You’d be amazed what hides inside dealership accounting records. It’s like lifting the couch cushions of your financials and finding not just a few quarters, but a family of raccoons living rent-free on the balance sheet. I’ve been talking and writing about these issues for years, and somehow, the raccoons are still there. Maybe wearing little visors now, pretending to reconcile schedules.
Some dealers and general managers know what’s going on and do the hard work to fix it. And thank goodness for them. But for every one of those, there’s a small army of others—plus a rotating cast of fresh recruits—who treat clean financials like an optional upgrade, somewhere between a window tint and the extended warranty.
When Good Financials Go Bad
The result? Painful write-offs, lost profit, and enough legal and compliance headaches to make a CPA cry into their 13th-month journal entries. The problems lurk quietly until they explode, like a forgotten burrito in a microwave.
Now, if I were more opportunistic, I’d welcome this mess as job security. But honestly, I’d rather see the industry adopt the kind of clean dealership accounting practices that don’t require a fire extinguisher (or a fractional CFO like me with one permanently strapped to their back).
Because here’s the truth: clean financials aren’t just a “nice-to-have.” They’re not about impressing auditors or pleasing the OEM. They’re the shortest route to making more money and sleeping better at night.
There was a time (trust me on this) when accurate, timely reporting was non-negotiable. Back then, financial statements weren’t suggestions. Somewhere along the line, that shifted. I don’t know if it was a slow erosion or a sharp left turn, but here we are.
Yes, selling cars and fixing them is the lifeblood of the business. But if the financials are a mess, it’s only a matter of time before the patient codes on the table.
The Dirty Half-Dozen: Dealership Accounting Habits That Haunt Your Financials
If you recognize any of these, congratulations, you’ve already passed the first test: awareness. Now might be the perfect time to take action before one of these slow-burning accounting sins turns into a five-alarm fire.
1. Not Reconciling All Bank Accounts at Least Monthly
Oh, bank reconciliations. They sound so simple—just a quick little match-up between what the bank says and what your books say, right? And yet, the horrors I’ve seen could fill a very boring horror novel titled “2,000 Reconciling Entries and No One Screamed”.
Part of our service for clients is to assess the current state of the books and that begins with the bank reconciliations. I’ve often seen bank recs so neglected that the dealership’s CPA was unable to file taxes. We’ve spent days reconciling a year’s worth of chaos, only to uncover (wait for it)… over 2,000 reconciling entries. Yes. Two. Thousand.
It’s one thing to check off the bank rec as “done.” It’s another to actually make the entries that bring the books into alignment with the bank—or in some cases, drag the books into alignment with reality.
When a dealership or auto group skips monthly reconciliations, here’s what tends to follow:
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Inaccurate Financial Statements
Without the bank accounts reconciled, your financials are basically a work of fiction—somewhere between magical realism and pure sci-fi. You’re making decisions based on numbers that don’t reflect reality. -
Fraud and Theft Go Unnoticed
Reconciling is one of the few ways to catch unauthorized transactions before they become expensive headlines. Without it, fraud can fester, quietly siphoning off your profits like a leaky fuel tank. -
Cash Flow Headaches
You think you’ve got $500K in the bank. The bank disagrees. Guess who’s right? -
Missed or Duplicate Payments
One vendor doesn’t get paid. Another gets paid twice. It’s like a bad soap opera, but with fewer dramatic pauses and more late fees. -
Tax and Audit Nightmares
The first thing a CPA wants to see is a tidy stack of bank recs. No recs? No review. No review? Cue the fines, penalties, and the mounting dread that comes from explaining it all to your lenders. -
Lost Profits
The real tragedy here is invisible. Inaccurate records create hidden losses that snowball over time. I’ve personally watched millions—yes, millions—slip through the cracks that proper reconciliation could’ve sealed shut.
2. The Absence of Regular Schedule Cleaning and Reconciliation
If bank reconciliations are where the obvious problems show up, dealership accounting schedules are where the quieter, more devious ones like to hide. The kind that smile politely during meetings while actively sabotaging cash flow.
