I find that most disappointments in the monthly financial statement come from a lack of daily reporting. In fact, I’ve been a long-time hater of our whole month end process. We basically shut down all accounting operations for three to five days while we “close the books” and as far as I’m concerned, “close our minds.”

I’ll admit now, that I was one of the biggest abusers of the month end process when I was a controller. If someone tried to interrupt me while I was closing the books, I’d sharply remind them that it was the “close” and whatever they wanted from me “better be good!” Years later, I discovered that if I changed my focus from monthly reporting to daily reporting in the form of a Super DOC, then I’d have more productive managers, easier month end closes and most importantly – fewer surprises on the financial statement for my dealer and general manager. By combining the technology that you already have in your DMS system with a slight change in your processes, you can provide the type of daily reporting that will get your managers more focused on daily profit retention. Here are four steps to great daily reporting in the form of a Super DOC for your managers.

Step 1 – It must have pay plan numbers on it. If you pay managers on adjusted selling gross then that line needs to be on the DOC so they can see throughout the month how much they will earn. It is a great motivator to increase profit.

Step 2 – It must have your dealership’s “metrics” or budget. What are metrics?  Let’s say that your customer labor gross profit rate is 75%. That percentage needs to be on the DOC. It’s easy – just divide your gross profit line by the sales line. By watching these metrics daily instead of monthly – you can spot problems. For example, I know a controller that saw a drop in parts retail from 32% to 12% from one day to the next. When she detailed this data, she found a large parts ticket sold at cost to a technician. Digging deeper, this part went onto another employee’s car and the labor was cash under the table. This variation would have been lost in the end of month in financial statement but sticks out in a daily report. Metrics can be entered into your forecast or budget columns. Just do the same calculation in the forecast (dividing your forecasted gross by your forecasted sales) and you’ll have the benchmark guide for each metric for your dealership.

Step 3 – It must be an accurate daily financial statement. Somewhere on your DOC there needs to be a summary section that has, total dealership gross profit, total expenses, total other income, and net profit. These four lines must match your financial statement. I’ve never been a fan of the DMS system’s DOC since it is easy to get it out of balance with the financial statement – so I prefer a download of the true trial balance into an Excel DOC. For more information on how to do this, visit my web site, www.sandijerome.com and click on the Super DOC link.

Step 4 – Include controllable expenses. How can you ask a manager to watch advertising and commission expenses if those lines are not on the DOC? In addition, they must be posted daily. Yes, I know a lot of expenses don’t happen until the end of the month, but many can be entered daily.

Make sure you accrue your commissions on each car deal as it is posted. Require managers to issue purchase orders on the DMS system for advertising when they create their budget – or order the advertising. Don’t wait for a bill from the newspaper. Require other advertisers to send daily or weekly invoices so you can get them posted.  I know of one controller that posts the floorplan charges weekly – but that might be asking a little too much (although the amount is pretty easy to calculate.) What about spiffs? Every time you issue a spiff check, debit the expense account. I know you like to debit the employees’ AR account, but debit the expense account and also the employee’s AR account and credit a controlled accrued payroll account. Change your payroll distribution to hit this accrued payroll account for spiffs and you won’t have a big chunk of spiff expense at the end of the month.