How and Why to Make Your CPA Your Most Important Relationship

A store may be missing over $200,000. Or $745,000. Or as much as $4.1 million. These are all real amounts embezzled from dealerships by employees. Most embezzle for years before they are caught. In one case, an employee was only caught because she was on vacation when a company called the dealership to question a large check she had written.

Up to 51 percent of dealers have been victims of employee embezzlement and theft or know someone who has, according to auditing research from Reynolds and Reynolds.

Would you know if your dealership was missing money? Most don’t. Various reasons make dealerships vulnerable to internal fraud, including high cash flows, limited internal controls, and departments with insular environments. Also, outside auditors and CPAs have limited to no internal knowledge of operations.

It is easier for fraud to go undetected when your dealership is profitable. That’s when you’re least likely to scrutinize financial records. Many dealers cite lack of resources, time, or employees to detect and prevent fraud.

But virtually every dealer has a CPA or CPA firm. That person can be your second pair of eyes. When you consider the money you could lose due to internal fraud, the cost of paying your CPA is negligible. Your CPA should be an extension of your business, instead of just a once-a-year transaction to complete your year-end audit.

Invite your CPA to learn about your internal operations and they can be proactive in conducting financial analysis, preventing fraud, and uncovering financial mistakes that cost you money. Empower your CPA to help your business with the following initiatives:

Give them the right tools. Historically, dealership documents were stored as paper files, on CDs, or on thumb drives. While digital copies were better than paper, it still took a lot of time and effort to find and analyze records. Switching to an online document management platform allows you to give your CPA immediate access. Online document management makes it easy to search for and access all of your dealership documents. By storing documents outside of your DMS, your CPA does not have to be an expert in using your DMS and he/she can access data at any time without assistance from dealership staff.

This kind of access has been invaluable for Arnold Creekmore Sr. and Jr., who’s CPA firm in Florida has been helping dealer clients since 1969. “With online documentation, we can easily download data to an Excel file and it saves a lot of time,” explains Creekmore Jr. “Because it’s not time-consuming, we can do more analysis and help dealers make good management decisions.” He points out that he and his father always prefer a dealer-client use a third-party document management platform because it ensures dealership data is accessible even after a DMS change. “When you have to amend a tax return or ask an audit question and you’ve switched your DMS and not converted to online document management, how am I going to find that data? It would be a nightmare,” he says.

Touch base regularly. It’s standard for many dealerships to sit down with their CPA only at year-end. This is a huge missed opportunity. Regular check-ins and continued access to your documents gives your CPA the power to be your second set of eyes and to nip problems in the bud. It’s smart to have a third-party performing reconciliation so that the same person isn’t handling all of the accounting all of the time. When one person has total control over your books he/she may miss errors or be tempted to skim money off the top. As Creekmore Jr. explains, “Having another pair of eyes on the books helps everyone out. Internal control is the best way to prevent fraud. You want to catch it early on before it gets big.”

Provide access to vendor agreements. Access to vendor agreements allows your CPA to properly capitalize expenses throughout the year. He or she can also perform vendor reconciliations to find errors, fraud, and poor management decisions that can cost you thousands. Consider implementing a vendor document storage solution to help stay on top of contract terms and conditions. Your CPA can monitor this solution on a regular basis to control costs, avoid accidental renewals, and transition to new vendors when a contract ends or business needs change. 

Proactively look at books to reduce write-offs. A CPA proactively looking at books can help you see, understand, and eliminate costly write-offs. “We can look at schedules and start asking questions,” says Creekmore Jr. “For example, let’s say a dealership grosses $80 million in sales, nets $1 million but then has to write-off $150k of that profit. A lot of dealers will just do it without asking what are we writing off. Is it Receivables? Obsolete parts inventory? A good CPA will do an analysis, get the information to management, and help them stop mistakes to significantly reduce and even eliminate write-offs.”

Encourage fraud investigation & prevention. According to a report by the Association of Certified Fraud Examiners (ACFE), the average time to identify theft or fraud is 18 months after the initial event. Approximately 58 percent of these cases do not lead to recovery for the dealership. Encouraging your CPA to regularly inspect for fraud can stop issues before they become a problem. Areas to investigate include unknown vendors, payments over $10,000, disproportionate departmental spending, month-over-month spending trends, improper rebates, false checks, and reconciliation of parts since it is not unheard of for employees to steal parts and sell them outside of the dealership.

The CPA relationship shouldn’t be a single occurrence to “get the year closed.” Dealers need to have two close third-party advisors: their lawyer and their CPA. Enable your CPA to be continually proactive throughout the year to uncover money saving opportunities, protect against fraud, and free-up employees to focus on higher ROI activities.

Digital uploads of vendor contracts and automated notifications of contract renewal or expirations ensure dealers are never caught off guard.

Indianapolis, IN – October 19, 2020 – One View, an auto industry-specific data solution specialist, today announced the release of its Vendor View contract storage and management platform. The web-based, user-friendly platform allows dealerships to upload copies of vendor contracts and receive automated notifications of upcoming contract renewal or expirations to better manage vendor relationships and control expenses. Vendor View can be implemented as a stand-alone product or added to a dealer’s existing One View Vault subscription.

