Advantages Through Strengthened Accounting Departments

In working with numerous dealerships (over 140 rooftops served), there are often varying degrees of sophistication in their accounting departments. While maintaining confidentiality is critical, there are still aspects we can share that better defines how and what it means to be a strong accounting department.

Most dealerships share the same ultimate goal: manage expenses and increase profitability. No big surprise there but making good decisions as a business owner emanates from a strong accounting team. Often, that team is complimented by an outside consultant.

Benchmarks to track

Savvy dealerships have an array of benchmarks that they use to determine how effective they are at managing expenses and increasing profitability. Some of those include:

• Expense control (variable expenses as a percentage of gross profit)
• Fixed absorption percentage
• Gross profit per employee
• Cash flow and balance sheet management

Along with those benchmarks, any good business will have solid balance sheets backed with sure processes and documentation backing them up as well as strong cash management. And, from a traditional accounting function, ensuring dealerships are filing timely and required tax reports (sales, payroll, etc.) while complying with new requirements like FTC safeguards, state regulations or Federal programs (like we saw with the Payroll Protection Program during the pandemic).

Establishing and maintaining an effective accounting department allows for peace of mind that the dealership’s financial foundation is solid. Focus can then be on well informed decisions including where to improve other areas of the business given their financial position.

What’s your position? What goals do you have for your accounting department as 2022 comes to a close? Reach out and let’s build a financial dashboard plan for 2023 with specific goals and key measurables.