Schedules are simply general ledger accounts that require extra attention—think of them as the accounts that can’t be trusted to behave without supervision. They tie directly to bank activity and are meant to explain why the numbers are what they are. When they’re ignored, the books slowly drift away from reality.
Without regular schedule reconciliations, balances become overstated or understated, and no one is quite sure which. The financial statement starts telling an incomplete story, one that conveniently leaves out missing payments, unresolved liabilities, and expenses that wandered into the wrong account and never found their way home. Cash flow suffers. Profitability follows.
I once received a request to help diagnose a dealership’s cash flow problem. The owner couldn’t understand why money always felt tight. So I started where I usually do: the schedules. Specifically, the contracts in transit schedule—the one that tracks payments owed by lenders after vehicle sales.
What I found explained everything.
There was over $8 million due from banks, and more than half of it was over 90 days past due. The money wasn’t missing. It was just sitting out there, uncollected, aging gracefully while the dealership struggled to make payroll.
Mystery solved.
Unreconciled schedules don’t just create accounting messes—they mask real operational problems until they become painful, expensive, and impossible to ignore.
3. Unskilled Team Members in Highly Skilled Positions
Car dealership accounting isn’t something you learn by osmosis—or by being “good with numbers” and owning a calculator. It’s a highly specialized skill, and yet, time and again, I see under-qualified people placed in critical roles because, frankly, no one else raised their hand.
I get it. Hiring is hard. Hiring for dealership accounting? Even harder. But putting untrained team members into skilled roles without oversight is like handing someone the keys to a Ferrari and hoping they figure out how to drive stick… on the freeway… during a thunderstorm.
Here’s what tends to happen:
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Expenses get misclassified (say hello to confused P&Ls).
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Balance sheets become a guessing game.
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HR issues pop up like unwanted dashboard lights.
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Compliance deadlines slip by unnoticed until the penalties arrive, right on time.
One of the biggest dangers? These team members can’t spot what they’ve never been trained to see—things like fraud, theft, or that eerie feeling when a reconciliation just doesn’t add up.
And let’s talk speed: transactions take longer, discrepancies pile up, and suddenly payroll is late, the DMV work isn’t clearing, and vendors are calling, not to say hi, but to ask why they haven’t been paid.
Of course, all this inefficiency comes at a cost. Managers end up playing cleanup crew, spending their time correcting errors instead of focusing on sales, strategy, operations, or profitability. It’s not just frustrating, it’s expensive.
If this sounds familiar, it’s not too late. But it is time to stop hoping under-qualified staff will magically level up. Training, oversight, and the right people in the right seats will always cost less than cleaning up a mess that never had to happen.
4. Management Not Respecting Month-End Deadlines
I’ve long believed that in a high-performing dealership, the General Manager and Controller should operate like a well-rehearsed duo—think Lennon and McCartney, but with fewer guitars and more spreadsheets. I have personally worked with a full management team that moved in sync (we were part of a larger auto group). Month-end wasn’t a scramble; it was a cadence. A rhythm. A shared priority.
The result?
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A highly motivated team
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Cross-department support
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Good vibes (a.k.a. positive morale)
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#1 in customer satisfaction
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#1 in sales, service, and parts across the entire region
In other words: when the financial engine runs smoothly, the rest of the car goes faster.
But when management treats month-end deadlines like a flexible suggestion—something to get to eventually—that harmony falls apart fast.
Here’s what starts to unravel:
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Financial reporting becomes fuzzy
Decisions are only as good as the data they’re based on. If the numbers aren’t timely or accurate, leadership ends up flying blind. -
External requirements get missed
Tax filings, lender covenants, OEM reports—none of these are fond of the phrase “we’re still closing the books.” -
Trust with partners erodes
Late or error-filled reporting strains relationships with banks, floorplan providers, and manufacturers. Eventually, it’s not just the books that get flagged, it’s your credibility. -
The following month starts broken
When the close is delayed, your team is forced to rush—or worse, skip—key tasks just to catch up. Errors pile up. Reconciliations get pushed. Accuracy goes out the window.
