution. Contact Scott at firstname.lastname@example.org or 972-202-8000.