DealersEdge Professional Forums

Just came to new store, here are a few things I see (All input welcome)

First they are supposed to have a clean Inventory. ( They set $1500 a month aside and write down obsolete parts 2 times a year)

I pull a report of no sales 18 months and over and realize they have over $48,000 in obsolete parts, but here is the thing.
I have over 4 pages of parts that someone has removed the cost. And I did a spot check and those parts are on the shelves.

Why would they do this?

More questions to come Thanks all

sounds like someone was 'manipulating' the amount of obsolescence to show the dealer what they wanted them to see as opposed to what it really was. Notify the dealer of the ommission, put the right cost back in and then make a plan for the disposal of the obsolescence. Remember if you 'write it off' you must destroy the parts, toss them, and keep the record of disposal for 7 years. Refer to Thor Power Tool vs. Administrator. If you or accounting are unaware of this Supreme Court ruling, contact me at miknik@aol.com for 'layman's copy of the decision'.
Mike Nicholes

Were they written off? If so, they may have kept the parts on the shelf and just changed cost to zero to make 100% GP now if they do sell.

PartsPlant81 wrote:Were they written off? If so, they may have kept the parts on the shelf and just changed cost to zero to make 100% GP now if they do sell.

As Mr. NIcholes just illustrated that practice is illegal. If I were in your shoes I would request a physical inventory be performed as soon as a professional firm can be scheduled.

I see that done many places. Write off, set cost to zero (or .01) and put in non updating source to be potentially sold later at 100% profit (on paper not reality).
It's illegal, doesn't help with making room, waste of time etc etc. The once and a while sale from this stock does not make up for the space taken up and time spent even if it was legal and real profit.
I see even right now on my local Craigslist parts that all have tags from local dealer visible, obsolete/dead part numbers, new in box.... what could they be other than dealer write off parts. Stolen?

Obsolete write off parts?..... Record, destroy, trash, move on.

That in theory sounds like it would work but in practice it does not.
I bet those parts have been there a very long time, if they have been written off get rid of them.

Your time is worth more $$$ trying to grow and actually sell parts rather than trying to scrape up pennies on parts that have aged to the point someone gave them a value of $0.00.

Was there a lot of dust on the parts you spot checked?

Just out of curiosity what is the total inventory value? Like is that 48k out of 500? Or 150. Big difference. Throw all that zero stuff in the dumpster. Sounds like someone was probably playing inventory games. Have you done a physical yet? Theoretically, by keeping that stuff there, if numbers came out bad, some could be brought back in to make the numbers look good. Its an easy way to hide things like theft and being a terrible manager.