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  • Posted by: Dante Odoni, CPA

Accounting Mistakes That Could Be Limiting Auto Dealership Profits

The auto dealership industry is already a competitive and confusing market to begin with, so it’s even more frustrating when you miss out on hard-earned money you’ve worked for. Don’t worry, though: we’ve got some simple and easy to implement tips and changes that can grab the money you’re owed and place it right in your bank account where it belongs.

These simple accounting mistakes are relatively simple, and all revolve around the big money-maker: incentives. Incentives are great: they’re motivating, help steer marketing in the right direction, and often pay out in sizable chunks. However, to make incentives work for you, a dealership needs to always be on its A-Game in this department. Here are the three ways to ensure you’re not losing money: claims, experience, and accountability.



Incentives can come in two forms: cash and dealer holdback. To boil it down, cash incentives come when eligible cars are sold from a current marketing campaign and sometimes increase when the sales goal is reached. The dealer holdback is the amount the dealer gets to keep from the MSRP or invoice price, depending on the dealer when the car is sold. Pretty simple right? Well, to get this money, someone has got to file a claim, or the manufacturer automatically calculates payment and sends them to your dealership for authorization.

Claims and authorization require someone always on top of paperwork. Sometimes, claims are hardly ever submitted, and even worse: some incentive claims become unresolved rejections or reversible chargebacks. That’s just money sitting there! Handling claims needs to be a daily to weekly part of someone’s job description to claim this money.



Paperwork is often confusing and nuanced, so this isn’t a job for an intern. An inexperienced person that handles claims will not know how to properly identify, file, or organize much of the incentive claims, making for tons of lost profit. It’s almost important to keep multiple people trained for this job as employees are bound to leave or need subsequent training.


Accountability (and Organization)

This is a huge one. Say you’ve established a person in charge of handling incentive claims—now how do you review their work? This is a week to week job that needs everyone for it to run efficiently for the sake of the dealership, and it requires an individual to pay attention to the closest of details. Bi-weekly meetings about incentives are a good way to start and keep track of everyone’s work; a sharable Excel spreadsheet is even better, which allows employees to submit information and inquiries about the vehicles they have sold.

However, suppose your dealership is raking in some six-figure amount in incentives. In that case, the best solution may be to invest in an outside professional accounting company to handle incentive claims and other accounting matters. Contact us today; we’re here to help!