Operationally, ignoring the end-of-month gums up everything: payroll, payables, inventory reporting—it all gets stuck in the bottleneck. What was once a smooth monthly rhythm becomes a perpetual game of catch-up.
Over time, this lack of discipline sends a message: precision doesn’t matter. And when that message seeps into the culture, accountability slips, morale dips, and financial health follows right behind.
Bottom line? The end of the month isn’t a nuisance. It’s the part that makes all the other parts work.
5. Lack of Store-Wide Practice of Good Dealership Accounting Habits
In that dream-team dealership I mentioned earlier—the one where everyone respected deadlines and no one ran from a spreadsheet—we had a simple but powerful philosophy: leadership wasn’t confined to the corner office. We believed in teaching everyone what made the store tick financially, not just the folks in accounting.
Now, I realize the mere mention of accounting causes most dealership employees to recoil like someone just asked them to do long division in public. But part of my job was to make it less scary. Less algebra, more plain English. Less mystery, more connection.
Here’s how we made good dealership accounting habits part of the dealership’s everyday rhythm:
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Friday Manager Meetings
Every week, without fail. No donuts, but lots of truth. -
Reviewing Departmental Financials
We didn’t just stare at numbers—we compared each department’s actuals to forecast. Accountability wasn’t a threat; it was a team sport. -
Balance Sheet Deep Dives
Periodically, I’d walk through the Balance Sheet like it was a ghost tour. “Here’s where the skeletons hide. Here’s where that mysterious receivables live.” It became less intimidating when people understood what they were looking at. -
Open-Invite Financial Discussions
Anyone in the store could attend certain meetings where we broke down how the business really worked—and how their job directly impacted the bottom line.
The result? Transparency. Inclusion. A team that wasn’t just hitting their own goals, but rooting for each other. When everyone understands how the money flows, they make smarter decisions and support others who are doing the same.
Financial IQ doesn’t have to be a barrier. With a little effort and a lot of candor, it can become the foundation of a healthier, more profitable culture.
6. Not Requiring a Monthly Review by Department Managers
While every employee should have at least a general idea of how their job affects the bottom line, it’s the senior leadership—the dealer principal, the GM, the department heads—who need to know the financial statement like it’s their Spotify Wrapped.
Especially the Income and Expense Analysis. That section doesn’t just report what happened—it tells you why it happened and what you should probably do next.
Too often, dealerships fall into the trap of thinking that “the accounting team will handle it.” But that approach creates blind spots. And blind spots in a dealership don’t just lead to missed turns—they lead to avoidable losses.
The truth is, you can’t steer the business if you don’t know how the dashboard works.
Monthly expense reviews by department managers are not a luxury, they’re a necessity. They’re how you catch problems before they metastasize into something your CPA has to explain with a sigh and a large invoice.
Training your department leaders—sales, service, parts—to understand their numbers and how to read their related Schedules isn’t just good practice. It’s self-preservation.
Without it, you risk:
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Mis-posted transactions (which then need to be found, fixed, and explained).
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Uncollected payments (also known as “the money that should’ve been yours”).
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Incorrect profit statements (which make every meeting awkward and every forecast irrelevant).
Each of these errors compounds quietly until one day you look up and realize you’ve lost tens of thousands of dollars—not to theft or fraud, but to silence. To no one looking. To no one knowing what to look for.
Empower your managers. Show them how to read the reports. And then, ask them to use that information to lead—not just in their departments, but across the store.
Bringing It All Together: Clean Books, Stronger Business
The dealership accounting department may be where the numbers live, but it’s the whole dealership that determines whether those numbers tell a story of success—or a cautionary tale. Each of these bad habits chip away at profitability, sometimes so quietly that no one notices until the damage is already done. But the good news? Every single one is fixable.
With clear processes, consistent training, and a culture that respects financial discipline, your store can avoid the common traps and start running on clean data, stronger decisions, and greater trust across the board. Because at the end of the day, clean books don’t just keep the CPA happy—they make everything else work better.
Automotive CFO-To-Go™ helps dealerships gain control of their financials, improve profitability, and build long-term stability, without losing sleep (or sanity) in the process. Click below and I’ll personally follow up within 24 hours.