Author Archive: AxioMobile

Author Archives for AxioMobile

By Phil Villegas

For the past 15 plus years, a fair amount of the work I’ve personally been involved with relates to dealership buy/sells of all makes and sizes.  Despite the size of the transaction, nearly all of these will have either a well-documented or loosely implied list of seller’s “Add-backs”.  Add-backs are suggested adjustments to a dealership’s reported profit, essentially as the word states, add-back to profit to arrive at the dealership’s true earnings.  The spirit of most add-backs is to account for and eliminate non-operational or unusual expenses that a new buyer would likely not have to incur going forward. 

Add-backs can cover a wide range of topics, from compensation, advertising, tax, legal, travel and entertainment, unrecorded income, data processing, etc. All these add-backs are disclosed with the end goal to recast the dealer’s financial statement, and ultimately, improve the appearance of the dealerships’  profitability to make the financial prospect of acquiring the [...]

By Marilou C. Vroman, CPA, CFE

As the weather begins to cool, the days grow shorter, and the leaves begin to change, we start to sense the nearness of another year coming to an end.  With the fourth quarter upon us, it is time to shine and bring in a strong finish to our dealerships both operationally and financially, with final push coming in the month of December, generating record sales.  While dealers both desire and expect to show strong performance at year end, it is also a time for some dealers to attempt to minimize their taxable income through appropriate tax strategies, typically recognized in the financials at year end.   As we know, dealers produce twelve monthly financials from January through December.  What on earth is a 13th month statement? For those unfamiliar with the 13th month, this [...]

By Phil Villegas

It may be a byproduct of getting older, or perhaps having less disposable time, which in turn may be the root cause of getting grumpier, but I am finding that I am having less patience with people who simply are not professionals or carry themselves as such.  I’m particularly more frustrated by the lack of professionalism and general courtesy at the highest ranks of many dealership groups with such as their general managers, controllers and at times, even the owners.

I’ve witnessed these types of disrespectful and unprofessional individuals throughout my entire career, I always chalked this up to a “different management style” or “cultural differences” within the dealership.  Over the years I never spent too much time reflecting on the individual merits of these individuals or their behavior in their stores; at least not until [...]

By Marilou Vroman, CPA, CFE

As the year comes to an end, many dealers start preparation for the annual tasks that go along with turkey with all the trimmings and holiday greetings.  One of those tasks is preparing for the annual parts physical inventory.  While not all dealers are required to, or even opt to, perform parts physical inventories, we strongly encourage the process since it provides an extra layer of internal control and helps validate the integrity of the inventory amounts on the dealership financial statement.

The parts physical compares the physical parts on hand on a given date to the perpetual inventory in the DMS and adjusts the quantities on hand accordingly.  The resulting inventory value will also be compared to the inventory balance in the general ledger and adjusted for common differences such as outstanding [...]

By Phil Villegas

After many years of the stability and brand performance parity, I sense we are going into a very interesting era for automotive dealers. While in my opinion there is a lot of fuss over “Mobility” and the virtual doom it has in store for a large percentage of the dealer network, I feel there is a more traditional and imminent threat to dealers before autonomous, subscription or ride-sharing services put a dent in the industry.

My primary concern relates to what appears to be a likely recession to come within the next few years.  While there are varying schools of thought of whether a recession is likely, the reality is we currently find ourselves not too far from being in longest economic recovery in US history, close to 10 years.  Despite this extended economic [...]

By Marilou Vroman, CPA, CFE

Buying and selling dealership’s is no small task, nor is it something to be taken lightly.  With transactions that can take months to complete and involve tens to hundreds of millions of dollars, both the financial risk and reward can be overwhelming.  Here are some items buyers and sellers should keep in mind as negotiations heat up.

Employee Matters

  • Employee compensation plans – Have there been any recent increases in pay or management?
  • Payroll considerations – Most closings will not occur conveniently at the end of a pay period.
  • Employee Vacations – How are employee vacations and time off accrued and paid?
  • “Sacred Cows” – The Dealer’s daughter or son, the Service Manager’s nephew, etc. Gain an understanding of employee relationships and their roles in the dealership.
  • Non-disclosed, undocumented employee privileges [...]

By Phil Villegas

In the mid-’90s, I drifted among a few self-indulgent jobs (valet, bartender and cabana boy) that were perfect for a young single guy who had just gotten out of the Marine Corps. After a few years of this life and someone very dear seeing some potential in me, I enrolled in St. Petersburg College and started looking for jobs that presented more career opportunities.

While at the time I would have never considered my first dealership job as a file clerk one that I could make a career out of, I now find myself nearly 25 years later feeling grateful for that initial dealership opportunity.

I was reading the Cox Automotive 2019 Dealership Staffing Study earlier this week.  Aside from the retrospective thoughts that the study elicited about my career, it also helped highlight what [...]

By Phil Villegas

We can all agree there is already more than enough paperwork in current vehicle deal files, with the average vehicle retail sale having between 50 and 100 documents with the deal jacket.  While the last thing any of us would want to do is add another document to the deal file, there is a one document that we routinely find missing that can help protect the dealership;  the Third-Party Funds Authorization Form.

It is almost a daily occurrence at many dealerships where the funds being used for a down payment or the purchase of parts and/or service come from an individual other than the person named on the deal, parts ticket or repair order.  While 99% of these payments may be innocent and well-intended in nature, it’s the one’s that are remitted maliciously that can [...]

By Marilou Vroman, CPA, CFE

You may be aware there are ways to monitor the web for content such as “Google Alerts.” This service is an easy way to have relevant news delivered to your in-box.  As a forensic accountant and a passion for dealership internal controls, one of my alerts is set up to provide articles about dealership fraud or embezzlement.  It seems almost every other day I receive an article about another dealership that has been taken advantage of by an employee.  After reading many of these articles, I find myself thinking, this could have completely been prevented with the simplest of internal controls.

Just yesterday I read an article about a Toyota dealership in which a General Manager perpetrated a fraud scheme where checks were diverted for personal use.  According to the article, the General Manager told his dealership employees to make checks in the thousands of dollars payable to a fictitious [...]

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