The phones are ringing off the hook. Your door is closed yet people keep pouring in. You have sales managers asking for their commissions, management wanting the final numbers for the month, a floorplan needing reconciled, and the statement still hasn’t been uploaded to the manufacturer.

I get it – I’ve been there. The dealership month-end close process is complex; however, a firm strategy and checklist can put the brakes on last-minute chaos and costly closure delays. You have to remember: proper archiving of month-end records is critical to overall dealership health. If you do not have a clear understanding of how/when you COLD data from your DMS, you may lose access to critical data and not know it until an unexpected audit reveals missing reports that result in hefty fines. 

It pays to give your month-end strategy a refresh, and investigate your DMS COLDing processes. The two go hand-in-hand in maintaining accuracy and efficiency, and in ensuring a fail-safe data back-up for auditing peace of mind. Here are a few tips:

1. Improve your deal flow.

It’s common for deal jackets to end up in accounting a day or two after the end of the month, which delays the process. Many also arrive without all of the necessary paperwork to process the deal. The best way to shut-down this last minute scramble for paperwork begins at the front-end with training and enforcement of both sales and F&I managers. A management-approved deal jacket checklist helps with completeness and accuracy. Many dealerships also levy commission penalties for incomplete or late paperwork – which is a great motivator!

2. Create a month-end schedule and checklist.

Sales and F&I must know when paperwork has to be submitted to be included in the current month. Accounting should also have deadlines for posting deals and invoices, and completing other month-end activities. It takes all hands-on deck and a structured plan to close out your books properly and on time.

The first four days of the following month are key for staying on track. Karlie DeVall, CFO of Tim Dahle & Red Rock Auto Groups, offers some great tips for breaking out your checklist and must-dos for each day in a recent article. If you already have a checklist, make sure it lists all key processes, who is responsible, detailed listings, and templates to be completed. Your Controller should be responsible for overseeing and managing activities to ensure the checklist is followed and daily activities get done.

3. Investigate your DMS COLDing processes.

You’re set up to end the month seamlessly so your job here is done, right? Not so fast. Your month-end data and reports need to be properly stored and archived to meet all regulations and protect you in the event of an audit. It’s easy to assume that your DMS is automatically taking care of COLDing everything – but do you know that for a fact?

Too often, a dealership relies on the DMS for fail-safe back-up, only to realize reports are not being saved. You may not even know this is happening until inactive data is needed. Consider the example of a six-store group using one of the DMS giants. It was only when the group’s CPA requested a report and couldn’t find it that management realized some schedules were not being saved to AGRA, therefore not being COLDed to DSDA. They had no insight into the Controller’s actions and no way of retrieving that data. This wasn’t on purpose of course, they just didn’t know how the process worked! 

Proper archiving and documenting best practices significantly increases the likelihood that you will be prepared to pass any type of audit, including OEM. The general trend over the past few years are manufacturers auditing more frequently on a smaller scale as a source of revenue. I’ve written in the past about how proper documentation can help dealerships pass warranty audits. This is just one example of why it’s crucial to investigate your system to understand why and how you COLD reports into the system.

It’s not enough to assume that everything is automatically saved. Every DMS has different rules that must be validated by your Controller. Once the process is understood, the Controller must share that knowledge and train accounting staff so that all crucial documents are retained.

Your Controller should validate the COLDing process monthly to ensure that key reports are being properly archived – most importantly every schedule, journal, general ledger. Without this information, you can be left blind to the details.

4. Understand archiving costs.

Another important consideration is how much your DMS will charge you to access archived documents once a month is closed. Many of the large DMS providers charge hefty fees to re-open a month. In addition to fees, you’ll likely have to work through layers of bureaucracy simply to open your books. This wastes employee time and causes frustration. And when you’re facing an audit, the last thing you need is more complications.

One way to avoid this scenario is to archive data to a third-party document management platform before you close out the month. This way if you do need to access COLD documents in the future, you can call them up with a few keystrokes, avoid additional DMS fees, and speed-up the auditing process.

A firm month-end strategy and checklist, coupled with verified COLDing processes, can reduce your close by several days and ensure your dealership data is easily accessible to protect against unexpected audits. Put the brakes on last-minute chaos and poor data archiving now to protect your dealership’s health far into the future.

Electronic document storage is now becoming the rule rather than the exception at many dealerships – and for good reason! The benefits are far reaching: from enabling easier audits to ditching jam-packed filing cabinets.