“Controlling expenses and staying up-to-date on vendor contracts has always been important to our dealer clients, but it’s even more important now as our industry recovers from the coronavirus pandemic,” said David DeHaven, One View Founder & CEO. “Vendor View is one central place where dealers can quickly view and compare all vendor terms and conditions so they are never caught off guard, and can make informed vendor decisions moving forward.”

Vendor View allows dealerships to manage all vendor contracts from one uniform platform. Dealerships can easily and securely scan and archive vendor agreements. This replaces the manual and time-consuming process of filing paper contracts, and then digging through file boxes in an effort to stay on top of contract terms and conditions.

One central view also helps dealerships avoid the “vendor gotcha moment” whereby forgotten terms and conditions result in an automatic contract renewal for a vendor that may no longer be a best fit. When dealerships can quickly access and analyze digital contracts, they avoid accidental renewals and are empowered to transition to new vendors when a contract ends or business needs change. 

Five unique features simplify document management and ensure a contract renewal, change in pricing, or duplication of service, never slips through the cracks.

Automated Notifications: Set and receive automated email notifications of upcoming contract renewals or expirations.

Upcoming Renewals: Track all contracts with upcoming end dates via a user-friendly dashboard.

Search Contracts: Locate contracts based on vendor, products and services provided, expense account, executed by, or contract dates.

Add Context or Updates: Post document notes to a select group of users to communicate a change or update.

Categorize Vendors: Assess dealership spending by categorizing vendors into related groups. Use visual graphs to highlight percentage of dealership costs.

One View is a SOC 2 certified organization, and as such is held to the highest standards of data security. Developed by the American Institute of CPAs, SOC 2 defines criteria for managing customer data based on security, among other service principles.

All dealership vendor contracts are scanned and sent to One View Vendor View through encrypted transmission methods and databases are backed up redundantly to multiple data centers to ensure business continuity and data integrity.

“Dealerships across the country are seeking ways to cut costs and run more efficiently,” said DeHaven. “We’re proud to offer a platform that makes it easy to view and manage vendor relationships with an eye to controlling costs, all within a top-of-the-line data center that meets the highest standards for security.”

For more information about One View Vendor View, visit https://bit.ly/36TSKzX

###

About One View

One View has been a trusted partner to thousands of automotive dealers across North America with a broad range of business solutions, including month-end data archiving, document scanning, and DMS data conversions. These solutions digitally capture dealer’s data from any source and provide immediate user access, insightful analysis, and management of their most important asset: their data. A preferred vendor, recommended by major CPA firms, manufacturers, DMS platforms, and dealer groups, One View has built a strong reputation of excellence by showcasing a solid product and a strong understanding of the automotive market. As the only auto industry-specific data solution specialist, One View has aided dealers with electronic data management for over 20 years. As the auto industry continues to move toward a more digital and paperless environment, One View is committed to preparing, consulting, and assisting dealers as they navigate into the data-driven 21st century.

An eye-opening article in Auto Dealer Today cites dealers can generate as much as $12,000 per month in additional gross profit from retail reimbursement for warranty parts.

This makes sense when you consider that the majority of manufacturers pay on average 40 percent over cost. If a dealer is approved at 80 percent markup over cost, that dealer will in effect double warranty gross profit without increasing volume. 

Think about this for a minute: You can earn twice the gross profit simply by exercising your right for retail reimbursements for warranty parts.

Your state auto association is on your side. Thanks to their lobbying work, legislation in nearly every state requires dealers be reimbursed by manufacturers for warranty parts at retail, which is your customer parts rate. California is the most recent to join the crowd with a bill that went into effect on January 1, 2020.

Due to COVID-19, there’s never been a better time to maximize revenue opportunities. Every dealer is worried about coming out on top of the current economic crisis. Now is the time to put in the effort to secure the higher rates you deserve – and come out of this crisis better than you went into it. 

For example, Chantel Procell is the Fixed Ops Director for the Hiley Auto Group in Huntsville, Alabama. She recently went through the process of this type of audit for a few of her stores. "The process was pretty straightforward. I submitted to the info to the OEM. Most of our stores received 20-30% increases on the first request,” she said. “You can apply every year, so depending on the store, I have applied every year or two for some stores and get another 2-5%.”

There is no sugar-coating the truth: a typical process to increase your rate is time-consuming and costly in terms of labor hours. You must compile a lot of documents to make your case, but there are ways you can make the process more efficient and cost-effective.

The first step is to examine your parts-pricing matrix. This matrix is a chart of pricing structures for specific parts dependent on unit cost, volume sold, and discounts available. These variables can cost thousands of dollars in lost profit. 

