Deal Pack Blog
The Importance of Cash Controls in a Used Car Dealership
This blog is going to be about controls over cash. Before I start on this topic let me preface everything by stating that I have heard nearly everything you can think of for why there is no control over the cash in a dealership. I understand your dealership is a family and everyone is very close. I understand that you trust all your employees. I understand that no one there would ever steal from you (or mistakenly lose money). I have likely heard this from your dealership and dozens of others yet somehow still hear about fraud and embezzlement. It really doesn’t matter how close of a family your dealership is. If you create an environment where stealing is risk-free, it is only a matter of time.
It is best not to focus completely on the embezzlement side of controlling cash though, because more often than not it is simply human err that results in lost money. Identifying when and how this happens is always the 1st step to eliminating the errors.
A system of controls over your cash does not have to be complicated and does not have to come across as mistrust. You can start with just two common sense policies that will go a long way to eliminate instances of ‘misplaced’ or ‘lost’ money.
Reconcile your Cash Drawer Nightly
This is not typically difficult and can be done rather quickly in most DMS systems. If you make nightly deposits, compare the deposit with what payments were made that day. If your cashier(s) took in $3000.00 in payments from customers and only $1500.00 was deposited in the bank, you have a problem. I realize that there are many more complicated scenarios that make reconciliation a bit more difficult, but it is the most basic level of controlling the cash that flows through your dealership and ensures your cash is getting where it belongs. You may uncover all sorts of problems reconciling your cash drawer, and it is basic enough that all your employees understand: We received $XXXX.XX in payments, why didn’t $XXXX.XX get deposited in the bank?
Do not allow bills to be paid out of the drawer
This is a practice that is not entirely uncommon at dealerships and it makes controlling cash a lot more difficult. If a vendor comes in and needs to be paid, always write them a check. Checks are controlled, tracked, and easily traceable to determine who wrote it. Taking money from the drawer to pay a bill is difficult to track and makes nightly reconciliation a lot more difficult. If you can’t get to the check-book, use a company credit card, just don’t take money out of the drawer unless you have to.