By Travis Peterson, Product Owner, One View
In my former life as a Controller, I was always aiming for a fast and accurate month-end close. Our business office typically closed the books within five to seven days. Is that a realistic deadline? Not according to Christine LaFontaine, Owner & CFO of Matt LaFontaine Automotive, which owns three dealerships in Michigan. Christine, who is also a former Controller for a 13 store group with 21 franchises, believes that it’s frankly too MUCH time. How many days till a full close do you ask? “Two days.”
Christine’s dealerships consistently finish closing their books on the second day of the month, and for good reason. Having accurate information sooner gives management more time to analyze what went well and what didn’t for better decision making, reveals items of interest that may be affecting the bottom-line, and allows the entire group to move forward instead of dwelling in the past for the first week of each month.
There are two big reasons many dealerships struggle to close their books quickly: lack of pressure from the top and co-worker buy-in. A Controller can’t do it alone. A two-day close requires that the entire dealer group be on the same page because a lack of data from one department can delay the entire process.
Beyond setting dealership-wide expectations and getting management on board, LaFontaine has several recommendations that other groups can follow to achieve a two-day close. These include:
Start early and clean schedules continually. LaFontaine works schedules weekly, even daily, when it comes to busy departments like service and parts. “People post and make mistakes so the schedules all get worked at least once a week,” she said. “It’s much easier to catch mistakes, like someone writing a check that they shouldn’t have or an expense posted twice, on an ongoing basis rather than trying to do it all at the end of the month. Keeping things clean is much less stressful and it works.”
Use a check-off list. LaFontaine swears by her check-off list that breaks down month-end procedures into smaller tasks. Each task has a due date and it is segmented by weekly/monthly action items. Due dates are set in stone, so the last few days of every month are spent fact-checking, clarifying information, and getting memos together, not scrambling for data. Departments work together to complete items since they all have an interest in getting paid properly and on time.
Estimate payroll accrual and bonuses at the beginning of the month. This recommendation is a major mind shift from my days as a Controller, but LaFontaine swears by it. She has an Excel spreadsheet for each salesperson and everyone in F&I and uses current payroll and bonus estimates to populate the sheets. “It doesn’t have to be completely correct,” she said. “Our pay plans are not hard so my estimates are very close.” She explained that management likes this approach because income and expenses are matched in the month they occur, regardless of when money changes hands.
Look at trends. LaFontaine relies on trend reporting in the group’s DMS to catch accounting errors and make them right before too much time has passed. “I can see 12 months of activity,” she explained. “So, if there’s an expense that’s $100k more than the month before, for example, I can ask questions of the department. It’s a double-check for everyone and people appreciate it because they get paid on the bottom-line, and they need to know what they’re getting paid on is proper.”
Get vendors on board. LaFontaine communicates to her vendors how important it is to have invoices and month-end statements in on time. She stresses this is integral to working with the group, but there are challenges. “Paint inventory can be painful, but I stress how important it is to come out on time and get the work done,” she said. “Every once in a while, we have a blip with a vendor, but when it comes down to it, we’re the customer and they need to make us happy.”
Reward your team. Closing the books is a team effort so it pays to encourage and reward employees for a job well done. LaFontaine celebrates with a pizza party for the entire dealership. “We talk about the month and reward with cash one ‘everyday hero’ who really stepped up,” she explained. “We need to give people a high-five because we all work very hard. It pulls us together as a team and gives us a chance to talk about how we did and how we’re going to move forward.”
When I was a Controller over five years ago, closing the books within seven days was the norm. Now I know that’s old-school thinking. Controllers like LaFontaine have found that starting early, getting department and management buy-in, taking advantage of technology, and rewarding the entire department for a job well-done, can result in a two-day month-end. Now it’s your turn.
About the Author
Travis Peterson is the head of One View’s Products and Services team, leveraging over 13 years of experience in the automotive industry.