Like most other kinds of businesses, auto dealerships are made up of quite a few distinct departments, all of which collaborate to ensure that everything runs as smoothly as possible. It is essential that all of the internal operations, from sales finance to servicing, run smoothly and without any hiccups. Accounting is one area. However, that is essential to the entire performance of a dealership, and it is responsible for keeping the books.
The best judgments can only be made when those making the decisions have access to all the relevant information that is also accurate and current. However, an alarmingly high proportion of company owners are making crucial choices on the future of their businesses based on outdated information because they have not reconciled their bank accounts. An up-to-date bank statement may seem like a trivial matter. Still, it is quite a powerful thing for a business owner because it enables them to make critical purchasing decisions, plan for the future of their business, create frequent, accurate cash flow forecasts, and inform decisions that could ultimately change the end of the business. Although it may seem trivial, an up-to-date bank statement is quite powerful for a business owner. When company owners have access to accurate cash data, they can control what they do with it in the long run.
IMPROVED CASH FLOW PREDICTIONS
When your financial forecasting skills are enhanced, you will see an improvement in your ability to manage cash flow. This, in turn, will directly influence how you work your cash daily. If you have access to the most recent information, you will be able to make judgments on the most effective way to use the working capital you now have that is more informed. Because of this, you won’t have to worry about going overboard with your expenditures, which may put you in a financial bind in the near term. It also indicates that you can compare your present cash flow situation with your projection, providing you with a solid idea of performance and the areas in which improvements need to be made.
The quality of the information on which a report is based determines how reliable that report is. For businesses to be able to make crucial and routine choices, knowing the company’s financial health is essential. Because of this, individuals who are in charge of making decisions need to have constant access to information that is up to date. If the bank accounts are only reconciled once a week, then the only day you have precise knowledge of the company’s status is that particular day, which may or may not be today. But suppose you reconcile your bank account every day. In that case, your systems can utilize the most recent information to provide accurate data and real-time insights about your company, improving your capacity to manage it efficiently. The process of reconciliation in car dealership accounting assists in the detection of mistakes and fraud.
ERRORS THAT WEREN’T IMMEDIATELY VISIBLE THE FIRST TIME MAY BE UNCOVERED DURING THE RECONCILIATION PROCESS. YOU COULD FIND OUT THE FOLLOWING WHEN RECONCILING YOUR ACCOUNTS:
- A straightforward calculation mistake may have occurred due to the worker pressing the wrong button on the calculator.
- The entries have been switched around; for instance, a credit was applied to an account, but it is now reported as a debit and vice versa.
To prevent a situation in which a single individual is responsible for all of the dealership’s accounting at all times, some dealerships prefer to delegate the task of doing reconciliations to a third party or to a different employee inside the dealership. Similarly, reconciliation may assist you in identifying any instances of fraud, particularly fraud that occurs inside your organization. When one individual has complete control over an organization’s financial records, that person may be motivated to steal a few checks or take some money from the top of the pot.
The service department is another place where fraud may be uncovered via reconciliation. It is not unheard of for staff in the service department to steal components and sell them outside of the dealership.
THROUGH THE DEALERSHIP ACCOUNTING RECONCILIATION PROCESS, IDENTIFYING MORE EFFECTIVE METHODS TO DO BUSINESS
Keeping up with all of the necessary reconciliation may be a time-consuming chore, but doing so has significant advantages for your company. Reconciling your accounts regularly enables you to identify problems at the earliest possible stage, find solutions to those problems, and move on before any significant harm has been caused. You will be able to prevent serious mistakes or difficulties that might cost your dealership a significant amount of money if you establish consistent internal controls.
Your books will always be fully balanced if you do reconciliation, allowing you to receive a comprehensive view of the financial situation at your dealership, including how money is being spent and where you may be able to budget more wisely. It could shed light on procedures that are working (and those that aren’t) and allow you to beneficially modify your dealership’s expenditure.
A dealership accounting department that is highly functional and has a streamlined process of reconciliation will be in a better position to make a significant profit and be steps ahead of the competition. Our data recon software is designed to make your task simpler and streamlined. Sign up now to book a free demo or know more about our software.