In every dealership I’ve ever walked into, there’s always one room that feels like the engine of the whole place. No, not the showroom, not even the service drive. It’s the accounting office. It’s usually tucked away in a corner, behind glass doors that don’t quite close right, humming with printers, sticky notes, and the occasional sigh of someone trying to make sure they have all the receipts in order to reconcile the Amex statement.
This is where reconciliations happen – or at least, where they should.
Reconciliations are not glamorous. No one celebrates them on a Friday afternoon (okay, I might). You’ll probably never hear, “Hey, team, let’s go grab margaritas because we nailed that flooring reconciliation this month!” But reconciliations are the kind of invisible discipline that keeps a dealership from veering off the road financially.
And here’s the truth: consistent reconciliations are simple, yet too often overlooked.
Why Reconciliations Matter More Than You Think
Think of reconciliations as the oil changes of your financial system. You could skip them for a while. The car might even seem to run fine. But ignore them too long, and suddenly the engine seizes up.
Dealerships live and breathe cash flow. Between vehicles coming in, contracts-in-transit, warranty receivables, and flooring payoffs, the sheer number of moving parts can make even seasoned controllers dizzy. Without disciplined reconciliations, small errors snowball. An uncashed check here, a misposted incentive there – and before long, your “cash on hand” is about as accurate as a weather forecast from three weeks ago.
The First Step: Daily Reconciliations
Hopefully, your team is already performing daily cash reconciliations. And by that, I don’t mean glancing at the bank balance online and calling it good. A proper daily reconciliation should include:
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Comparing deposits in your books against what actually hit the bank.
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Accounting for all outstanding checks.
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Tracking deposits still in transit.
Daily reconciliations are less about catching big mistakes and more about keeping a pulse. Think of them as the daily weigh-in at the doctor’s office. You may not learn everything about your health, but you’ll catch if something looks off before it becomes serious.
Skipping daily reconciliations is like skipping brushing your teeth. You can get away with it for a few days, maybe even a week. But eventually, the buildup leads to a painful – and expensive – appointment you’d rather avoid.
The Missing Link: Monthly Reconciliations
Here’s where many dealerships fall short. They do the daily checks, but stop there. Daily reconciliations alone won’t keep you on top of your cash flow. To really keep things clean, you need monthly reconciliations. At minimum, these should include:
Formal Bank Reconciliation
Don’t just assume the bank is always right. Match every transaction and clear every outstanding item.
Formal Floorplan Reconciliation
Flooring is often the largest liability a dealership carries. Reconciling monthly ensures you’re not paying interest on cars that were sold weeks ago, or worse, misreporting units still in inventory. A monthly physical inventory goes hand-in-hand with this, which means that it’s not okay to simply let the flooring auditor’s report suffice.
Just the other day, I discovered two vehicles at a client’s dealership that have been sitting on the lot because they were in accidents. The flooring had been paid off months ago, and now they’re simply gathering dust waiting for someone to notice them. This is not smart money management and it comes from not performing a monthly physical inventory.
Schedule Analysis and Cleanup
Review accounts receivable, accounts payable, and accruals. Look at aging, identify mispostings, control number errors, small differences, and confirm balances. This is where you catch the “oh, that never cleared” kind of errors.
These monthly reviews are like a deep cleaning. Daily reconciliations keep the clutter manageable, but monthly reconciliations catch what slipped through the cracks.
Common Pitfalls (and How to Avoid Them)
Every dealership thinks their reconciliations are “fine,” until they’re not. Here are a few pitfalls I see regularly:
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Over-reliance on one person. If only one employee knows how to do the reconciliation, you don’t have a process, you have a dependency.
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Inexperienced reconcilers. I’ve seen some new controllers proudly announce their bank recs are “balanced,” only to find out that their idea of reconciling doesn’t quite match what it really is.
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Not following up on old items. A deposit(s) that doesn’t match the bank from six months ago isn’t just sitting there patiently. It’s a warning light.
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Waiting until year-end. By then, the trail is cold, and your CPA will spend January chasing ghosts.
Avoiding these pitfalls isn’t complicated. It’s about discipline. Set a process. Assign responsibility. Review the work. And most importantly, follow up when something doesn’t make sense.
The Human Side of Reconciliations
What often gets lost in the talk about reconciliations is that they aren’t just about numbers. They’re about people.
When reconciliations slip, stress builds. The GM starts asking pointed questions about where the cash went. Controllers stay late, re-running reports that should have been tied out weeks ago. Staff morale dips because no one likes working in an environment where yesterday’s mistakes show up as today’s emergencies.
By contrast, when reconciliations are done consistently, something almost magical happens: calm. Everyone knows where the cash stands. There’s no panic at month-end. Managers can make decisions with confidence. And the accounting office, once a place of sighs, becomes a place of quiet order.
Reconciliations as a Leadership Tool
Here’s a secret most dealers don’t realize: reconciliations aren’t just an accounting tool. They’re a leadership tool.
Why? Because reconciliations build trust.
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Trust in the numbers. When the books tie out, leaders can make decisions without second-guessing.
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Trust in the team. A disciplined process shows employees that details matter, and that everyone is accountable.
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Trust with lenders. Banks and flooring providers love seeing reconciled accounts. It shows the dealership is run with competence and care.
When reconciliations are part of the culture, it tells everyone – employees, vendors, lenders, even buyers in a potential sale – that this dealership is serious about financial health.
A Practical Roadmap
If your dealership needs to strengthen its reconciliation practices, here’s a roadmap you can start using today:
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Document Your Process. Write down who does what, when, and how. Make it repeatable.
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Use Checklists. Create a daily and monthly reconciliation checklist so nothing gets missed.
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Assign Backup Responsibility. Cross-train another staff member(s) to cover if someone is out.
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Review Regularly. The CFO, controller and/or dept managers should spot-check reconciliations monthly. Not to micromanage, but to verify.
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Address Old Items Promptly. Don’t let stale checks or deposits sit. Investigate and clear them.
Why It’s Worth It
No one gets into the car business to obsess over reconciliations. But the dealerships that thrive – the ones that avoid crises, keep their lenders happy, and grow profitably – are the ones that take reconciliations seriously.
It’s not about being perfect. It’s about being consistent. Each day, each month, showing up and making sure the books match reality.
Because here’s the thing: reconciliations aren’t just about catching errors. They’re about creating clarity. And in a business as complex and fast-moving as a dealership, clarity is priceless.
Final Thought
So, the next time you hear the accounting office sighs, remember: reconciliations may not win awards or make headlines, but they are the steady heartbeat of your dealership.
And when done right (daily and monthly) they quietly save you from countless financial headaches. Which, in my book, is worth more than all the margaritas in the world.
Ready to strengthen your dealership’s financial foundation? At Automotive CFO-To-Go™, we help dealers build disciplined processes like reconciliations that protect cash flow, build lender confidence, and reduce stress at month-end. If you’d like support implementing best practices in your store, let’s talk.