Yet as with any big change, there are speed bumps. The biggest obstacle is the lack of an official dealership scanning process.

Too often, this job is seen as simply clerical and assigned to a $10 an hour temp or piggy-backed onto the existing tasks of an overtaxed employee. This is a mistake.

The truth is, the Scan Operator acts as a compliance manager as he or she is responsible for ensuring every document in a file is legible, in the proper order, and labeled correctly. Sloppy scanning that results in missing pages or illegible information could result in thousands of dollars in fines if auditors come calling.

Sloppy work may also affect sales managers who want to review a previous deal to provide the best customer experience to a returning customer. The same applies to service managers who want to see previous service history to help with up-sell opportunities when a customer is back in the service bay.

Proper scanning matters – a lot. It’s well worth the time and money to hire a detail-orientated professional and provide hands-on training of the full document flow and scanning process. Skimp on the hiring process and training and a Scanning Operator is likely to make these common missteps:

1. Failing to validate that every image is clean - Every scanned document must be legible and clear before it is added to permanent electronic storage. Tried-and-true rules must be followed, such scanning drivers licenses in color or ensuring there are no folded corners in the documents. The Scan Operator must check the screen after every scan to ensure document integrity.
2. Failing to correct incorrect titles - Mis-titled scans create a load of unsearchable documents. Sometimes it’s a simple smudge on a page that causes the system to misread and misspell the title. The Scanning Operator must always check the documents against what’s on the screen to make sure the title is accurate.
3. Mis-collating documents - Assembling documents in the wrong sequence can lead to an incorrect document title which makes the documents unsearchable. Additionally, ordering the pages are key for optimal use – you do not want to scroll though pages to find the 1st page of an RO or a Deal Recap sheet.
4. Scanning multiple documents together - Failure to use separator sheets or not paying attention to ensure documents are separated may cause multiple documents to be stored under one title. This creates a big issue when trying to find those misfiled documents.
5. Forgetting to number pages - All pages in a document should be counted and numbered before scanning, and then compared to what is on the screen. Missing this step runs the risk of not scanning every page.
6. Immediately shredding documents - Scanning and then immediately shredding documents runs the risk that a scan will be incorrect and there is no way to fix it without the originals. Correct policy is to check the system the next day for documents scanned the day prior, to ensure accuracy before shredding.
7. Failing to remove staples - Staples increase the likelihood of missing a page as one may be “hidden” behind another, resulting in an incomplete file. More importantly, staples may scratch the glass of the scanner. Scanners can cost upwards of $5,000 and a scratched glass can ruin that investment by causing lines on every page.
8. Improper scanner maintenance - Like any equipment, a scanner requires proper maintenance to get the best image quality and functionality. The Scanning Operator should clean the glass daily and clean the paper chute, rollers, and sensors once a month. Page rollers should be replaced annually or every 200,000 pages, whichever comes first.
9. Scanning without document knowledge - The Scanning Operator should be able to identify Service, Parts, Deal, and Accounting documents. After all, if they can’t identify the document how can they make an intelligent decision about how to organize it? Proper identification also ensures they know who to approach in the dealership if information is missing or they have questions.

Electronic document storage is a game-changer when it comes to breezing through audits, enhancing employee efficiency, and getting rid of towering boxes of paper. However, don’t trust scanning to a temp or low-level employee. It pays to hire a professional and invest in training because proper document scanning is the linchpin of a successful storage program.

It is NADA time again! While this year’s show may look different, it still is the best opportunity to discover and explore technology solutions to successfully run your business.

Every dealer’s “must learn more” list should include digital document management technology. The auto industry produces a lot of paper. All those documents take up valuable office space, and/or cost you money to store off-site. Digging through boxes to find a deal jacket or repair record wastes employee time. 

Paper files are also a liability. It’s estimated that 1 in 20 paper documents go missing. With the proper paperless system in place, documents are scanned, filed, and tagged, for the ultimate in security and risk mitigation. 

Need a document? It takes only a few seconds to type what you need into a search bar. Online storage also means you can retrieve an entire list of documents at once, documents can be accessed anytime and from anywhere, and there is no risk of misfiling pulled documents once they’ve been accessed.

