Six Essential Principles to Operating a Profitable

Finance Department

Is your dealership really 100-percent committed to being in the special finance business? This is the first question we ask dealers and upper management teams before we agree to consult with a dealership.

As NBA Hall-of-Fame coach Pat Riley said, “There are only two options regarding commitment. You’re either in or out. There’s no such thing as life in-between.” I can tell you from my experience as a general manager that Riley’s quote hits the nail right on the head! After all, you can’t just dip your toes in the water and expect to be a great swimmer, can you?

Dealers thinking about getting into the special finance business must be completely committed; anything less will lead to complete failure. I can honestly say that if you’re not 100-percent committed to operating a process-driven special finance department, you will probably never have the long-term consistency you are looking for.

When I say completely committed, I am talking about 100-percent commitment from the top down. Fact is, most special finance departments break down because upper management has very little understanding of how a well-run special finance department is supposed to operate, therefore the departments become people-dependent rather than process-driven.

The entire upper management team must be fully committed to their roles in building, developing and maintaining the special finance profit center. Everyone must understand that special finance is a much-needed profit center.

The dealer principal must give his/her blessing to the special finance department simply by acknowledging that it’s a very large segment of their daily business, while offering his/her full support.

The general manager/general sales manager must realize that it’s a fast-growing segment of the business. The GM/GSM must also learn, teach and commit to a firm process and commit to allocating a three- to four-month budget for this department and then be prepared to adjust the budget after that time.

The used car buyer must be committed to exhausting all avenues to find the vehicles that will best fit the needs of the special finance department. The used car buyer cannot just go to the same auction(s) and buy the same vehicles as he or she would normally buy for the retail department! Again, exhaust all avenues to find the right vehicles!

The comptroller/office staff must understand that when you sell more vehicles to customers with troubled credit, there will be some downside that goes hand-in-hand with the big gross profits. Bounced down payment checks and funding delays are just a couple of things to get used to. This is a very small price to pay for the potential profits your store will gain from this highly profitable business. Keep a positive attitude, work together, get everyone involved and keep your eyes on the prize—long-term growth and profitability.

The sales manager must be able to work within the department and train the processes set by the GM/GSM on a daily basis with a contagious positive attitude. In order to stay ahead of the curve in acquiring loans for customers, SMs must also be committed to staying ahead of the competition when it comes to knowledge of current and upcoming bank programs and guidelines.

The finance director/finance manager(s) must work diligently to fund all special finance deals as quickly as possible to ensure keeping each deal together even though SF will not be the biggest source of back-end gross profit. That’s why it is especially important for the finance department to understand that the SF department is a much-needed profit center.

I hope this article helps you understand just how important commitment is to the success of your department, as well as your dealership. Our next article will focus on the principle #2: Team.