Pub. 1 2019-20 Issue 3

http://wvcar.com WVADA 16 BY THE NUMBERS Expense Management By Tasha Sinclair Vice Chairperson, AutoCPA Group W ithout a doubt, the glob- al market has been neg- atively affected by the coronavirus pandemic and will most likely affect your business if it has not already. You have prob - ably read numerous articles advising you to manage expenses in today’s economy. But what exactly does that mean? In addition to cutting out the “non-essentials” in a down - turn, consider the following suggestions for managing your essential costs. Obviously, employment costs are the largest expense of a car dealership. Making sure the work force is the right size, has the right indi- viduals, and awards the right compensation is key to managing employment costs. Com - pensation includes benefits. If you were to poll your employees, I imagine many of them could not name all the benefits you provide them. An example may be a profit-sharing contribution. Many employees do not look at their retirement statements and recognize a contribution was made on their behalf, let alone appreciate the contribution. Most em - ployees recognize a cash bonus and appreci - ate that. So maybe a cash bonus instead of a profit-sharing contribution is the more effec - tive way of creating goodwill with employees. The key is determining what is important to your work force and adjusting accordingly. Vendor relationships are arguably just as im - portant as employee relationships. Look at your vendor list. Do you know what product or service each one provides and why they are your supplier? If you haven’t established an approved vendor list, you may be sur - prised by what you find. You may find that you are purchasing from multiple vendors in an expense category or that you are paying an outside party for work that could and should be done internally. For instance, you may have a body shop that has the capacity, but because of poor communication between the used car department and fixed operations, you are paying some - one else for dent removal on your used units. When evaluating your vendor re - lationships, assess whether you are “overbuying.” For instance, think of your cell phone. Like most people, you may not utilize many of the features you paid for. You may be doing the same with some of your vendors. The options sounded good at the time you purchased them, but now you realize they just aren’t practical. Trim the list to the op - tions you use. Lastly, don’t be afraid to nego - tiate for a better price. If you determine you have been pur - chasing the same product from multiple vendors, you may be able to negotiate a better price with one by promising them more of your business. Also, look for new competitors you haven’t considered before. Even if you don’t want to switch vendors, a competitive price to take to your current vendor is a good bar- gaining tool. Expense management takes time and effort and is an ongoing pro - cess. If you would like assistance in establishing a plan and getting the ball rolling, please feel free to contact us. t Tasha Sinclair is a member of Tetrick & Bartlett, PLLC where she has been pro - viding accounting, tax, and consulting services to automobile dealers since 2002. She also serves at the current Vice Chairperson of the AutoCPA Group. thartley@tetrickbartlett.com. 304-624-5564.