The benefits are obvious, but how do you choose the right vendor partner? Before you visit a virtual NADA booth or jump on a Zoom call, make sure you familiarize yourself with the nine essential components of any document management solution: 

1. Breadth and depth. A vendor should handle documents from every department – not just accounting or service. Look for a solution with deep archiving abilities, the expertise to tackle any document challenges, and the ability to convert data from a wide range of software and hardware systems.
2. Customization. Your dealership has unique processes and requirements. Make sure a solution can be tailored to your needs (including custom folders) and preferred input devices (like scanners and smartphones). You want a flexible provider who tailors to your preferences, not the other way around.
3. Integrations. Third-party vendors are an essential part of your business. Ensure a solution can work with you to pull data records and integrate with vendors of your choosing.
4. DMS-Agnostic. A solution should be able to work with any DMS so that if you choose to move to a new DMS, your document storage continues uninterrupted. This is also essential for dealer groups that use multiple DMS vendors and require a consistent view of data via the corporate office.
5. User access and security. You want a system that allows full control over user administration. Look for systems that allows unlimited users, provides security controls over stores/folders, and provides the ability to lock access remotely to certain IP addresses.
6. Customer support and training. Ask about the implementation process and continued technical support. Training is also key, especially for your Scan Operator. Scanning documents is simple, but requires meticulous attention to detail. A vendor should offer plenty of training options to ensure your team hits the ground running.
7. System safeguards. Top vendors have built in safeguards to catch mistakes like missing documents or documents unintentionally scanned together, before documents are shredded. Ask about tools to ensure all deal documents are accounted for and legible before being placed in the permanent folders.
8. Exit costs and data ownership. Insist a vendor include exit costs in the initial contract to avoid surprises should you decide to change vendors. 
9. Dealer referrals. During the sales process, ask for at least three customer referrals for dealerships that are approximately the same size as yours. Don’t skimp on these calls. You want to make the best partner decision now to avoid the hassle of switching vendors later, if your first choice is not a best fit. In addition, discuss the vendor with your 20 Group. They may have insights that didn’t come up during your sales conversation.

The “paperless” dealership is coming, and it’s easy to see why. Scanning and electronically storing documents increases security, frees up office space, enhances employee productivity, and eliminates the cost of offsite storage facilities.

A dealership is a complex organization with a lot of moving parts. With only so many hours in a day, an Owner or GM has to trust the CFO & Controller to handle financials. But as the saying goes: absolute power can corrupt absolutely. Who’s watching the watchman at your dealership?

Of course, I’m not saying that every Controller is corrupt. Far from it. What I’m saying is that a Controller should never perform their job without oversight. Mistakes and temptation grow in a vacuum. A system of checks and balances can stop problems or mistakes before they affect your bottom line. There are at least five things every Owner and GM must do regularly to stay on top of financials.

Monitor cash payments. 

A cash payment is way too easy to slip into a pocket. True, embezzlement is at the far end of the extreme. It’s more likely that a sales manager puts aside a deposit and then forgets to take it to the finance office. Whatever the circumstances, the Owner or GM must keep a close eye on the handling of cash. Mandate the process for collecting and issuing payments is documented and adhered to.

Homework Assignment:

1. Request a weekly DMS report on check payments over a threshold, such as $100. This will eliminate any title checks that are written. You can also start at $0 and work your way up to establish a threshold.
2. Validate that these vendors are on your active Vendor Report and that you have a valid W9 form completed for each. 

Stop overpaying vendors.

You could be paying more for the same service as another dealer in your market. If you suspect you’re being overcharged, speak with your 20 Group and compare pricing. The more worrisome concern is ensuring you aren’t paying fake vendors.

To avoid fraud, overpayment, and duplication of services, audit all your vendors for ROI twice a year. Pull a report from your check register or run a DMS vendor report. Maintain better control over the process by authorizing only one or two staff members to sign vendor contracts. A third-party vendor management platform, that makes it easy to retrieve and review contracts with only a few keystrokes, can streamline vendor management and save you time and money. 

Homework Assignment:

1. Request the listing of all vendors paid in the past 12 months. 
2. Review the ROI of the vendor relationship. 
3. Compare the dollar amount to previous years, as well as confirm the pricing matches the contract signed. 
4. Check that the dealership expense is recorded to the correct Expense account in the books. Review the last three invoices for accuracy.

Keep an eye on floorplans.

Selling cars out of trust is an old story; but not paying off a floorplan debt immediately after a sale is bank fraud and could result in a hefty fine and even prison time. An outside pair of eyes is recommended for reconciling floorplans. A third-party service can receive data directly from the lender and crosscheck it with dealership accounting records to ensure floorplan reporting consistency.

