Resource Center - Industry Articles
Protect Yourself and Your Money from a Manufacturer’s Audit
by Sherralyn Peterson, March 18 2010
Even with corporate downsizing, restructuring and bankruptcies, the manufacturers have recently increased the size of their Dealer Audit Staffs. The domestics have, in most cases, doubled their staffs! Interesting! What does that mean - MORE Dealer Audits!
So the auditors are out conducting audits at dealerships all across the country. With their improved technology and "intelligence", it tells them where to go and what to look for when they get there. Sometimes the random rule of 'never been there' is used. Either way, a visit from them still has the same impact - money out of your pocket and from your profit. It will leave you with less of both.
There are several things a dealership can do to stay off the "radar" or to help lessen the "sting". Here are a few tips:
Staying 'Off the Radar'
- Report all deliveries accurately - the correct date, customer name, address and sales type.
- Report deliveries on time; not loading-up on the last day of the month or contest.
- Keep to a minimum delivery changes and cancellations; do it right the first time!
- Know all the incentive program rules and exceptions. Read the entire program bulletin.
- Do not abuse incentive programs! Know what your employees are doing. Ex. targeted incentive programs are not "free-for-alls".
- Don't advertise or offer any questionable discounts or "give-a-ways" on manufacturer employee programs without knowing all the rules and guidelines. Auditors do read the newspapers.
- Do not sell to Exporters or Brokers; know your manufacturer's policy regarding such sales. Review the "List of Known Exporters", if published by your manufacturer.
- Know if the difference between Fleet and Retail Sales; then report them properly and consistently.
- Treat all Mail-Out Audits and Quarterly Deal Jacket Reviews seriously (conducted by manufacturer's Field Reps.); the results could cause a full blown in-dealership audit.
During the Audit
- Be interested, involved and attend all update meetings, if possible.
- You should be given an opportunity to resolve any questionable issues during the audit. Review all of the auditor's chargebacks and assumptions; don't just assume that their data is always correct.
- At the closing meeting, instructions should be provided in writing regarding the Appeal Process, where to send additional information, the deadline for submission and the timing of the chargeback.
Getting audited and having compliance issues are no fun; it can keep you up all night. But it doesn't have to. Continuous training, good internal controls and regular quantitative in-depth reviews of Deal Jackets are the best solutions and should be a normal business practice in every dealership.
Face it, incentives are not going away anytime soon; they are not getting any simpler either. So, it could just be a matter of time before the auditors show up at your door. Be ready!
Sherralyn Peterson, Automotive Incentive Specialist, with 30 years of automotive experience, helps dealerships prepare for audits, minimize risks, maximize profits and enhance cash flow. For more information, call 312.310.8380, email at speterson@sherralynpeterson.com, or visit www.sherralynpeterson.com.
