Top Tips for Locating Cash in Your Dealership

We certainly are living in uncertain and unusual times. However, there are sound methods that dealers can use to save cash, speed up the cash collection process or delay the payment of cash. Let’s dig in and uncover ways each department can help accomplish or bring to light opportunities. We are going to find that there are areas to identify additional capital in every department.

1. Deal Flow

Now more than ever, billers and finance and insurance (F&I) producers need to work extra closely in getting the appropriate documents in order to get the deals funded. The importance should be placed on getting the deals booked and funded as quickly as possible. E-contracting and e-signing should be considered during this discussion, especially in light of potential remote purchases and deliveries.

2. Receivables
  • Contracts in transit (CIT): Collection of CITs needs to be a constant focus. Dealers do not want to be in the business of floating their cash.
  • Warranty & Incentive Receivables: Check schedules to be certain all warranty claims have been submitted, especially any potential aged items. Furthermore, verify that all rejected claims have been resubmitted.
3. Floor Plan
  • Confirm that all unwinds and dealer trades have been refloored. Remember to consider swapping net checks for dealer trades if it is not already a common practice.
  • Floor all of the used inventory that you can.
  • Renegotiate floor plan rates, have discussions surrounding waiving curtailments and deferring interest payments where appropriate.
  • Also, continuously monitor payments on sold vehicles to make sure the dealership does not get out of trust.
4. Aged Vehicle Inventory

Perform a cost benefit analysis of wholesaling aged inventory. Consider the need to push the wholesale process faster for used vehicles that are not going to turn a profit in your market.

5. Parts Inventory

  • Check that you have returned your old cores.
  • Verify that you do not have any open returns outstanding that could be completed and resolved (e.g., earned return reserve, ARP returns not yet done such as RIM returns).
  • For special order parts, consider requiring upfront deposits or payments on special order parts needed to perform service work.
  • 6. Warranty Reimbursement Increases

    Make sure you have submitted proper documentation to the manufacturer to get retail rates on parts and service warranty work, if applicable in your state.

    7. Expenses
    • Manage supplier credit terms. Do not pay early if there is not a financial incentive.
    • Secure supplier rebates if available.
    • Make sure there are preferred vendors and back-up vendors for major expense categories. Consider negotiations where appropriate.
    • Extend payment terms or ask for discounts from suppliers and vendors.
    • Have all managers perform an expense line item analysis.
    • Consider overtime or a hiring freeze.
    8. Tax
    • Evaluate estimated tax status with your trusted advisor. The first two quarters of 2020 may result in very low, or perhaps no, profitability. You may be able to hold on to some cash you otherwise thought you might have to pay to the taxing authorities.
    • Visit the DHG COVID-19 web page for updates to tax law changes to take advantage of the government stimulus opportunities.
    • Re-evaluate the amount of distributions being taken out of the dealership.
    9. Reinsurance
    • Consider the opportunity to take a loan, advance or distribution from your reinsurance company(ies).
    • Consider taking an advance payment on any available retroarrangements.
    10. Capital Expenditures & Special Projects

    Consider halting or at a minimum have management re-evaluate all significant capital expenditures and special projects.

    11. Digital Solutions

    Evaluate the effectiveness of your advertising dollar spend and your digital presence. For more information, click here for insights on adapting your marketing strategy during times of uncertainty.


    In uncertain times, the low-hanging fruit or the basic blocking and tackling can help locate cash quickly. Most of the points mentioned above should be items of continual focus but may easily be forgotten when business is going well. Paying attention to these items today is critical now as dealerships conduct business during the impact and effects of COVID-19.

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