Homework Assignment:

1. Perform your own spot check of Vehicles on floorplan. Request a Floorplan schedule from Accounting that lists out all vehicles with VIN. Have a 3rd party touch each vehicle to ensure you still have it in inventory.
2. Any balance that is less than $10,000 on a new vehicle schedule should be investigated every month with an explanation on why it exists on the floorplan.
3. Review the Used vehicle floorplan schedule for any sold units that still have a balance. This could be incorrectly posted Internal Repairs that showed up after the vehicle was sold.

Perform a regular review of your scheduled accounts.

A monthly or quarterly review of all scheduled accounts will save time during your accountant’s year-end fieldwork and help eliminate potential problems moving forward. Three major areas where balance sheet accounts may not be scheduled and/or detailed are: write-offs, sold inventory, and contracts-in-transit.

All write-offs (customer and factory) should be reviewed and declared monthly so as not to disproportionately affect December income with bad debts incurred during the year but not written off.

Sold inventory schedules should also be reviewed monthly to clear out aged balances and correctly allocate each salesperson’s cost of sales to the month of the sale. A dealer will eat an unwelcomed COGS charge if sales managers are not charged on the cost for the gross amount on a deal.

Finally, commit to weekly reconciliations of the contracts-in-transit ledger. This helps clean up any unpaid deposits before the end-of-the-year and catches mistakes in the deal posting process.

Homework Assignment:

1. Perform your own spot check to ensure all three areas are scheduled and/or detailed in your computer system.
2. Require that any General Journal entry to a COGS account has an explanation. 
3. Mandate that all COGS postings carry the Sales Manager or General Manager signature. For future awareness when reviewing postings, I recommend the use of signatory initials in the description (Example, TP (Travis Peterson)/Internal Vehicle RO Ticket #1234).

Pay attention to irregularities in journal postings

Irregularities can be found in general journal entries, cash disbursements to non-vendors, reconciliation of void checks, and year-end bank reconciliation statements. A final year-end review of the general journal entries is recommended. Most importantly, ensure that checking accounts are not showing any general ledger entries documenting cash taken out. Cash should only be released through a cash receipt or check transaction. Any other method could indicate fraud. Use a third-party tool to analyze your financial standing for any adjustments over $1,000 in COGS, Asset, or Liability accounts, to ensure payments or postings are placed correctly. 

Homework Assignment:

1. Perform your own spot check to ensure checking accounts are not showing any general ledger entries documenting cash taken out.
2. Enlist your external CPA as a third-eye during the year to check on any irregularities, or run a report through your third-party document management platform. 

The watchman, or Controller, has a lot of power and responsibility in the dealership. Don’t expect them to work in a vacuum where mistakes and temptation can hide and grow. Every GM or Owner must do these five things on a regular basis to stay on top of financials, set up the Controller for success, and help their dealership thrive.

A glance into any dealership accounting office reveals a lot of paper. That’s because selling cars creates a LOT of paperwork. Although a “paperless” office may be the holy grail, we’re not there yet.

States require certain paperwork, and they insist you keep it. Retention periods vary by state, but the result is paper deal jackets crammed into filing cabinets, stored in piles of teetering cardboard boxes in unlocked offices, or jammed into storage facilities.

What you end up with is a lot of paper with sensitive customer information that is not secure, is not easy to search or retrieve, and is costing you money – whether via outside storage fees, lost employee productivity searching through boxes, or wasted office space taken over by documents.

However, we are seeing progress. States are revising regulations and reducing onsite retention periods. Most importantly, many are giving the green light to scanning deal jackets, storing them in electronic document storage platforms, and then shredding the originals.

California is the most recent state to revise its regulations. It reduced its onsite document retention period from 18 months to 90 days. This applies to documents related to vehicle purchase, sale, rental, and lease. Paperwork can be shredded after 90 days as long as a dealership has a document scanning solution for digital document storage.

The fact that deals can be scanned and then shredded is huge in terms of cost savings, employee time savings, and efficiency. Deals stored electronically can be sourced, reviewed, and even printed with a few keystrokes. Proper scanning and electronic storage also minimizes the risk of lost paperwork.

Dealerships don’t have to pay for offsite physical storage, or take up valuable office space with filing cabinets and document boxes. That office space can instead be used to centralize accounting teams or for additional employee desks. Wasted space becomes usable space.

