ACCOUNTS RECEIVABLE

Cutting off receivables on the 25^th of the month is one of those rocks that have been lying around in dealerships since the beginning of time. By cutting off business on the 25^th, the last five days of business are pushed into another accounting cycle and the customer is granted an additional 45 days of credit. Cutting off receivables on the last day of the month and mailing statements on the 1^st of the month will increase the cash flow. A customer receiving a statement on the 26^th or 27^th of the month isn’t going to pay any faster than a customer receiving the statement on the 2^nd or 3^rd of the following month.

Collecting receivables can be frustrating. How many times has the receivable person heard, “I don’t have a copy of an invoice?” No problem, fax or email a copy of the invoice while the receivable person has the vendor/customer on the phone and then ask, if the fax or email was received. That small procedure solves the “I don’t have a copy” excuse. A simple solution.

CONTRACTS/VEHICLE RECEIVABLE

A contracts/vehicle receivable report should be given to the vehicle manager, finance manager and the dealer daily. Attach a copy to the daily DOC.

Deals that are short should be researched immediately to determine the cause of the shortage and corrective action taken. The managers should be hammered daily until the funds are received.

When a deal is short a small amount such as fifty or a hundred dollars, the prime suspect is usually the salesperson. The salesperson may have had the cash shorts and needed some walk-around money until payday. Under those circumstances the controllers’ position should be to immediately inform the salesperson and the manager that the salesperson’s receivable account will be debited and the amount will be payroll deducted from their washout. Of course proper documentation must be in place authorizing a payroll deduction.