Fixed Operations: Reading Your Financial Statement Like a Pro

Transcription

1 Fixed Operations: Reading Your Financial Statement Like a Pro Brooke Samples President Profit Blueprints, LLC 1 Over the course of her career, today s presenter, Brooke Samples, has analyzed over 14,000 Dealership financial statements. Over the past 15 years, Brooke Samples has coached and motivated hundreds of Dealership Managers in all departments across North America. Using her monthly financial analysis, Profit Blueprints, she compares Dealers financial statements to key Benchmarks. She then uses her previous dealership experience, plus feedback from 15 years of Coaching & Consulting her Clients to help Managers utilize over 150 Action Plans. Your Presenter, Brooke Samples, President Profit Blueprints,LLC By implementing customized processes her clients reach their full Net Profit potential. She s proven that with good people, consistent training, the right plans, and a little good-natured "nudging", her Dealership clients can become very successful. Last year she became working with VW University, training their people to understand the opportunities hiddend in the financial statement. Before becoming a Consultant, she worked in Dealerships in a variety of upper management positions. She expanded her automotive knowledge while working for Lloyd Schiller s Dealer Service Corporation and later as part of NCM Associates. 2

2 LOTS OF NUMBERS! In this Webinar You ll Gain the Following Benefits: Learn How to Use your Financial Statement to Make 2013 Your Best Year Yet! 5 LOTS OF NUMBERS! In this Webinar You ll Gain the Following Benefits: Identify the key profitability accounts for Fixed Operations on the Financial Statement Calculate your Profit Potential using benchmarks and simple formulas Understand how some accounts may impact positively or negatively other accounts 6

3 LOTS OF NUMBERS! Recognize when Too Good is Too Good Determine if you are staffed for maximum profits and for future growth Calculate the days of supply for key assets and actions to take when they are out of line Prioritize your action plans to set record Net Profits Create your own monthly tracking spreadsheet 7 FINANCIAL STATEMENT YOUR REPORT CARD Balance Sheet Expenses Sales & Gross Profits 8

4 KEY PERFORMANCE INDICATORS Puts the data into perspective Targets (Internal/External) Trends 9 KEY PERFORMANCE INDICATORS Most KPIs are % Allows Us to Compare Stores of Different Sizes 10

5 KEY PERFORMANCE INDICATORS Some KPIs are Franchise Specific, Such as Hours per Repair Order or GP per Employee 11 AVAILABLE TARGETS NADA 20 Groups Manufacturer Reports CPAs Independent Consultants Dealer Group 12

6 FINANCIAL STATEMENT SALES AND GROSS PROFITS Sales _ Cost of Sales = Gross Profit 13 FINANCIAL STATEMENT SALES AND GROSS PROFITS When you can Increase Gross Profit your Pay Plans will determine how much will show up in the Net Profit 14

7 FINANCIAL STATEMENT SALES AND GROSS PROFITS Remember how much you spent to increase the Gross Profit! 15 ONE TRANSACTION 1 Hour of Labor Sold $100 1 Hour of Tech Time $25 Parts Sale Price $60 Cost of Parts $35 Shop Supplies $ 8 Sales Tax $10 Total Invoice $178 16

8 LABOR GROSS PROFIT Labor Sale $100 Tech Pay (COS) $25 Gross Profit $75 Gross Profit $75 Labor Sale $100 = 75% 17 PARTS GROSS PROFIT Parts Sale $60 Parts Cost $35 Gross Profit $25 Gross Profit $25 Parts Sale $60 = 41.7% 18

9 ONE TRANSACTION FINANCIAL STATEMENT SALES/GP Account Name Sales Gross Profit % GP CP Labor $100 $ % CP Parts $60 $ % 19 SERVICE TARGETS GROSS PROFIT % RETAINED RANGE Account Description Domestic Import Highline Customer Pay Labor Gross Profit 73%+ 76%+ 78%+ Warranty Parts Gross Profit 74%+ 78%+ 80%+ Internal Parts Gross Profit 74%+ 78%+ 78%+ NVI/PDS/Road Ready 86%+ 84%+ 84%+ Sublet (Combined with Warranty) 10%+ 10%+ 10%+ 20

10 PROFIT POTENTIAL GROSS PROFIT TARGETS Gross Profit / Sale = % $70,000 / $100,000 = 70% (.7) If last month we were at 65%, then we are doing better. If the target is 73%, then we are worse then top performing Service Departments and we have opportunities! 21 PROFIT POTENTIAL $70,000 / $100,000 = 70% If the Target is 73%, how much profit are we missing? (Target % Dealer %) x Sales = Profit Potential 73% - 70% = 3% x $100,000 = $3,000 $3,000 x 12 months = $36,000 a year 22