It’s also a win for customers. Sensitive information is electronically secure and less likely to be stolen. According to the 2019 Identity Fraud Study from Javelin Strategy & Research, nearly 1 in 15 people were victims of identify fraud last year. Dealerships that can promote secure online data storage have an advantage over the competition.

Are you ready to implement document scanning in your sales department? It’s important to do your due diligence before hiring a document management platform. Make sure to ask these questions:

Is data storage onsite or cloud-based? Cloud-based storage is generally preferred for several reasons. Data is stored electronically on a server which provides data access controls not available when physically storing files. Cloud-based solutions generally have store-level, user-level, and folder-level permissions to minimize the accessibility of data to only the right people. The cloud also offers better resiliency against natural disasters.

What is your data security policy? Ensure a provider adheres to the highest standards of data security. Look for SOC certified providers, which is a standard developed by the American Institute of CPAs to define criteria for managing customer data based on security, among other service principles. All data transfers should be encrypted and databases should be backed up redundantly to multiple data centers to ensure business continuity and data integrity.

Are there safeguards to prevent missing documents? Scanning documents is simple, but it requires meticulous attention to detail. For example, a hidden staple can cause documents to be scanned together as one. Or a page of the deal may be missed altogether. Top providers have built in safeguards to catch these mistakes before documents are shredded. Ask about tools that ensure all deal documents are accounted for and legible before being placed in the permanent electronic deal jacket.

Who owns the data if I decide to end the relationship? It’s long been an issue in our industry that some DMS providers require you to pay hefty fees to retrieve your own data if you decide to sever the partnership. This should never happen with a document management company. The data is yours and should always remain yours. 

What training do you offer? There’s a misconception that scanning documents is a simple clerical task. In reality, the person scanning deals is acting as a compliance manager to make sure every deal is complete and legible before it becomes a permanent record. Look for a provider that offers onsite and virtual training to take the fear out of scanning and ensure the job is done correctly, every time.

Free your dealership from the tyranny of too much paper. Take advantage of changing regulations to explore electronic document storage. Scanning and electronically storing deals increases security, frees up office space, and eliminates the cost of offsite storage facilities.

Industry experts predict that manufacturers’ will continue to double-down on service warranty audits. After all, chargebacks are an additional source of revenue that is sorely needed now. 

Every service manager should take special note of this prediction. Here’s why:

It is the dealer’s responsibility to maintain a record of all warranty work and to substantiate all requests for reimbursement. In the event of a dispute between the dealer and manufacturer, the burden of proof is on the dealer.

Proper documentation of warranty work falls on the service department, not the accounting office, as is commonly presumed.

The service manager is responsible for the service department; therefore he/she is ultimately responsible for document management and for training service staff to meet warranty work requirements.

Service managers can, and have, been fired for chargebacks resulting from a failed service warranty audit.

Every service manager knows that they must keep accurate and complete records. The task is not complicated but commonly lands on the bottom of the priority list. Why? Because the process takes time, organization, and knowledge about retention requirements. 

What can a service manager do? Be proactive and prevent chargebacks with the following techniques and strategies.

1. Know document retention policies for your state and OEM.

Document retention guidelines are not uniform across states and manufacturers. Research what is required in your specific state and by your specific OEM(s). For example, so-called electronic audits are now commonplace for some OEMs but not for others. How and where you store documents can also vary by state and OEM. Not sure what’s required? Contact your state auto association or a CPA firm that has expertise in warranty parts and labor reimbursement analysis.

2. Manage your document retention workflow.

Never assume that your staff knows what to do when it comes to warranty job card compliance. Job cards require the completion of several checkpoints. If one or more checkpoints are violated, the claim could result in a debit during an audit. Define a process for how the job card flows between the advisor, technician, warranty administrator, service manager, and cashier.

Conduct a review monthly or bi-monthly to make sure the process is being followed, and employees know who is ultimately responsible for checking each point. Reviews and training are especially important when you consider the turnover rate for service advisors alone is nearly 50 percent, according to the 2018 NADA Workforce Study.

Consider scanning and archiving documents online. Online records are easy to search and cannot be altered by employees. Exception reporting also makes it easy to track documents so you know with certainty what has been archived and what hasn’t. Review this list with advisors every week to locate and scan missing documents before auditors come knocking.

