Steve Hall | Senior Transition Consultant
A very common problem among businesses in general and small businesses in particular, is the failure to maintain accurate and timely accounting and financial reporting. Independent automobile dealers are certainly no exception. Many in fact, make no real attempt to do so.
AutoStar’s Professional Services team invests many hours and resources into providing our customers with accounting tools, documentation, training and education.
They may make some effort by using QuickBooks to post their checks and deposits, and maybe even reconcile their bank account monthly. Too many of these mistakenly believe that this is accounting. Maybe it is, if cash basis accounting is all one needs. However, when it matters the most is when the business needs to or chooses to borrow money from a lender, or seek investors or partners. For financial statements to be acceptable, typically they must present the operational results and position of the business according to generally accepted accounting principles (GAAP). Among other requirements, GAAP (and the IRS) generally requires accrual based accounting, not cash basis. This demands a greater degree of accounting sophistication than just accounting for money in and money out. The bank statement is not a financial statement.
This is where the importance of good accounting systems and business processes comes in. This requires that the person assigned such responsibilities be endowed with adequate tools, skills, process documentation, training and education to enable them to perform their duties. Autostar’s Professional Services team invests many hours and resources into providing our customers with just such tools, documentation, training and education.
For example, I recently worked with a dealer’s accountant in an effort to help them determine why several of their general ledger account balances were not balancing to the corresponding detail reports in Fusion. These included inventory, contracts in transit, customer deposits, notes receivables, drafts payable and floor payable. We discovered several procedural errors that were contributing to their problems. They were the same kind of errors that we often see, and try very hard to teach how to avoid. It seems that there is an inevitable process and time line prerequisite to fully understanding and appreciating the impact of such procedural errors. It is only when this point is reached that adequate effort is applied to ensuring the execution of best practices and proper accounting and business processes.
I know some of you are wondering if you perhaps have been guilty of perpetrating the same procedural errors. For your edification, the list includes back-dating sales into prior month, back-dating entries in general, deleting funded outside financed sales, without adjusting for the funded contract in transit, improperly accounting for returned down payments on deal unwinds, etc.
At Autostar’s user’s conference, Innovate 2011 in October, our Accounting track will contain two and a half days of real world learning experience, covering everything from understanding the accounting impact of typical daily transactions, to mastering the daily reconciliation process, advanced auditing and analysis of your general ledger accounts, finding and fixing account balance errors, and even financial analysis, roll forwards, borrowing base reports, Leedom and NCM composites, etc. You will come away from this conference with the knowledge, skills, tools and confidence you have been longing for.
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