5 Car Dealer Accounting Practices That Actually Hurt Your Bottom Line

November 11, 2022

Team ACV




5 Car Dealer Accounting Practices That Actually Hurt Your Bottom Line

ACV facts & figures

No items found.
Used cars lined up in a car dealership

If you’re running an auto dealership, the accounting office might not be the first part of the business you think of when trying to optimize profit—sales and service departments are generally the first places people look to drive revenue. However, the accounting department shouldn’t be ignored in the search for airtight financing. Here’s how to keep your accounting department in excellent shape to ensure successful financial outcomes. Utilize these auto dealer accounting practices to optimize your financial situation. 

Accounting Practices Car Dealers Should Avoid

1. Cut out manual data entry 

Manual data entry slows the workflow and creates opportunities for costly human error1. Some processes only make sense in digital form. It’s essential to build efficient processes in dealer accounting and stick to them, as any deviation from these methods can create unnecessary costs. 

Create a list of processes that the business is still doing manually and mandate an official process change. Help the accounting department transform and initiate the changes in a way that makes all employees feel confident and comfortable. There are challenges to switching to an all-digital process, but they’re worth it to ensure that the accounting department is more foolproof in future processing. 

2. Get on top of reconciliations 

Although monthly bank, inventory, and vendor reconciliations can add up quickly, it's a mistake to take them off the accounting department's plate. Reconciliations need to be thoroughly reviewed on a regular basis through a mandated and streamlined process2. Without regular reconciliation reviewing, errors and fraud can slip through the cracks. You might even end up making poor management decisions based on faulty data. 

3. Avoid constant calls from vendors in your auto dealer accounting department 

Tasks like tracking past-due invoices and paying vendors can pile up quickly if they’re not prioritized. Though these might not be the flashiest part of the business, they need  just as much attention as sales and service. Rock-solid accounting keeps a dealership running and enables a company to do the fun stuff, like expansions, growth, and change. If things get too out of control in the back end or with vendor relations, creditors may even question the business's financial stability and therefore stop shipping parts or providing essential services. 

4. Remember—the month-end is not the last day of the month

There’s a saying: 15 minutes early is on time, and on time is late. Think of the month-end the same way. If you aren’t finished before month-end, you’re still going to be catching up after the end of the month. Managers will even claim they need to keep the books open for a few extra days at the end of the calendar month to pressure the sales team. This is bad form. The month ends when the month ends. Get the team on the same page about setting strict end-of-the-month deadlines, and then the accounting will be correct3

5. Train every department with good accounting habits

It may seem like all accounting decisions can stay in the accounting department, but this isn’t the case. Team-wide ignorance about accounting hurts the bottom line4. Other departments need to be trained and participate in oversight; otherwise, mistakes can cause significant problems down the line. A deal could get posted incorrectly, receivables might not be collected, or profits could be misrepresented. All of these can cause unnecessary costs that hurt the business as a whole. 

Though everyone should be familiar with basic in-house accounting practices, it’s most important for principals, general managers, and other senior management to be cross-trained in accounting. They need to understand how to read reports and make sure they’re not making any costly mistakes. 

ACV Is the Dealer Partner to Help Grow Your Business

Improving accounting practices is one area where dealers can boost their bottom line5. Another option is sourcing inventory through ACV Auctions. The average dealer profits $316 more on vehicles sourced through our platform. With our transparent vehicle condition reports, you get the full story on the car before you decide to purchase. Register today to become a member.


  1. Gopal, Lakshmi. (2021) Manual Data Entry: Drawbacks and Solution. Nanonets. Retrieved November 8, 2022 from https://nanonets.com/blog/manual-data-entry/
  2. Everett, Laura. (September 13, 2021) Optimizing Bookkeeping Practices to Benefit Your Dealership. Albin Randall & Bennett. Retrieved November 8, 2022 from https://arbcpa.com/bookkeeping-practices-to-optimize-your-auto-dealerships-financial-statement-engagement/
  3. Himelstein, Cord. (April 1, 2019) Three Simple Rules for Managing Deadlines. Forbes. Retrieved November 8, 2022 from https://www.forbes.com/sites/forbescommunicationscouncil/2019/04/01/three-simple-rules-for-managing-deadlines/?sh=620eec9b199f
  4. Androitis, Nikos. (May 28, 2018) The Benefits of Cross-Department Training For Your Employees. eLearning Industry. Retrieved November 8, 2022 https://elearningindustry.com/benefits-cross-department-training-employees 
  5. Maldonado, Melissa. (August 28, 2019) 5 Profit-Draining Dealership Accounting Practices. Autodealer Today. Retrieved November 8, 2022 from https://www.autodealertodaymagazine.com/358009/5-profit-draining-dealership-accounting-practices