3. Review your warranty processing.

You must have trust and confidence in your warranty administrator. Get to know this person. Is he/she a seasoned veteran or a rookie who may need more training? Is he/she comfortable with your OEM requirements and paperwork? Is this person organized? A desk covered in papers may indicate it’s time to start the search for someone new.

Another option is to hire a third-party warranty processing company. This can save you time and money, but weigh the cost-benefit ratio carefully. A low reimbursement rate from an OEM could mean you’ll be paying more for processing than you get in reimbursements. Conversely, if you’re a large group with multiple OEMs and your warranty administrator can barely keep up, a third-party processor could significantly increase your reimbursement dollars.

4. Pay attention to the details.

It’s not usually the absence of documents that results in chargebacks; it’s the little things. As the old saying goes: “You must inspect what you expect.” For that reason, be aware of common violations that result in chargebacks, including: lack of technician time punches; missing customer signature; missing service manager signature on internal repair or over-the-phone customer-authorized repairs; poor technician documentation; etc. Of course, all auditors and audits are not the same. Each OEM may interpret and enforce policies differently. Contact your OEM for a list of audit requirements.

As a service manager, what you don’t know can hurt you. Service department documentation is NOT handled by the accounting office. An office manager or controller will rarely lose their job if they fail an audit, but a service manager will. Take ownership over the process to reduce chargebacks and gain job security.

As the saying goes, the only guarantees in life are death and taxes. For dealers, you can add a third: audits.

The general trend in the industry over the past few years is manufacturers auditing more frequently, on a smaller scale. Manufacturers are struggling in the time of COVID-19, and it’s likely that increased audits will be a source of revenue for OEMs.

Many dealerships are also facing economic hardship due to the disruption caused by the pandemic. Now more than ever, it pays to be proactive in reducing liability to manufacturer warranty charge backs.

Once this crisis passes – and it will – where do you want your dealership to be? Now is the time to put documentation best practices in place to protect your business.

In a typical warranty audit 50-100 VINs are reviewed, depending on the manufacturer. Producing the required documentation for an audit is expensive in itself: a lot of labor hours are involved to pull and re-file all requested documentation. Compiling all those documents can lead to misfiling down the road.

Worst-case? You may be forced to fire your warranty administrator or service manager for failing the audit. This can lead to additional loss in productivity while you get someone new up to speed.

Fortunately, the following five steps can help you decrease this liability:

1. Scan all related documentation for easy, online retrieval. A missing document could cost your dealership an expensive charge back, so it is crucial to scan all documents including signed invoices, receipts, technician notes, diagnostic tests, and warranty claim reimbursement forms. Using a document scanning provider, you can quickly find all documentation associated with each VIN through web-based software for a painless, smooth audit. You can image how much easier it is to type each VIN into a search bar than it is to hunt through filing cabinets for hundreds of documents. It’s a simple solution with a big payoff.
2. Keep accurate and complete repair orders (ROs) online. By scanning and archiving your ROs online, auditors can access the requested information from anywhere as opposed to coming to the dealership. Keeping records online allows you to maintain them for the full retention period without taking up valuable floor space or dedicating employee time to searching through document boxes. Scanning also eliminates the risk of an employee altering the information with white out, black out, erasers, etc. Consider a third-party document management platform that is DMS-agnostic for your archives. Housing documents outside of your DMS guarantees they will be available anytime and from anywhere, even if you end up switching DMS providers.
3. Find a trusted consultant to review your dealership policies and procedures. Automotive consultants can help identify areas of concern prior to a warranty audit. These consultants specialize in the industry and know the process from working with other dealerships. The consultant can also recommend record retention and parts retention best practices and how to document consistent with standards. They will customize internal auditing procedures for your specific dealership or dealer group. Many also offer self-audit checklists so you can perform informal audits on a regular basis.
4. Designate an employee or vendor as your Compliance Officer. No dealership, large or small, should go without a compliance officer. This person should regularly spot check claims to ensure all supporting information is in the system and perform mock audits by randomly pulling a few job cards (warranty and shop copies) to ensure customer concern descriptions are clear and concise, bills fit the dates and times, and necessary signatures are included, etc. Performing self-audit reviews will most prepare your dealership for actual audits. When it is time for an actual audit, this designated compliance officer will handle the claims from beginning to end. This person should not be the service manager or the warranty administrator; this helps keep the self-audit process honest.
5. Host annual employee training sessions on the auditing process and internal procedures. The warranty process is complex and should be reviewed regularly with the team. Service and parts employees may need to be properly trained on documenting hours and repair work. Employees should make sure dates and mileage are recorded correctly. For example, technicians must note what was found as the cause of the customer’s concern and what was done to correct it to complete the 3 C’s (Complaint, Cause, Correction). The absence of one of the 3 C’s on any line may result in a chargeback during the audit. Documents of customer eligibility for incentives must also be documented to avoid being classified as fraud by the manufacturer. One employee not following the process could potentially cost the dealership thousands of dollars. Informing your team is key, they need to know what an auditor is looking for during their review in order to be prepared.