11 PARTS TARGETS GROSS PROFIT % RETAINED RANGE Account Description Domestic Import Highline Customer Pay Parts Gross Profit * 38%+ 40%+ 42%+ Body Shop Parts Gross Profit 30%+ 30%+ 32%+ Warranty Parts Gross Profit * * Internal Parts Gross Profit 25% - 30% + 25% - 33% + 25% - 34%+ Counter Retail Parts Gross Profit 35% + 35% + 35% + Wholesale (More than $250K Sales)*** 17% 18% 20% Wholesale (Less than $250K Sales)*** 23%+ 22%+ 23%+ * Without Tires ** If Warranty Markup is 40% 28.60% 28.60% 28.60% ** If Warranty Markup is 60% 37.50% 37.50% 37.50% *** Including W/S Comp & Incentives 23 PROFIT POTENTIAL GROSS PROFIT TARGETS Gross Profit / Sale = % $35,000 / $100,000 = 35% If last month we were at 32%, then we are doing better. If the target is 38%, then we are worse then top performing Parts Departments and have opportunities! 24

12 PROFIT POTENTIAL $35,000 / $100,000 = 35% If the Target is 38%, how much profit are we missing? (Target % Dealer %) x Sales = Profit Potential 38% - 35% = 3% x $100,000 = $3,000 $3,000 x 12 months = $36,000 a year 25 ONE TRANSACTION 1 Hour of Labor Sold $100 1 Hour of Tech Time $25 OR 1 Hour of Labor Sold $80 1 Hour of Tech Time $25 $75 75% $55 68% 26

13 SERVICE DEPARTMENT 68% 75% Increase our Selling Price or Reduce our Cost of Sales 27 SERVICE DEPARTMENT Increase our Selling Price Competitive Items Shouldn t go too much above market Price shopped in the last 6 months? 28

14 SERVICE DEPARTMENT Increase our Selling Price Precision (A Skilled) Labor Rate 20% - 30% above your Posted Rate Driveability/Diagnostic Repair - Electrical Wiring &Circuitry Internal Automatic Transmission/Transaxle Repairs Internal Engine Diagnostics/Repairs Ring and Pinion Replacements Supplemental Restraint System 29 SERVICE DEPARTMENT Increase our Selling Price Monitor Unauthorized Discounts Exception Reports Reynolds & Reynolds: 3619 Report ADP: REX Report 30

15 SERVICE DEPARTMENT Decrease our Cost of Sales Make sure the Techs are paid the correct amount and time per job The Right Tech gets the Right Job 31 SERVICE DEPARTMENT Decrease our Cost of Sales Use lower-paid Technicians Reduce time allowances paid to the Technicians Have a separate maintenance pay rate for your Technicians Pay a flat amount for a job regardless of which Technician works on it. 32

16 CLOCK HOURLY TECHNICIAN $14.00/Clock Hour for 40 Clock Hours Completes only 20 Billable Hours (Flat Rate) Paid 40 Clock Hours $ FRHs X $14.00 = $ $28.00 Cost of Sale per Billable Flat Rate Hour 33 CLOCK HOURLY TECHNICIAN Paid 40 Clock Hours X $14.00 = $ Completes only 20 Billable Hours (Flat Rate) 20 FRHs x $14 = $280 C.O.S. 20 Clock Hours x $14 = $280 ADJUSTED C.O.S.! Or Unapplied Time. Per WEEK! 34

17 When Too Good is TOO Good Sales = $100,000 Gross Profit = $85,000 GP Retention = 85% 35 When Labor GP is Too Good to be True Check Other Accounts Unapplied Time - Reconciliation Advertising Coupons and Discounts Personnel Hourly Folks Outside Services -??? 36

18 Customer Retention COMPARE Customer Pay Labor Sales (Including Quick Service & Factory Paid Maintenance) To Warranty Labor Sales 37 Customer Retention COMPARE $50,000 in CP Labor Sales $18,000 in Warranty Labor Sales $50,000/$18,000 = 2.77 TARGET = > 3 38

