Expense Management for the 21 st Century (or any Century) Presented by: Clay Nelson, GMAC June 3, 2009

Transcription

1 Expense Management for the 21 st Century (or any Century) Presented by: Clay Nelson, GMAC June 3, 2009

2 Expense Management BAD habits are developed in GOOD times, GOOD habits are developed in BAD times!

3 Expense Management Definition- The cost of doing business which is not a _Cost of Goods Sold. Money the dealership uses to get _business_ done! An asset whose value has been _used up.

4 Expense Management Locations of expenses: Type of expense Fixed expense Variable expense Personnel expense Semi-fixed expense Associated with Property Selling People Pencils

5 Expense Management Action Steps Step 1: Analysis Look for changes (both up and down) Compare to standards established by GM and NADA Compare to local market Where spent? Why spent? When spent?

6 Expense Management Action steps Step 2 Trend Review Establish for your Expense Accounts compare to last year and year before Step 3: Goal Setting Establish for maintaining realistic and effective Expense budgets

7 Expense Management Action Steps Step 4: Planning & Organizing Develop Action Plan to achieve goals Set time limits and/or due dates Step 5:Follow-Up & Control Assign to individuals and ensure tasks are completed Review total spending each month to uncover possible overspending.

8 Elements of an Expense Control Program Controlling Personnel Expenses Complete Dealership Organization Charts Have every Employee complete a Job Task List Stay current on completing Employee Performance Reviews Ensure Dealership Pay Plans are reviewed annually Ensure that key Dealership Procedures are in writing Have Department Managers submit Expense saving ideas Conduct weekly Staff Meetings

9 Elements of an Expense Control Program Controlling Non-Personnel Expenses Have Managers complete three Annual Expense Budgets: For most likely year For a year that turns better For a year that turns worse Set Monthly Budgets for controllable Expenses Complete a detailed monthly Advertising Budget and Calendar Require that all Purchases not going into Inventories have prior General Manager approval

10 Elements of an Expense Control Program Controlling Non-Personnel Expenses Reduce quantity of all Purchases to minimums Ensure that written Receiving Systems for each Department are being maintained Send letters to all Suppliers requesting new pricing (especially during tough times) Have Department Managers submit Expense saving ideas Conduct weekly Staff Meetings

11 Emergency Response Exercise! Your dealer has just exercised his/her management by crises technique and has requested that you cut your dealership s expenses by 10% immediately. What are you going to do? This has to be done, without hurting any part of the business.

12 Emergency Response Recommendations! Number One Answer? Reduce Variable Advertising How? Count your customer contacts! Get a true report on where your customers come from. Buy cable cancellations Buy billboards the last 10 days of the month Renegotiate rates for TV, Newspaper, Radio

13 Emergency Response Recommendations! Reduce Variable Advertising Do a zip code analysis to focus advertising Use the Internet for legal contacts, adhere to the CAN-SPAM Act 2004 Make sure there is an opt out Pay a spiff to sales for previous customers encourages salespeople getting on the phone Any other ideas?

14 Supplies Office Emergency Response Recommendations! Minimize orders for all supplies Have minimal supplies on hand in August Give one back to get one Tablets, pens, pencils

15 Emergency Response Recommendations! Supplies Fixed Operations Monthly open a repair order for each technician keeping track of all supplies obtained from parts department (chemicals, shop towels, etc) Count all supplies coming from a vendor especially shop towels and uniforms you are charged for a 100 towels and then the vendor counts how many are returned and subtracts from a 100. Did you really get a 100 shop towels. Uniform companies may not account for vacations, meaning they charge for uniforms for 8 technicians and 1 was on vacation.

16 Telephone Emergency Response Recommendations! Audit the number of phone lines Do you really need that many fax lines? Renegotiate long distance Bundle services to avoid duplicate taxes Restrict long distance have calls placed by receptionist

17 Emergency Response Recommendations! One Purchase Order book for the Dealership Should be kept in the Parts Department All purchases require GM/Dealer advance approval One AVO book for the store Only GM/Dealer can sign

18 Emergency Response Recommendations! Analyze your computer system expense Specifically look at report menu You pay for some reports regardless of use If not using report have it deleted How many computers are really needed Renegotiate your T1 or isdn rate

19 Expense Management BAD habits are developed in GOOD times, GOOD habits are developed in BAD times! The End