Warranties seem to consistently be a function that leaves excess money on the dealership’s table. From unfiled or misfiled claims to parts not returned, the list of vulnerable areas in which a dealership can lose dollars goes on. Prior to moving into the dealership accounting world, I spent 10 years as a warranty administrator and many dealerships that I encountered seemed to have some level of warranty system dysfunction. In fact, I’ve seen several dealerships with warranty losses exceeding $60,000. Though this may seem like an immaterial amount to some larger groups, it is plenty impactful to some of the single point dealerships that have experienced that kind of loss.
Unfortunately, to those who have already experienced this, and fortunately to those who have the opportunity to nip warranty loss in the bud, there are many simple mistakes – such as entering wrong labor codes or not following up on a suspended claim – that you can easily avoid by simply paying close attention. Rather, they are oftentimes overlooked and upper management forgets to follow up with the warranty administrator.
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