It's Time For Uniform Accounting Systems
By Bob Dilmore
Frankly, from my viewpoint, most financial reporting statements are obsolete and cumbersome. We need to simplify the balance sheet and standardize the accounts for everyone. The operating report likewise needs a serious overhaul to recognize leasing, e-commerce, factory incentives, advertising co-ops, real-time service measurements, etc. I could go on and on-and so could you! There are various figures, data, and measurements we would all like to see, right? It could be simpler and more user friendly for all of us non-accountant types, and particularly, for easier usage by department managers to analyze their performance.
Dealership data collection systems are going to change dramatically in the next few years. Someone will drive this change. Manufacturers will resist these changes as much as they have any change that has threatened their control position; however, as I have predicted for quite some time, the power is shifting to the retailer-and ultimately to the consumer, as it should. So, take charge folks.
A uniform, common standard automotive accounting system would save millions annually for dealers, financial advisors, accounting firms, computer vendors, and lending institutions.
We already have sophisticated formula to accurately spread expenses across each department, and a standardized accounting system would give the automotive retail industry benchmarking possibilities heretofore flawed because of "non-commonalties." I just invented this word, in order to describe the contrast with the common nature of accounts like: sales, gross, advertising, floor plan interest, and so forth. Each manufacturer displays this information, common to each, in a different physical location on their financial statements, creating "non-commonalties."
Most dealers today have more than one franchise - and some of the large dealer groups have all the franchises. The accounting systems serving all of them are time-worn and obsolete, and these systems (which protect certain financial and accounting company paradigms) do not serve the dealer community and its need for simplification and commonality.
So, who leads the charge to move towards a single system designed for the twenty-first century? One would have thought that NADA might have made a progressive move in this direction, but I've not heard it mentioned. It will take the solid support of dealers nationwide. If all dealers got behind this idea, it would be possible to have a totally uniform statement in place by 2001. Can you think of any dealer, vendor, CPA, anyone other than the manufacturer, who would not like to see this?
We would be interested in your comments! Maybe this is just a radical idea of mine, but I think not. I'm willing to challenge NADA, NCM, and dealer-oriented CPA firms to join us at MPG in the development of a new, state of the art, uniform balance sheet and operating report-and I welcome everyone's feedback. Talk about a paradigm shift! It can-and should-be done. Let's just do it!
Bob Dilmore is Chairman and CEO of Management Performance Group. bdilmore@dealeronline.com