19 PARTS DEPARTMENT INCREASE OUR SELLING PRICE Monitor Unauthorized Discounts Exception Reports Reynolds & Reynolds: 2542 Report ADP: ROV Report 39 PARTS DEPARTMENT INCREASE OUR SELLING PRICE Priced Competitively Other Parts Accounts too HIGH WHO Can Change Parts Sales Prices? Check for Changes in Labor Pay Type Tires Track Separately Warranty Charge Backs 40

20 PARTS DEPARTMENT DECREASE OUR COST OF PARTS If the Inventory is TOO Skinny or not Accurate: TOO Many Outside Purchases from Like-Franchised Dealers Factory Programs for Bulk Purchases 41 When Parts GP is Too Good to be True Check Other Accounts Other Parts Accounts too Low Advertising Coupons and Discounts Wrong Cost Amount Check Exception Reports 42

21 HOURS BILLED PER RO Labor Rate $100 # RO SALES GROSS PROFIT G.P.% Mech. Labor 190 $36,480 $25,530 70% ($36,480 / 190) / $100 = 1.92 Billed Hours Per RO Different from DMS Report 43 HOURS BILLED PER RO Avg Avg CP Labor Sales $31,000 $36,480 # CP Repair Orders Labor Sales per CP Repair Order $ $ Posted Labor Rate $85 $100 Hours Per Repair Order

22 Calculate Gross Profit Per Hour Billed Total Labor Sales Posted Labor Rate* = $100,000 $100 = 1,000 Billed Hours *Use Repair Rate or Warranty Rate Effective Labor Rate 45 Calculate Gross Profit Per Hour Billed Total Labor Gross Profit Billed Hours = $65,000 1,000 = $65 Labor Gross Profit Per Billed Hour 46

23 Gross Profit Per Hour Billed During 1 Week Each Technician Wastes an Hour -Holding for Authorization -Looking for a Vehicle/Tools -Waiting For Parts $65 Labor Gross Profit Per Billed Hour 47 Gross Profit Per Hour Billed 10 Techs x $65 = $650 X 52 Weeks = $33,800 Parts Gross Profit = $35 X 52 Weeks = $18,200 Annual Potential Gross Profit = $52,000 48

24 FINANCIAL STATEMENT Gross Profit _ EXPENSES = NET PROFIT SELLING GROSS PROFIT DEPARTMENTAL PROFIT 49 DIFFERENT FINANCIAL STATEMENTS Net Profit After ALL DEPARTMENT EXPENSES GM and IMPORTS Selling Gross Profit (Ford) (Department) Net Profit (Chrysler) After Most CONTROLLABLE EXPENSES 50

25 FINANCIAL STATEMENT EXPENSES Listed from most controllable to the least controllable 51 FINANCIAL STATEMENT EXPENSES Personnel Expenses Semi-Fixed You have some control Fixed 52

26 FINANCIAL STATEMENT EXPENSES When you can reduce an Expense, most of the reduction will show up in the Net Profit 53 PROFIT POTENTIAL EXPENSE TARGETS Shown as a % of the Department s Gross Profit Expense / Gross Profit x 100% = Expense % 54

27 ONE TRANSACTION 1 Hour of Labor Sold $100 1 Hour of Tech Time $25 Parts Sale Price $60 Cost of Parts $35 Shop Supplies $ 8 Sales Tax $10 Total Invoice $ ONE TRANSACTION SERVICE DEPARTMENT FINANCIAL STATEMENT EXPENSE Account Name % GP Service Gross Profit $75 Supply Expense ($8) -10.7% 56

28 SERVICE TARGETS KEY EXPENSES RANGE Account Description Domestic/Imports Ford/Chrysler Personnel/Employment 50% - 30% - Advertising Expense * 3% - 3% - Policy Expense 2% - 2% - Supply Expense (net) 1% - 1% - Domestic/Imports Highline Company Vehicle ** 2% - 6% - * If used only for true advertising - not discounts 57 PARTS TARGETS Account Description Personnel/Employment Advertising Expense * Policy Expense Supply Expense (net) Company Vehicle ** KEY EXPENSES 1% - Domestic/Imports 2% - * If used only for true advertising - not discounts ** If not a big Wholesaler 40% - 2% - 1% - RANGE Domestic/Imports Ford/Chrysler 25% - 2% - 1% - 1% - Highline 6% - 58

