The Three Day Financial Statement Close: Fact or Fiction?

By Tom Wolf, CPA

Why is a timely month end close important?  Dealers want a timely close so they can have access to accurate financial data in order to measure performance. With an ever-changing economy and consumer buying habits, it is more important than ever that management have access to timely financial data to adapt quickly and capitalize on all opportunities.

Management culture has the most important impact on month-end close efficiency.  Expectations should be clear and accountability should be commonplace. Management must include all departments in the close process, as the responsibility does not fall solely on the accounting department.

For Bell Ford Lincoln in Adrian, Michigan, the 3 day close is a way of life.  Sherrie Bertram, the Controller, has been doing this for over 20 years.  “The ability to do a quick month end close starts way before the end of the month,” says Sherrie.  To give some background, this store retails on average around 38 new and 62 used per month post-pandemic, and 45 new and 40 used per month pre-pandemic.  In addition, Sherrie has only 2 other office staff, plus a cashier/receptionist.  The staff consists of a receivables/payable clerk and a title clerk.  The receptionist waits on customers, answers phones and stocks in new vehicles.

As Sherrie stated above, there is a continuous focus throughout the month to keep things up to date and deal with issues as they arise.  As you might imagine, Sherrie is in constant contact with all departments to make sure deals are coming in regularly from the sales department and parts invoices are posted throughout the month.  Every month end, there is a clean sales cut-off and the payables clerk checks with the parts department two days prior to month end to make sure accounting has all the invoices

Sherrie reconciles cash on daily basis, which limits the amount of investigation and reconciliation necessary at month end.  There is also constant monitoring of expenses by Sherrie and the owner throughout the month using a DOC as well as comparison reports to detect any missing information.

On a weekly basis, schedules are cleaned and deals are posted. Commissions are recalculated and reviewed and postings to the policy accounts are communicated with the managers.

Some of you may be saying to yourself that there is no way all the expenses are entered based on actual invoices for the month.  According to Sherrie, all expenses, except the telephone bill, are reported as actual.

As you can see from above, Bell Ford Lincoln is a good sized dealership, with a right-sized accounting staff that makes it a priority to close the month end timely and accurately.  This gives the management team excellent opportunities to adapt with the ever changing industry.