The Risks of Relying Solely on Funder Audits: Why Dealers Need to Be Proactive

In the competitive world of automotive retail, dealerships constantly need to find ways to optimize their operations and financial health. A crucial aspect of this is the management of inventory and financial audits. While many opt to rely primarily on audits conducted by their funders, this approach can have significant limitations. It's essential for dealers to understand why a more proactive stance in auditing and inventory management is not just beneficial but necessary.

The Limitations of Funder-Only Audits

Funder audits, while important, often provide only a snapshot of a dealership's financial and inventory situation. These audits:

1. Are periodic and retrospective: Funder audits typically occur at set intervals, meaning they can miss real-time changes in inventory and market conditions.
2. Incomplete: Since the funder is only auditing their funded inventory, the information will only be a partial audit. 
3. Lack comprehensive detail: Such audits may not delve into the nuances of a dealership's operations, potentially overlooking critical insights that could impact business decisions.
4. Can lead to compliance risks: Relying solely on funder audits can leave gaps in compliance, especially if internal processes aren't aligned with the latest regulatory requirements.

The Case for Proactive Dealer Management

Being proactive in inventory and financial management allows dealers to maintain better control over their operations and brings benefits in:

1. Up-to-date inventory control: Utilizing tools like LotCount gives dealers an up-to-date view of their inventory, helping to identify trends, manage stock levels, and respond quickly to market demands.
2. Enhanced financial oversight: Proactively auditing financials allows dealers to identify discrepancies and address issues before they become problematic, ensuring that the financial health of the dealership is always in check.
3. Fraud detection: Enhancing inventory accuracy and control, automatically reconciling and validating data will identify anomalies and potential fraud.
4. Improved decision-making: With real-time data and insights, dealers can make more informed decisions about purchasing, sales strategies, and overall business management.
5. Building trust with funders: By demonstrating diligent management and oversight, dealers can foster stronger relationships with funders, which can lead to better financing terms and more trust in future dealings.
6. Optimizing funding and reducing costs: Optimize funding by avoiding unnecessary costs and enhancing the use of credit lines. It also impacts future credit decisions positively and can prevent financial penalties from funders due to insufficient controls​
7. Insurance premium reduction: By demonstrating strong controls in inventory management, dealers have been able to negotiate significant reductions in insurance premiums.

LotCount: Empowering Dealers for Better Audit Management

LotCount offers a solution that empowers dealers to take control of their audit processes. The platform provides:

Digital Auditing Tools

Streamline the auditing process, making it more efficient and less reliant on manual, error-prone methods.

AI-Powered Insights

Offer predictive analytics and insights that help dealers anticipate market changes and adjust their strategies accordingly.

Compliance and Risk Management

Ensure dealers comply with regulations and reduce the risk of financial discrepancies.

So, while funder audits can play a role in dealership oversight, they should not be the sole source of inventory management. By adopting a proactive approach and leveraging advanced tools like LotCount, dealers can maintain better control over their business, make informed decisions, and build stronger relationships with their funders.

LotCount has proven to deliver significant financial improvements.

Discover how an auto dealer group revealed $30m of inventory anomalies from a simple one-day digital audit

• A franchise dealer with 37 sites and over 12,000 vehicle assets switched from manual inventory auditing to digital auditing
• Time taken to complete a full inventory count was reduced from five weeks to a single day
• Manual audit anomalies totalling $30m across 1,493 vehicles were discovered in the first digital audit, along with a range of quantified risks and suggested remedies
• Improvements in inventory control and management have reduced or eliminated almost all anomalies and the financial risks associated with them

Read the full story here: Case Study - LotCount