By Jennifer Margettes - November 19, 2012
With respect to a BHPH dealership, what are they and how are they different? Well, a repossession is taking back your asset, while a charge off is expensing a receivable, taking it off your balance sheet.
This is important to take note, since these words can be used interchangeably in the industry, but mean to different things. In Deal Pack, we make the distinction between the two. If you are processing repossession, at the time you complete the process we ask for an ACV (actual cash value) of the asset you are securing so that we can make the necessary journal entries to your customer’s deficiency balance and inventory. In contrast, if you process a charge off, no ACV is entered and the customer’s deficiency balance is not reduced by the value of the asset. The difference in the two is simply that a charge off means you didn’t secure the asset.
From there, both of the balances are expensed, commonly referred to as ‘charged off’ or ‘put to bad debt’. Whether you get the asset back or not, Deal Pack makes the appropriate accounting entries and the customer’s account will be updated with a deficiency balance.
ABCoA is a Software-as-a-Service company dedicated to the subprime industry. Our cloud-native ecosystem handles every part of business operations - improving productivity, security and accuracy, while consolidating vendors and reducing costs.
Since 1983, ABCoA has helped buy here pay here used car dealerships and subprime finance companies eliminate duplication, remain compliant, and achieve success with complete, customer-driven software and dependable support. Customers properly using Deal Pack have never lost an IRS audit.
Recently awarded Top Online Accounting Software for Deal Pack, ABCoA continuously elevates the standard for software in the subprime industry and helps customers grow through our commitment to quality, innovation, and service. Headquartered in Jacksonville, Florida with employees across four states, we remain family-owned and operated.
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