Knowing Where My Cash is Going
Last chapter we discussed the matter of understanding dealership cash flow and answered the question, “where did all my cash go?” In this article, we want to focus in on developing a tool that will help you know where your cash is going on a daily basis. I have helped many dealers in the recent past, and I am always amazed at how both the large and small RV/Marine/Auto dealerships have not established a daily reporting system to monitor their cash flow. This oversight could cost a dealer his or her business! You may find yourself out-of-trust with a floor plan institution, or in an embarrassing situation in which the bank sends you those beautiful NSF (non-sufficient funds) love notes.
We at Best Friends Consulting don’t want this to happen to you. May we make a recommendation to you?
The Daily Cash Flow Document
We recommend that the accounting manager produces a Daily Cash Flow Document that quickly informs you as a GM or owner as to what is coming into the pipeline and what is going out. The best way to discuss this helpful document is to show you a sample. Check out this three-page report:
PAGE ONE – Big Picture Overview (Summary Page) Today’s Date: November 17, 2012
Cash Position
- Checkbook Balance – Operating Account $95,000
- Deposits Made Today $15,000 3. Checks Written Today (see page 2) -$20,000 Sub-total – New Bank Balance $90,000
Results of Daily “Done” Deals (Sales)
- Money Due from F & I Deals $60,000
- Floor plan Payable -$75,000 3. Lien Payables (Trade-ins) -$30,000 Sub-total -$45,000
Today’s Effects on Cash Flow (If Everything is done)
1. Cash Flow Change Based Checking – $5,000 2. Cash Flow Based on Deals – $45,000 Total Cash Flow Change (+/-) – $50,000
Bottom Line Effect if Everything were to be received and paid off
1. New Checking Balance……………………………… $90,000 2. Deals – Contracts Income and Pay-offs ……. -$45,000 Real Available Cash………………………….. $35,000
PAGE TWO – Checks Written Detail
CHECKS WRITTEN TODAY
DATE: CK # WRITTEN TO: AMT REASON
11/17/13 1402 JONES ELECTRIC $3,000 Monthly Utilities 11/17/13 1403 RAYMOND THO $1,000 Employee Advance 11/17/13 1404 OUTDOOR ADV. $9,000 Billboard Advert.
11/17/13 1405 PETTY CASH $300 Parts Dept.
11/17/13 1406 NELSON SMITH $3,000 Return Cust. Dep.
11/17/13 1407 STAG PKWY $3,700 Parts Purchase TOTAL CHECKS WRITTEN TODAY: $20,000
PAGE THREE – Details on Deal
ACCOUNTS RECEIVABLES/PAYABLES – ALL DEALS
Date Customer Stock# Contract Floorplan Trade Lien Notes
In Transit Pay-off Payoff 11/1/13 Robinson, Tom P3434 $35,000 $30,000 $20,000 B of A
11/7/13 Franks, Bob P2948 $25,000 $20,000 $0 DFS
11/9/13 Smith, Martin P3948 $0 $15,000 $10,000 Cash Deal TOTALS $60,000 $75,000 $30,000
Net Cash Flow Effect of All Deals: $60 – $75 – $30 = -$45k