29 PROFIT POTENTIAL EXPENSE TARGETS Policy Expense / Gross Profit = % ($3,300 / $100,000) x100% = 3.3% If last month we were at 5%, then we are doing better. If the target is 2%, then our policy expense is worse then top performing departments and we should examine it closely. 59 PROFIT POTENTIAL $3,300 / $100,000 = 3.3% If the Target is 2%, how much is our excess policy costing us? (Target % Dealer %) x Gross Profit = How much we should Reduce our Policy Expense 2% - 3.3% = -1.3% x $100,000 = -$1,300 $1,300 x 12 months = $15,600 a year 60

30 EXPENSES MONTH YTD NET SALES $ 100,000 % of Sales $ 550,000 % of Sales GROSS PROFIT $ 65, % $ 350, % EXPENSES % of Gross Profit % of Gross Profit Personnel/Employment $ 29, % $ 165, % Advertising $ 2, % $ 25, % Supplies $ 1, % $ (450) -0.1% 61 Personnel Expense Too High? 1. Get Payroll Detail of Department. a. Are these people in the correct Department? b. Is their PAY being calculated correctly? 2. How Paid, on Sales, Gross Profit, Production? Weekly or 3. Performance Measurement and Information Standards 4. Recruiting, Screening, Hiring 5. Can you offset with increased Gross Profit? 62

31 SEMI-FIXED Create Sub-Accounts Example: Policy Expense Comebacks Lot Damage Missed Estimates Service Contract Deductibles not Collected 63 EXPENSE CONTROLS FOR SHOP SUPPLIES Shop Supplies 1. Get rid of those Service Department Shop Supplies R.O. s 2. Weekly Individual Technician Counter Tickets 3. Control and Measurement 4. Customers Portion 64

32 FINANCIAL STATEMENT Page 1 Balance Sheet Assets _ Liabilities Bills = NET WORTH 65 ONE TRANSACTION (S) Labor Sale Acct. ($100) (S) Cost of Labor (COS) $25 (B) Work in Process ($25) (S) Parts Sale Acct. ($60) (S) Cost of Part (COS) $35 (B) Parts Inventory ($35) (E) Supply Expense ($ 8) (B) Sales Tax Payable ($10) (B) Cash paid by Customer $178 ($233) $233 66

33 ONE TRANSACTION BALANCE SHEET Account Name ASSETS LIABILITIES Cash $178 Parts Inventory ($35) Work in Process ($25) Sales Tax Payable $10 Net Worth (Profit) $108 Totals $118 $ ONE TRANSACTION (E) Service Advisor Comm. $8 (E) Counter Person Comm. $3 (E) Management Comm. $2 (E) Payroll Taxes $1 (E) Credit Card Fees $3 (B) Accounts Payable ($10) (Supply) (B) Payroll/Taxes Payable ($14) (B) Credit Card Fees Payable ($3) 68

34 ONE TRANSACTION BALANCE SHEET Account Name ASSETS LIABILITIES Cash $178 Accounts Payable $10 Comm./Taxes Payable $13 Credit Card Fees Payable $3 Parts Inventory ($35) Work in Process ($25) Sales Tax Payable $10 Net Worth (Profit) $82 Totals $118 $ ONE TRANSACTION BALANCE SHEET Account Name ASSETS LIABILITIES Cash $82 Accounts Payable $0 Comm./Taxes Payable $0 Credit Card Fees Payable $0 Parts Inventory $0 Work in Process $0 Sales Tax Payable $0 Net Worth (Profit) $82 Totals $82 $82 70

35 DAYS SUPPLY Calculate the Cost of Sales Sale Gross Profit = Cost of Sales GL Inventory Balance / Cost of Sales x 30 = Days Supply 71 DAYS SUPPLY TARGETS SCHEDULED ACCOUNTS SERVICE/PARTS/BS RECEIVABLES = 15 WARRANTY RECEIVABLES = 7 15 WORK IN PROCESS = 3 10 (with BS) SUBLET IN PROCESS = 5 15 = HALF A MONTH 72

36 DAYS SUPPLY TARGETS PARTS INVENTORY = (Do not include discounts/adjustments) Tires/Oil Separate Accounts 73 Where to Start GRADE THE SERVICE DEPARTMENT C B A Net Profit Profit % GM and Import < 10% > 15% > 20% Department / Selling Gross Ford or Chrysler < 35% > 40% > 50% 74

37 Where to Start GRADE THE PARTS DEPARTMENT C B A Net Profit Profit % GM and Import < 20% > 30% > 40% Department / Selling Gross Ford or Chrysler < 35% > 40% > 50% 75 Grade Your Department C = Examine Your Expenses B = Yield Per Customer A = Growth 76

