Are You Receiving All The Money You Are Owed?

Running a dealership is no easy task.  You are constantly pulled in 10 different directions during your busiest time of year, so things are bound to slip through the cracks.  One of those dreaded issues I constantly see is unclaimed rebates.  I have no doubt you would be shocked to know how many manufacturer rebates go unclaimed every year.  So how do you ensure you get what you are owed?  Read More.

It starts with a comprehensive understanding of your sales programs that you receive from your Manufacturer throughout the year.  It is imperative you review each one in detail and fully comprehend the rebates you can expect based on your proposed booking orders.  If anything is unclear, make sure you review it with your DSM so there are no surprises down the road. 

It’s not just about maximizing the rebates offered in the sales programs.  It is also how you account for them.  The following is a checklist of things you should do to guarantee you receive all of the rebates and consumer incentive fees you qualify for based on the units you purchase and sell:

  1. Prepare a Chart:  Once you have a clear understanding of the rebates that are available within a sales program, prepare a chart as a quick reference guide.  Mark down the rebate value based on the volume you purchase or sell and the dates that you need to meet to qualify.
  2. Accounting:  Set up a receivable for each rebate program and note when they should be paid.
  3. Record The Correct Margin:  One of the biggest mistakes I see is separating your rebates from your unit sales.  For every unit you sell with a rebate or incentive fee you must credit the value of the rebate to the unit at the time of sale.  You then create the matching receivable.
  4. Book What You Can Sell:  A word of caution here is not to be drawn into purchasing units to achieve certain rebate levels that you can’t sell in your marketplace.  Getting your margin up to 15% based on the rebates available may look very attractive until you have to pay the interest on the unsold carryover.

Managing rebates through your accounting system achieves two key objectives.  First, it provides a check and balance for the money you are owed through your receivable account.  Second, it provides for accurate accounting of unit margins.

An easier way to view this is when you set your pricing for unit sales, you calculate in any rebates or incentive fees – Right?  Well if you don’t post the rebate at the time of sale, your unit margin will be below your marketing objectives.  To complete an accurate financial analysis of your unit margins and compare to industry standards, they must be inclusive of the rebates and/or incentive fees you took into account when setting your pricing.

If you post your rebates to a separate account, there is no way you can accurately calculate your margin earned by model or even product group.  This is invaluable information for you to qualify whether you are selling within industry standards and meeting your goals and objectives.

If you would like to discuss this further, contact me for a free consult.  If you would like to know more about Lifeline Business Solutions, click on the link provided.

 

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