There are many helpful and free “self-audit checklists” available online. For example, this GM and Chrysler checklist breaks out the primary points that auditors look for by job category. Conduct an online search using keywords “self-audit” and the name of the vehicle manufacturer. Every manufacturer can also supply a list of audit requirements.

Don’t let expensive charge backs eat into your bottom line. Follow these 5 tips to ace your next audit while cutting preparation costs and time. 

Did you choose, or inherit, a DMS that isn’t working for your dealership and now you feel stuck? Do you keep renewing your contract because you’re concerned about losing data and documents if you switch to a new provider?

The typical DMS contract lasts five years. But the law mandates you retain documents for seven years.

Welcome to the DMS “gotcha” moment. It’s no accident that many legacy DMS contract terms fall just short of what the law demands. These DMS systems have one goal: catch you in a repetitive renewal cycle so you never make it to the end.

It doesn’t have to be this way. You can break the cycle, avoid that “gotcha” moment, and be DMS independent.

Independence is as simple as owning your data. When you implement a third-party platform to scan your documents and/or retain your month-end DMS data, you truly own that data. Your DMS provider no longer has ownership over it. It’s yours to access, retrieve, and retain, anytime, and anywhere. You don’t have to worry about document retention periods and the overlap with DMS contract renewals.

The power struggle over dealers’ data is a fight that legacy DMS systems are willing to fight; just take a look at the data ownership laws being passed in Arizona. Also, the recent Authenticom lawsuits, which sparked additional claims about anti-competitive behavior. These will surely set the precedent for the rest of the industry moving forward.

DMS independence gives you control over your dealership’s destiny. Consider the leverage you’ll have in DMS contract renegotiations. With a copy of critical DMS data saved outside of your system, it becomes easy to tell a current provider unwilling to meet your terms, “I don’t need you, I have my data.”

The stress of an audit becomes much easier to weather. Say you sell a dealership. You can still be audited for a number of years, even though you are no longer the owner. When you store documents outside of the DMS you can provide access to an auditor or CPA so audits are fast and painless.

During these challenging economic times, you may be faced with losing a dealership. Whether it is a manufacturer's decision, bankruptcy, or even lack of a succession plan; it's a sad fact that sometimes a store must close. As when selling a dealership, audits are still possible for several years after a dealership closes Proactively using a third-party company protects you in the future, and eases the transition as the store close.

On the other side of the spectrum, some dealer groups continue to acquire stores at a fast pace. These stores likely use a variety of DMS providers. That leaves the corporate office with a difficult decision: move all stores to one DMS, or allow the stores to keep what they are used to and what is working for that store?

When you have a third-party document management platform, this decision becomes much easier. There’s no need to force every store to transition to a DMS that may not be a best-fit based on size, sales, or location. You have one consistent platform to store and retrieve documents. This opens up a big opportunity to allow every dealership to keep a system that is working, and there are no conversion costs.

Take for example one large multi-regional dealer group with 19 locations. They currently use five different DMS systems. Why? Since many stores are regionally located, they allow the flexibility to use what provides the most bang for their buck. Since they use a third- party platform for scanning and COLDing their month-end accounting books, corporate can access all data from all stores in one consistent platform. New DMS? New acquisition? No problem.

Finally, data independence frees you from any DMS “pay me now, pay me later” schemes. In this scenario, a provider charges you to input your data into their system. Then when you want to make a switch, they demand payment again to release your data. It’s your data, yet they hold it hostage as a way to keep you on the system.

A third-party document management platform is the most effective way to avoid the DMS “gotcha” moment. When you are DMS independent you have the upper hand. You decide when to leave a system that isn’t working. You decide what system to keep. DMS independence allows you to tear down any exit barriers before they can even be built.