Issue link: http://read.dmtmag.com/i/765954
SOLUTIONS 26 • December 26, 2016 • Powersports Business www.PowersportsBusiness.com Hurricane Matthew showed its strength as it made its way up the East Coast. It was fast and furi- ous, wreaking havoc along the way. As I ponder this year, the same thing can be said as 2016 also went by the same way. I am sure for many, it wreaked havoc along the way. But just like Hurricane Mat- thew, things are being put back together and rebuilt. For some of you, that is what year-end means — clean up and rebuild. It is time to start year-end processes and to decide where you will go in 2017. Start your preparations now. Waiting until the last min- ute to prepare causes more stress on everyone in the business. It is time to recap the year by asking ques- tions to your team about the year's perfor- mance. Such questions can be: How did the store do financially? What can we improve for next year? How do I improve my year-end process over last year? Look at your store financially. What can you see that needs attention? Have you taken care of obsolete part writedowns? Are your accounts receivable and accounts payable clean and up to date? Do you have any cus- tomers or vendors to write off? How do your warranty claims look? Dealerships tend to take revenue for war- ranty claims twice, or they never process them to be paid, thus they need to be written off. FOR OBSOLESCENCE Order less parts. Sounds easy, right? Truth be told, many of you order way too many parts. For most dealerships, parts are delivered within a couple days. So why tie up dollars in stocking parts when you can order them by the job? You need to have the money to buy the parts, but then you also need to have the money to pay the people to stock and maintain the parts. Less is better. FOR ACCOUNTS RECEIVABLE Track down those who owe you money. Collect, collect, collect. It is harder to col- lect from customers who are 30 days past due. Be careful — you do not want to be a bank for customers. I had a dealership tell me he could not understand why he did not have any cash in his bank. After looking around his system I told him it is because he is the bank — and his customers owe him over $675,000. FOR ACCOUNTS PAYABLE To whom do you owe money? Did you know that by not paying your bills before the due date and not taking advantage of discounts, those factors combine to cost you money? Maybe you paid them by doing a transfer or by a manual check but you never recorded those checks. Clean up those bills! Are there major units that need to be writ- ten down? Units can depreciate. Talk to your CPA about depreciating your units. Remem- ber, just because your unit is depreciated, does not mean you owe less. Be careful to not change the cost in accounts payable to show the amount owed including depreciation. Many dealerships make this mistake. Do not be one of them. Always make sure clearing accounts have a zero dollar balance. If they are not, be sure you know why they are not at zero. If clearing accounts are not monitored and cleared on a weekly or monthly basis, this account can be overwhelming. If you have dollar values in your clearing accounts, start from January and print the detail for each month. Make adjusting entries. Entries may need to be backdated for each month or your accountant might tell you to create entries in the current month. That should be decided between you and your CPA. All of your asset and liability accounts that have sub-ledgers need to be brought into bal- ance with the general ledger. This can be done at any time. It should be done monthly so that when year-end comes, all accounts will be in balance and be ready for year-end. Everyone is so busy throughout the year that regular main- tenance is typically not completed. By year- end the warranty is void, and the clean-up can cost thousands. Can you generate a profit and loss state- ment to compare year over year? This would be beneficial for you to see where the devia- tions are. This is mainly helpful for expenses. Are your expenses much higher or much lower than the previous year? If you have a large variance, do not panic. Spend time inves- tigating why there is a difference. CASH OVER AND SHORT These accounts need to be reviewed and analyzed. There should be small amounts in this this account. Look at the detail for the year to see what happened in this account. Be sure you understand the ins and outs of this account. FOR WARRANTY Warranty claims are an asset until you are either paid for them or they are written off. Warranty is a pain point for many dealerships. Tips for preparing for the year-end storm FOLLOW ME See Paula Crosbie, Page 31 PAULA CROSBIE