In today’s unprecedented automotive landscape, social distancing and economic hardship have put increased pressure on dealership profits and placed a crunch on cash flow. According to Cox Automotive surveys, dealerships are reporting 60-70% declines in revenues as consumers put off purchase decisions and delay repairs*. Even before the current crisis, dealerships were operating on razor-thin margins and many will lose money over the coming months. With significantly less revenue available to replenish cash outlays, dealerships need to shift their focus toward managing cash flow. Fortunately, DMS tools—combined with increased attentiveness—can help identify and eliminate operational inefficiencies and unnecessary costs. To begin the hunt for greater efficiency, jump into your DMS and take a few basic steps to mitigate the financial impacts of the coming financial decline.
Take advantage of slower months by being more meticulous and more process-driven in your review of expenses. In the hunt for cost savings, your DMS can be an invaluable tool and it makes sense to start with a deep dive into your recurring costs. Review standard entries to see what recurring transactions might be unnecessary or might be able to be reduced in an era of increased frugality. Contact your regularly recurring vendors and negotiate future payment terms and ask for any available discounts or monetary relief for early payment. Lori Garrison, the controller at Huffines Auto Group, has found value in reconciling AP vendor payments every single day. “This not only saves you from being overwhelmed,” she says, “but it also makes it easier to find and correct problems/errors before they get worse or cause your dealership penalties.”
Naturally, all companies look for ways to do more with less during economic downturns. Almost every company has areas where effort is being duplicated and many will make difficult decisions regarding layoffs, pay cuts, and employee furloughs. In addition to these traditional paths, dealerships have several unique opportunities for finding efficiencies and creating synergies in their operations. Multi-rooftop enterprises, for example, might consider consolidating similar departments across stores to create synergies between multiple locations. For Dealertrack DMS customers, tools like Intercompany/Consolidated Accounting can reduce the operational complexity of such decisions.
Many dealerships, of course, will hope to avoid workforce reductions during economically trying times. Fortunately, not all consolidation efforts need to end in layoffs or furloughs. In fact, dealerships can actually create efficiencies while developing members of their existing workforce. Dealertrack DMS users can take advantage of DMS 360, online webinars, and a variety of other on-demand and virtual training opportunities. By training and cross-training employees, your dealership can create employees that always have something to do because they’re capable of doing different things. Cross-training will be especially effective in single-point stores that decide to reduce hours and run skeleton crews. But even multi-store dealerships that decide to consolidate departments have the option to retrain employees rather than eliminate jobs.
Automate and Streamline Repetitive Tasks
In the quest to do more with less, eliminating repetitive tasks can go a long way. While it’s easy to overlook wasteful work processes when times are good, it’s essential to streamline employee efforts when every minute counts. Look for ways to automate or reduce the non-value-added time spent on things like billing, paying and processing vendor invoices, stocking in vehicles, paying out warranty claims, and creating and reviewing parts stock orders. There are a number of DMS tools that can perform these functions efficiently and accurately, freeing up employees to focus on activities that add financial value to your company.
When it comes to repetitive and inefficient tasks, there’s no bigger culprit than data entry. Manually keying and re-keying data is one of the most time-intensive things your employees can do. The GL Import function of Dealertrack DMS is an example of a simple way to quickly and easily post accounting transactions into the system. GL Import can be used for common tasks like posting regularly recurring payroll entries, stocking in vehicles, and creating standard entries. Lori Garrison has automated a number of repetitive processes, including inventory stocking. “There are so many helpful tools and features in our DMS,” she said, “that I try not to do anything by hand anymore.”
*2020 Cox Automotive COVID-19 Consumer Impact Study