The accounting needs for car dealerships are far more complex and multi-faceted than your average business. Customers purchase vehicles using a wide variety of payment methods, many of which involve intricate financing agreements with outside credit agencies that require rigorous tracking. Managing a diverse inventory of vehicles with different Blue Book and depreciation values also presents a fair bit of challenge. Add in things like warranties, recalls and repairs, and the numbers really start to get messy.
With circumstances like these, pen and paper, Excel spreadsheets or simple out-of-the-box accounting programs won’t do. Instead, dealerships need to invest in dedicated automotive dealership accounting software—advanced accounting platforms built with the specific needs of car dealerships, large and small, in mind.
If you’re new to researching or purchasing automotive dealership accounting software, this Buyer’s Guide has everything you need to know to get started.
Here’s what we’ll cover:
What Is Automotive Dealer Accounting Software?
Common Features of Automotive Dealer Accounting Software
How Much Does Automotive Dealer Accounting Software Cost?
Evaluating Auto Dealer Accounting Software
Automotive dealer accounting software allows dealers to easily and accurately track the numbers surrounding every facet of their business, and to also generate a number of standard and customized reports for greater financial visibility.
Car inventory management is a main concern of auto dealership accounting packages. Auto dealership accounting systems should record and organize the wide variety of costs associated with the vehicles, such as internal and external repair orders.
A particularly useful feature is inventory age policy settings, which allow the user to set the age limit of a vehicle on the lot before it is marked down in price or moved to wholesale. Some systems also record information on the performance of individual salesmen.
In addition to core modules such as the general ledger, accounts receivable and accounts payable, auto dealership accounting systems typically includes the following:
|Regulatory compliance||Software should be designed to comply with Office of Foreign Assets Control and Specially Designated Nationals regulations, automatically checking the individual against the terrorist list and for ID verification. It should also support compliance for state, county and city taxes, as well as any registration details.|
|Dealer & traditional financing||Auto dealerships’ payments typically come in one of two ways: from traditional lending sources like banks or from the customers themselves in a “Buy Here Pay Here” dealer-financing model. An auto dealer accounting program should support both, managing payments from multiple parties and ownership types, reporting to credit bureaus, sending out automatic late fee reminders and repossessing the vehicle when/if necessary.|
|Credit checking||Since loans are involved, the dealership needs fast and easy access to the main credit bureaus. The software should be able to pull credit reports for Experian, Equifax and TransUnion, and be able to report data to those bureaus as well.|
|VIN database records||Auto dealership software should connect to VIN databases and/or decoding tools, making it easy to add new vehicles to your inventory and record sales data.|
|Repair order tracking||Managing service center repairs is an essential component for most dealers. Repair order tracking software can help manage job progress and efficiency.|
|Age policy settings||This feature, a specific benefit for automotive dealerships, allows the user to set the age limit a vehicle can reach on the lot before it is marked down or moved to wholesale. It will issue automatic reminders, therefore supporting the movement of old inventory before its costs exceed the value in keeping it on the lot.|
|Employee performance||Tracking sales results for individual salesmen, this feature will automatically calculate commissions, generate reports for long-term results and perform other tasks to simplify and improve the sales incentive process.|
|Warranty & service||Car sales usually involve some kind of warranty, either standard or supplemental. Some systems will allow for the sale of service contracts, as well tracking service costs and managing parts inventory.|
No two accounting software platforms are exactly alike. Because of differing functionality, target audiences and pricing models, no two accounting software price tags are exactly alike either.
Here are some things to keep in mind, price-wise, as you research automotive dealership accounting software:
Regulatory compliance—including an extensive audit trail—is designed to mitigate risk and prevent potential government fines, so this is an important feature when purchasing automotive dealership accounting software. Franchised dealers will need to look for software with report-generation functionality that considers the specific instructions required by certain franchisers (e.g., Chrysler, Dodge, Jeep, Ford) for composition of the financial statements.
When evaluating these systems, buyers should consider the following:
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