Comments Off on How Social Distancing is Bringing Us Together
By Marilou Vroman, CPA, CFE
A visit with a multi-franchise dealer with stores in multiple states left a marked impression. I entered a conference room and saw countless monitors on the wall, many of which were tracking appointments, ups, and sales transactions at each of the group’s dealerships. Interestingly, the largest screen in the center of the wall at focal point was dedicated to hosting virtual meetings with team members at other locations. At the time I viewed this setup, it was almost foreign, embracing video technology by dealers seemed somewhat rare, discretionary, and almost “ahead of its time” even though the technology had been around for quite some time. Many dealerships to this day still engage in primarily face to face meetings and conference calls with those away from central operations.
At a time when working from a remote location is either required due to a government order, or merely encouraged for health and [...]
Comments Off on Staying Ahead of the Coronavirus Curve
By Phil Villegas
Throughout our automotive careers, most of us have had to face what has been considered unprecedented. We have had to face challenges we had not fully anticipated or could have imagined. Whether it was the terrorist attacks on 9/11/2001, the great recession of 2008, and now the global coronavirus pandemic.
While each of the above events are unique in both their substance and nature, they are similar in their anxiety impact. The anxiety of not knowing how deep and how long lasting an impact this is going to have on our daily lives. With all the uncertainties come essential questions; are we doing enough? Are we adequately prepared? How do we prepare for the unknown, and for how long? The real answer is that no one really knows; the entire situation is very fluid and changing every day. However, one thing is for certain; this too will pass. The only real question [...]
Comments Off on Bad Behavior Toward Women Is NOT the Norm
By Marilou C. Vroman, CPA, CFE
On March 2nd, I read commentary in Automotive News titled “This is why few women stay in dealership jobs” by Jackie Charniga. The spirit of the article spoke to retention of female employees in the dealership environment and the treatment of women in the automotive profession. The article raised my heart rate for two reasons. First, I have experienced inappropriate treatment in a dealership and therefore I understood the perspective of the writer, however, my heart rate escalated more so because in my 30 years in automotive retail, I have witnessed firsthand more advancement and success in women’s initiatives in the retail automotive industry in the last ten years than ever before. Are the misguided actions of some enough to discredit or second guess our industry?
It’s time to focus on the good.
Women in every role, from parts managers with impeccable inventories, to closers with the highest F&I [...]
Comments Off on What Corona and Carvana Have in Common – Steps to Help Mitigate the Disruption to Come
By Phil Villegas
With China in a state of Coronavirus and contamination concerns, new vehicle sales volume in China dropped over 80% in February 2020. As the virus is appearing to gain traction here in the U.S., genuine concerns begin to arise related to the potential disruption here at home and what this could mean for dealers.
Having faced some adversity early in my life, my personality type has always been to focus more on the potential opportunity of a given set of circumstances. Operating with a philosophy that “the calvary isn’t coming” to save me, has always provided me with greater clarity in confusing times.
Even before the rise of the Coronavirus, one of the largest risks facing conventional retail auto dealers has been their ability, or should I say inability, to successfully engage and transact with customers online. The general inaccessibility to fully transact virtually by most dealers has paved the way for [...]
Comments Off on When Buying a Dealership, have Seller “Add-backs” Properly Reviewed
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 [...]
Comments Off on Back office investment will yield front end rewards
By Marilou Vroman, CPA, CFE
One of the best indicators of a good restaurant is a well-kept, clean and organized kitchen. Some of the best restaurants are those where you can see the food being cooked with utmost care and concern, the chef directing traffic, an orchestra of gastronomic talent working together to create amazing dishes with the final garnishes so being carefully placed on each plate. So, as you take time from your busy day to read this, why is this relevant to your dealership?
It’s interesting to me how many dealerships continue to operate with the minimal amount required to meet corporate image requirements, and make little no investment in the non-customer facing areas of the store, such as the accounting office, parts department, and even the service department. These are the places where dealership employees come to work every day and are expected to be high producers and to be happy and [...]
Comments Off on Your accounting department can make you more profitable, you just might not see it at first glance
By Jorge Arrieta
As a young internal auditor, it can be discouraging to work in an industry where the importance of an accounting department and dealership auditors can be unappreciated or undervalued at times. Understandably, most automotive dealerships are driven by the bottom line, which may put the accounting department in a disadvantaged position due to their work not directly translating to immediate or measurable profits.
However, we often come across articles with a headline such as “Dealership controller embezzles $1.1 million”. This article in Automotive News written by Eric Freedman told the story of Controller Vanessa Vence-Small. According to the article, the Controller started to embezzle 50 days after she got hired and ultimately pleaded guilty to wire fraud. In another article just recently reported by Tariq Kamal in Auto Dealer Today with the headline “Former GM gets 4 years, Owes $8M for Embezzlement”. The article revealed the general manager had worked for Sonnen [...]
Comments Off on Professional Development and Upward Mobility through Dealership Training Programs
By Courtney Becton
Dealership Universities and on-going training are great ways for personnel to sharpen or gain a new skillset while remaining up to date on compliance. Training programs serve to expand on professional development and enable personnel to study specific areas of the dealership they have an interest in pursuing. Not only will your staff have the opportunity to stay up to date with compliance initiatives, but they will also have the opportunity to become more knowledgeable overall and have a chance to grow within the company. It is a great idea to promote from within and allow personnel the opportunity to work towards a goal or position they would like to be within their reach. Commonly, employees leave companies because they feel there is no room for them to grow or there are not enough measurable platforms, they can utilize to exhibit proven knowledge in an area they have worked hard to gain [...]
Comments Off on Dealing with Dealership Mobility Disruption
By Phil Villegas
On a recent flight, I was seated next to someone with whom I unsuccessfully avoided conversation with. Within a millisecond of finding out I worked with automotive dealerships, he asked, “How do you feel about working in an industry that will be gone in five years?” Before I could respond, he was already blabbering off about Air B&B, Uber, Tesla, Amazon, and others, and about how dealerships will not survive in an autonomous car age. The plane was full and had just started taxiing, so switching seats or getting off the plane was no longer an option; fortunately I had good Marine Corp training and knew that this pain of having to listen to this guy would either kill me or come to pass.
The reality is auto dealerships are going to face a level of financial disruption in the years to come. Do I believe traditional automotive dealerships will be extinct [...]
Comments Off on Relying on accountants alone to detect fraud is a risky proposition.
By Phil Villegas
Several years ago, there was a great cartoon I came across from Leo Cullum. At the time it truly resonated with me since I was working with a CPA firm and could clearly see firsthand the differences between “accounting” and “accountability”.
While most CPAs, will go to great lengths to tell their clients a reviewed or audited financial statement is not designed to uncover fraud, most dealers will simply hear the word “audit” and will get a false sense of security that all of their transactions are being analyzed.
For a CPA to provide an opinion on a financial statement, they need to ensure that it’s not materially misstated. The term “materiality” is a cornerstone of most engagements. Materiality is the maximum amount by which auditors believe a statement could be misstated, by known [...]