Managing an accurate parts inventory is essential for profitability, but many dealerships unknowingly make costly mistakes. These errors lead to accounting discrepancies, lost sales, and unnecessary expenses. Let’s break down the five most common mistakes and how to fix them. 1. Not Reconciling Parts Inventory to the General Ledger (GL) Regularly Many dealerships only reconcile parts inventory at month-end, leaving…
When it comes to automotive parts inventories, accuracy and efficiency are critical. Dealerships face the constant challenge of maintaining precise stock levels while ensuring that their financial records match the physical inventory. One of the decisions dealerships must make is whether to perform inventory counts internally or hire a third-party service. While internal counts can be cost-effective, third-party inventory counts…
In the fast-paced world of automotive dealerships, staying on top of inventory and financial accuracy is crucial. One of the most critical tasks is reconciling parts inventory to the general ledger (GL). But the question many dealerships face is: Can parts-to-GL reconciliation be done daily, entry by entry? And why don’t monthly reconciliations cut it? Let’s dive into the importance…
When a dealership undergoes a buy/sell transaction, the accuracy of its parts inventory valuation is critical. Failing to properly audit parts inventory can result in financial discrepancies, disputes, or unexpected losses for buyers and sellers alike. Conducting a thorough audit ensures transparency, protects investments, and helps facilitate a smooth transition. Why Parts Inventory Audits Matter in Buy/Sell Transactions Accurate Valuation:…
Parts to General Ledger (GL) variances are a common frustration for dealerships, leading to financial discrepancies that can impact profitability and reporting accuracy. Understanding the root causes of these variances is the first step toward eliminating them and maintaining a clean reconciliation process. What Causes Parts to GL Variances? 1. Parts Received but Not InvoicedWhen parts are received into inventory…
Inventory variance is a persistent challenge for dealership parts departments, often leading to financial losses and operational inefficiencies. While minor discrepancies may seem insignificant, they can accumulate over time, affecting profitability, customer service, and even compliance. Understanding the hidden costs of inventory variance is crucial for dealership managers and accounting teams. 1. Financial Losses Due to Shrinkage One of the…
To reconcile your parts inventory to your parts general ledger you’ll need to take your ending inventory balance and compare that to your GL closing balance for the same date. You will also need to account for all your reconciling items. Using the following calculation will give you your variance: Variance = Ending Inventory – (GL Closing Balance + Reconciling…
PartsCount by Total Dealer Solutions (TDS) was established in 2003 to meet the automotive dealers’ need for an unbiased, professional third party parts physical inventory. We specialize in the automotive industry exclusively because with specialization comes expertise. Here are some tips and best practices to follow to maintain a clean parts inventory.
Parts that are 12 months and older are obsolete. Parts that have not sold for 6 months have a 65% chance of not selling again Parts that have not sold for 7-9 months have a 75% chance of never selling Parts that do not sell for 9-12 months have an 85% chance of never selling Obsolescence exists in every dealership…
A parts physical inventory is a process where an automotive dealership physically counts its entire parts inventory. It is recommended that a parts physical inventory be conducted every year. Why should I do a parts physical inventory? Physical accounting of the dealership’s parts assets is critical in managing a dealership’s capital investment. A physical inventory is also essential to keep…