What does this mean? Simply put, the OEM is looking for consistency. When evaluating reimbursable rates, the manufacturer does not want to see large swings in what the customer ultimately pays for a specific part. For example: if the retail pricing for a part is $200, and your team is charging between $135-$200 (dependent on your volume/discount matrix), the manufacturer is going to look at the average charge. Therefore, if you are only charging 70% on average due to an aggressive discounting structure, you’ll only be accepted at the 70% rate ($140). Now anytime you sell at full retail, you are losing out on a $60 difference.

It’s crucial to examine your matrix and discount policy before applying. Most manufacturers allow you to apply only once a year for a rate increase. Although it may be beneficial at that moment to apply favorable discounts for specific customers, you must understand the potential downside that this practice causes. Maintaining a consistent and tight parts structure will give you the best opportunity to maximize your reimbursed rate, therefore increasing your profit.

The second step is to get on-board with document scanning and online archiving. Your manufacturer will not just give you the rate increases. You have to make your case and that takes documentation.

Most state laws require a dealer to submit at least 100 sequential qualifying ROs to substantiate its retail rate. These documents must be detail copies that outline per-unit cost. Missing documents or in-correct versions can result in the manufacturer rejecting your submission.

A third-party document management platform makes it easy to simply type a RO number into a search bar instead of dedicating countless hours to digging through filing cabinets and boxes. Online storage also means you can retrieve the entire list of documents at once, documents can be accessed anytime and from anywhere, and there is no risk of misfiling pulled documents once you have accessed them.

The last tip is to investigate partnering with an automotive consultant who specializes in warranty parts reimbursement analysis. These companies can help you analyze your price matrixes, inform you of the laws in your state, and essentially build the “case” to the manufacturer. They will typically be specialized in certain manufacturers and know what the OEMs require to optimize the cost reimbursement percentage.

Time is important as the sooner you submit documentation, the sooner you can benefit from higher rates. With massive amounts of data and limited employee time, the combination of a scanning and archiving solution and a trained automotive consultant is likely your best bet to optimize your warranty parts and labor markups to get results faster.

Because of the current economic situation, a lot of dealers are actively seeking ways to cut costs while boosting gross profits. Do not overlook the profit potential of retail reimbursement for warranty parts. Take advantage of a document management platform and the expertise of an automotive consultant to efficiently and cost-effectively prepare a rate increase submission that, once approved, will pay dividends for years to come.

One View Vault gives dealerships even more power to archive, access, and retain DMS documents.

Indianapolis, IN – September 15, 2020 – One View, an auto industry-specific data solution specialist, today announced the full transition of its customer base to the recently launched One View Vault. The company has officially sunset its former platform, Web-View. The new state-of-the-art system incorporates the highest standards of data security with a user-friendly, mobile-enabled interface that makes it easier and faster for dealerships to archive, access, and retain DMS documents.

“We heard from our dealer clients that they wanted a faster, more user-friendly system,” said David DeHaven, One View Founder & CEO. “One View Vault delivers that ease of use along with innovative permissions, workflow tools, and the highest levels of security, to help our clients find and use information more effectively to improve business performance. It also sets us up to implement several new products coming soon.”

One View Vault is unique because it is compatible with all DMS vendors. Dealerships can securely and easily archive and access their data anytime and anywhere via any web browser. Thousands of existing customers, including large dealership groups such as Hendrick Automotive Group, have already transitioned to the new platform. Dealers own their data and have the freedom to utilize it in any manner. 

Documents across dealership departments can be easily archived and stored. Fixed operations can capture repair orders, service invoices, parts invoices, technician’s notes, and more. Intelligent Exception Reports protect dealerships from audits.

Sales departments can electronically capture all deals and upload deal jackets directly to One View Vault from the DMS. Full deals, or other documents referenced during the sales process, can easily be retrieved, printed, emailed, or downloaded.

Accounting departments can COLD month-end files or scan in documents to provide an auditor or CPA access to specific accounting records to make audits fast and painless.

As a SOC 2 certified organization, One View is held to the highest standards of data security. Developed by the American Institute of CPAs, SOC 2 defines criteria for managing customer data based on security, among other service principles.

All dealership DMS data is sent to One View Vault through encrypted transmission methods and databases are backed up redundantly to multiple datacenters to ensure business continuity and data integrity.

“Data security has become one of our customers’ top priorities,’" said DeHaven. "We've always maintained a secure, top-of-the-line data center, but this certification allows us to ensure we are doing everything possible to put our customers' minds at ease."

For more information about One View Vault, visit https://bit.ly/2DZaVs1

###

About One View

One View has been a trusted partner to thousands of automotive dealers across North America with a broad range of business solutions, including month-end data archiving, document scanning, and DMS data conversions. These solutions digitally capture dealer’s data from any source and provide immediate user access, insightful analysis, and management of their most important asset: their data. A preferred vendor, recommended by major CPA firms, manufacturers, DMS platforms, and dealer groups, One View has built a strong reputation of excellence by showcasing a solid product and a strong understanding of the automotive market. As the only auto industry-specific data solution specialist, One View has aided dealers with electronic data management for over 20 years. As the auto industry continues to move toward a more digital and paperless environment, One View is committed to preparing, consulting, and assisting dealers as they navigate into the data-driven 21st century.