outside purchas accounting

[jslvlith]

Hi, I was wondering how other dealers handle the outside purchase accounting. Here we put the difference from GM cost and what we pay from the other dealer to 687 which I don't think is truly fair.

[TimK]

If you split the profit with service it is not fair.

If you get all of the profit then it doesn't matter.

What about putting it into account 688 so you can track it?

We change the cost on the ticket to reflect the actual price paid for the part.

The only exception is for warranty repairs but we can charge GM the extra cost involved for picking up the part from another dealer.

[WhoParted]

If its Warranty you should be able to recoup the difference, if its Customer pay I would modify the cost and mark up the sale price accordingly

[cville1987]

If it is customer pay, we raise the price on the part and give the customer the choice of today or tomorrow. It's up to them if it's worth paying the extra, they usually do. If it's warranty, I put the difference on the RO using part # Z5000 so the warranty admin will see it. I always change cost to what we paid except when it is warranty. So the only time we lose any money is on extended warranty since we can't up the price so I just take the hit on gross and bitch A LOT! The only time I ever put the difference to 687 is when my counterguy brain farts and doesn't change cost.

[PartsPlant81]

Do not change cost. Difference gets credited to 68700. Customer pay we put the difference to the sale of the part. Warranty can be reconciled for cost difference (credit difference to 24600 and have your warranty clerk submit as a net item.)

[lochstein]

You should never change the cost regarding outside/emergency purchases. It can and should be accounted for in EIV (ADP) or 2710 (R&R). It should also be posted in PR as order type "E" so it can be tracked (can't remember R&R code.) This way, you can track total dollars spent in losses and purchases. You should also be posting a lost sale when purchasing from a competing dealer/WD. Honestly, I feel it's best to just eat the loss in the efforts of helping the tech turn hours and get cars out quicker which helps sell more of our parts. Plus, it helps relations with the Service Dept. when you absorb the loss. If you are purchasing enough to lose more than a few hundred dollars in gross profit each month, your DMS settings might need tweaking and counterpeople need to be trained on posting lost sales. Sorry to sound ranty, but I really feel that in 2015 our primary focus should be taking care of our own in-house body shop and service customers; not worrying about selling fenders for a 9% margin to Joe's Auto Body. Not sure about GM accounting on warranty repairs...

[PartsPlant81]

You should also be posting a lost sale when purchasing from a competing dealer/WD. Honestly, I feel it's best to just eat the loss in the efforts of helping the tech turn hours and get cars out quicker which helps sell more of our parts. Plus, it helps relations with the Service Dept. when you absorb the loss. If you are purchasing enough to lose more than a few hundred dollars in gross profit each month, your DMS settings might need tweaking and counterpeople need to be trained on posting lost sales.

Why would you post a lost sale if you got the sale? If you procure the part and sell it; it is not a lost sale. It doesn't matter where you obtain the part from; if it gets charged out on a repair order or invoice you got the sale. It will show in your DMS as a sale and you receive it when you procure it so the DMS knows that you had a demand for that part #.
Also, if you are able to not lose any GP from picking up a part why would you not? You still have costs of a driver, fuel a vehicle...Might as well at least break even on the GP for the sale of the part.

[lochstein]

I guess it's just the cost of doing business in my opinion. Kinda like when parts managers started putting fuel charges on wholesale invoices when the cost of gas went up. Bet that went over well... Or when the service dept charges "shop supplies" on repairs that use no shop supplies whatsoever... It's like tripping over dollars to save pennies. As far as the lost sale posting, doesn't everyone post lost sales on parts when the tech requests them and you don't have them on hand (before the purchase?) I was under the impression and told by DMS companies that a lost sale and a sale in the same month count as one. I could be wrong... Either way, I guess I'm looking at fixed ops from the big picture and what's best for the store as well as the customer.

[cville1987]

Every store is different. My service department still gets half of my CP profits at the end of the month as well as any discounts applied, half go to parts advertising, so I'm not going to absorb the loss. Like I said on CP, the advisor and the customer are given both options. We are about half an hour away from the city here and the big wholesaler here delivers to me since I don't have a driver but charges an extra 1.5% fee on top of the mark up which I also have to account for. I only post a lost sale if it is a true lost sale due to availability not cost. The vast majority of the time it is due to price thanks to GM's 600% mark up on me. I am all for helping out service and taking care of the customer but between lost cores, stolen oil, stolen freon, GM's 35% restocking fee, lazy advisors and a DP who doesn't grasp that letting fixed ops make money on used cars keeps money in the store, I absorb all I'm going to absorb.

[lochstein]

true; good points. i guess your mileage may vary. do you guys matrix?