38 Your Opportunities EXPENSES Compare Your Net Profit Retention to Target Look at Key Expenses to Targets Calculate Excess Expense (Target % - Dealer %) x Gross Profit What can be reduced? 77 GROSS PROFIT Your Opportunities Compare Your Gross Profit Retention to Targets Calculate Profit Potential of Accounts Below Target (Target % - Dealer %) x Sale Where are the Opportunities? 78

39 END OF MONTH BEFORE FINANCIAL IS PRINTED Review Key Expenses Accounts Advertising, Policy, Loaner Vehicle, Supplies Reconcile GL Work-in-Process & Sublet Schedule. (Open Repair Order Report) Review Receivables Schedules Reconcile GL Parts Inventories against DMS Parts Inventory 79 PLANNING FOR NEXT MONTH $65 Labor Gross Profit Per Billed Hour Plus Parts Gross Profit for CP = $35 Per Billed Hour $100 Gross Profit per Hour Billed 80

40 PLANNING FOR NEXT MONTH Target Net Profit = $ 20,000/mo. Average Expenses = $ 80,000/mo. Need Gross Profit = $100,000/mo. Need $100,000 in Gross Profit to Reach $20,000 Net Profit 81 Gross Profit Per Billed Flat Rate Hour = $65.00 $100,000 Gross Profit /Mo. $ Gross Profit/ FRH = 1,538 FRHs 1,538 FRHs 160 FRH s/tech 1,538 FRHs 200 FRH s/tech = % Or = % 82

41 EMPLOYEE PRODUCTIVITY Number of Repair Orders per Service Advisors Customer Pay and Warranty RO s per day: Time to handle Customers = Write-up (?) Follow-up (?) Delivery (?) 30 minutes? At the most 15 Customers can get good service. Steps may be "dropped" including - Greeting, Listening, Questioning, Selling, Follow-up, Follow-through, Active Delivery, etc. 83 EMPLOYEE PRODUCTIVITY Technicians to Service Advisors 3 4 Techs to 1 Service Advisor Each Tech flags 10 hours a day. 3 Techs x 10 hrs a day = 40 hours. Number of hours per Repair Order = 2 30 hours /2 hours per Repair Order = 15 Repair Orders a day. 84

42 EMPLOYEE PRODUCTIVITY RED LOBSTER Reversed its July 2012 policy of wait staff ratio from 4 Customers to 1 Waiter/ress to 3 Customers to 1 Waiter/Waitress 85 Tracking Your Opportunities A B C D E F YTD Avg. January February FORMULA 3 4 # Customer Pay Repair Orders Customer Labor Sales $41,873 $39,128 $44,618 6 Gross Profit Target $29,579 $27,400 $31,758 7 Percent Retained 73% 30.06% 70.03% 71.18% +E7/E6 8 Missed Opportunities $1,163 $813 +($B7-E7)*E5 9 Labor Sales Per Repair Order $195 $196 $194 +E5/E4 Enter # from Financial Statement in White Cells, Targets in Orange Cells, Formulas in Yellow and Green Cells 86

43 Tracking Your Opportunities A B C D E F YTD Avg. January February FORMULA 3 4 TOTAL PARTS SALES $114,300 $124,500 $104,100 5 Total Gross Profit $34,915 $37,350 $32,479 6 EXPENSES Target 7 Other Personnel Expense $12,882 $13,452 $12,312 8 Personnel as a % of GP 35% 36.0% 37.9% +E7/E5 9 Excess Expense (Shown in Red) ($380) ($12,312) +($B8-E8)*E5 10 Supplies $858 $213 $1, Supplies as a % of GP 1% 0.6% 4.6% +E10/E5 12 Excess Expense (Shown in Red) $161 ($1,502) +($B12-E12)*E5 Enter # from Financial Statement in White Cells, Targets in Orange Cells, Formulas in Yellow and Green Cells 87 The Future If you focus on one underperforming account each month, at the end of the year you will have improved 8 accounts! 88

44 The Future If I Don t Change the Processes Affecting this Account WHAT WILL IT LOOK LIKE 6 MONTHS FROM NOW? 89 CONCLUSION! Brooke Samples, President Profit Blueprints,LLC Profit Blueprints, LLC Dealership-Proven Plans for Net Profit Improvement 90

