Are Your DOCs Dependable?  Better Management Will Enhance Your Reports’ Value

December 08, 2017

Although many dealer-owners would say they wouldn’t do it, they should be able to make business decisions based on the accuracy of the daily operating control reports (DOCs) they prepare. But reality enters the picture — and with it company habits and human error — and your DOCs may not reflect the current financial characteristics of your dealership.

The following are some tips to improve the quality of this continuously generated report.

DOCs should be your “dashboard”

Your DOC is a daily summary of the financial metrics that drive your business. It typically makes the rounds midmorning after it’s generated by accounting personnel. The reports should be a “dashboard” that can help you and your department heads keep a close eye on performance and make quick adjustments. And that, in turn, will enable your store to meet its weekly, monthly and annual financial goals.

The report can provide a wealth of information on cash receipts and disbursements, as well as on revenue and expenditures. For example, here are nine of the nearly 200 lines on a DOC used by one franchise: total dealership gross, new front end gross, used front end gross, service labor gross, parts gross, selling expenses, operating expenses, overhead expenses and operating profit (or loss).

Also consider including in your DOCs total dealership gross profit per employee, unit sales per salesperson, revenue per service advisor and parts revenue per counterperson. Other data can be nonfinancial, such as inventory units, employee counts, repair orders sold and service bays. Ask your managers to suggest calculations that would be helpful in running their departments.

Quirks and quagmires

While the DOC process should be manageable, many dealership owners complain that quirks in their computer system processes — and staff habits — impair their usefulness. They say that the numbers aren’t always up to date because of delays in F&I processes and accounting entry.

In reality, you might find that many receipts and expenses aren’t recorded on the day they’re incurred. And, if the parameters in your dealer management system (DMS) aren’t properly linked between the F&I module and the accounting module, the gross profits on car deals will be inaccurate in the DOC.

Discipline is needed

Don’t be discouraged. The secret to a good DOC isn’t magic; it’s discipline. Data collection needs to be rigorous and on a near real-time basis. Pay special attention to your expenses because they can be grossly understated if they’re not entered into your DMS on the day you’re billed or as soon as the charge is known. Consider the following actions to improve your DOCs:

Pinpoint your vulnerabilities. Consider evaluating your current controls by having your accounting department head interview every other department head to determine where the weak spots are and how to remedy them. Then put new processes in place, if needed.

Stick to a schedule. Set an agreed-upon time for the F&I department to finalize car deals for office processing — for example, a deal must be completed and in the office by 7 a.m. the next day in order for it to be posted and show up on the DOC. Additionally, to keep your DOCs current, and thus more valuable, determine a time by which the accounting office will have all car deals posted for the prior day — for instance, 10 a.m.

Establish controls in each department so that every bill and receipt is entered on the same day it’s available. If this isn’t possible for an expense, have the accounting department post it off the purchase order and then adjust the expense when the bill arrives.

Keep it current. Have the accounting department review the DOC regularly to ensure that any new general ledger accounts have been updated in the document.

Step up to the plate

The data in your DOCs is as good as the procedures you put in place to collect it. If needed, your CPA can help you put in place processes to make your DOC the reliable document it should be.

© 2017