4 Questions You Should Ask Your CPA
Many dealership owners view their external accountant simply as the “number-cruncher” who reviews or compiles financial statements and prepares tax returns. But don’t forget: He or she can also help sort out other financial issues at your dealership. By expanding your view of your independent accountant, you may be able to make operations more efficient and boost your dealership’s profitability.
The next time you meet with your CPA, consider asking a few broader questions. Here are four queries to get you going:
- Should we finance equipment or purchase it outright? Often, the main consideration in finance vs. buy isn’t tax savings but cash flow. Specifically, do you have enough liquid cash to pay for equipment now, or would it be better to finance the purchase and pay interest? Your accountant can help you weigh the options.
- Are our sales compensation plans structured properly? Sales incentives should be tied to the actions you want your salespeople to take. For example, you could offer a bonus to the salesperson who sells the most extended warranties if you want to increase extended warranty revenue. Your accountant can assist in structuring your sales comp plans.
- Are our internal controls adequate for deterring fraud? Two of the most effective internal controls for dealerships are conducting random parts inventory counts throughout the year and segregating the cashier’s duties among two or more employees. Your accountant can help establish these and other sound internal controls.
- How can we operate more efficiently? Your CPA likely handles the financial affairs of many dealerships in addition to yours. He or she may be able to suggest overall streamlining steps your organization can take, as well as changes that improve efficiency in your various departments. Just ask.
Dealer Insights - March/April 2017