45 Plan Like a Pro If Service Expenses High: Thought Starters Confirm expenses are posted to the correct department. Service Direct Personnel Expenses (without allocations or benefits) should be 30% or less. Are employee bonuses calculated correctly? Are pay plans based on productivity? Service Advisor pay plans should not be paid on Labor Sales as Labor Rates increase Service Advisors get automatic pay raises. Service Advisors should be paid the same time period as Techs not a draw, but the commission earned. Use sub-accounts to track expenses like advertising or policy. Ex: Advertising discounts, If Labor Gross Profit Retention Percentages are Low: Run daily exception report to confirm staff is not overriding the established prices. Paying Techs too much time for maintenance work that is sold at a lower rate. Solution to higher paid Techs doing low skilled work pay a flat amount for certain jobs regardless of the skill level. Establish a precision labor rate 20% - 30% above door rate for work requiring highly skilled Techs. Dispatch the right work to the right Techs Any hourly or salaried Techs? How much are they really costing the Dealer per flag hour? If Sales per Repair Order are Low: Analyze the repair orders for vehicle age and mileage. If below 5 years or 75,000 miles the Dealership should focus on Customer retention. Higher mileage vehicles = higher dollar per repair order Do the Service Advisors use a maintenance menu to sell from including benefits? Review the Multipoint Inspection process for gaps in performance either by the Service Advisor or the Techs. Is there a second effort (TO) process in place when the Customer says, No? Do the Service Advisors have enough time to follow-up with Customers (Average CP and Warranty R.O.s a day allows enough time, more than that the Service Advisors become order takers.) If Technician Productivity is Low: Are the right Techs getting the right jobs? Do the Service Advisors do a GOOD job at completing the repair order? Do we have a GOOD parts inventory to sell from? Are productivity goals set and monitored for Techs and Service Advisors (daily, weekly, monthly)? Do we confirm the Customers reservations? Are special tools, the necessary equipment, TSB and manuals easily accessible by the Blueprintforprofits.com 2013 Profit Blueprints, LLC

46 Plan Like a Pro If Body Shop Expenses High: Thought Starters Confirm expenses are posted to the correct department. Body Shop Direct Personnel Expenses (without allocations or benefits) should be 30% or less. Are employee bonuses calculated correctly? Are pay plans based on productivity? Estimators pay plans should not be paid on Sales, as labor rates and parts prices increase the Estimators get automatic pay raises. Estimators should be paid the same time as Productive Staff not a draw, but the commission earned. Use sub-accounts to track expenses like advertising or policy. Ex: Policy, shortages, comebacks, shortages If Gross Profit Retention Percentages are Low: Not filing for supplements when warranted. Paying Productive staff more time than the estimate allotted. Department paying for helpers instead of the Body Men or Painters. Any hourly or salaried Productive staff? How much are they really costing per flag hour? Using the sublet and materials accounts for paying the Productive Staff more without having to file a supplement. Materials painter over mixing, reconcile the mixing machine reports to the estimates If Technician Productivity is Low: Are we doing a good job with DRPs? Do the Estimators do a GOOD job at writing the estimate? Is there a quality control process that each step is signed off on, which includes date and time? Are productivity goals set and monitored for Productive Staff and Estimators (daily, weekly, monthly)? Do we confirm Customer reservations, that the necessary parts are here, and they are the correct parts? Are special tools and the necessary equipment up-to-date and easily accessible by the Productive Staff? Blueprintforprofits.com 2013 Profit Blueprints, LLC

47 Plan Like a Pro If Parts Expenses High: Thought Starters Confirm expenses are posted to the correct department. Parts Direct Personnel Expenses (without allocations or benefits) should be 25% -30%. Are employee bonuses calculated correctly? Are pay plans based on productivity? Pay plans should not be paid on Parts Sales as parts prices increase the counter people get automatic pay raises. Use sub-accounts to track expenses like advertising or freight. Ex: Freight for returns, shipping in, shipping out. If Gross Profit Retention Percentages are Low: Run daily exception report to confirm staff is not overriding the established prices. Poor parts inventory requiring excessive emergency purchases. Employees purchases are excessive (Counter Retail). Discounts being misapplied. If Parts Inventory is too High: Are we doing perpetual inventories? Customer Pay special order parts should be pre-paid. For Warranty special order parts the Customer should have an appointment set before the part(s) are ordered. Review DMS management reports for aging and stocking status. (2213 for R&R, MGR for ADP) 65% + for Normal or Active Parts. Dealership performs monthly reconciliations of Parts Inventory General Ledger compared to Parts Management report. Blueprintforprofits.com 2013 Profit Blueprints, LLC