Phyllis Goldie and Associates_ Specializing in Dealer Asset Protection_ ONE ACCOUNT AT  TIME
Phyllis Goldie and Associates
Posting F and I Cancellations
Posting F and I Cancellations. When and Where.

Many dealers we meet struggle with their F and I cancellations.  This is understandable as they can be a moving target and hard to keep track of.  Oftentimes refunds can take several months.  Posting when you receive the refund can result in reflecting the charge back in a subsequent month or even year.   This can cost the dealership thousands in unrecouped charge backs, the Finance Manager may no longer be employed by you, or you can be responsible for excess corporate taxes paid in that year.
In order to ensure accurate posting, and a clear audit trail, we recommend that you set up a separate journal for your F and I cancellations.  Post at the time that the cancellation occurred NOT when you receive the check.  This is important to note for Accrual Basis dealers.  Waiting until you receive the refund to post is considered a Cash Basis method and not acceptable if you are designated as Accrual. 
Create a cancellation worksheet customized to your accounts and use as the posting document.  If part of a down payment for a new deal, post and put the document in the deal.  Make a copy and keep out until you receive the money from the vendor.  This will create a true internal control of the refund.  Without specific controls in place for monitoring your refunds as down payments, you run the risk of "over refunding", allowing the credit for a down payment and refunding to the customer.  

Click here for a sample posting document.  

***For a custom document tailored to your accounts contact us through our website or reply to this newsletter.
Sales Tax.  Are you paying your share_
Sales Tax.  Are you at risk during an audit?

Recently we were working with a group of dealers and noticed several bills from vendors without sales tax.  One in particular was a vendor who supplied shirts for a breast cancer event at the store.  The shirts were given away to the team for the event, not resold.

Under their tax laws we discovered that the burden is placed on the end user to pay the sales tax.  This is the case in many states.  A good rule of thumb, when purchasing items not for resale, is to require your vendors to charge you sales tax. Sometimes this is easier said than done.   
We all know that a sales tax audit can be extremely painful.  It is easy to put a process in place that will eliminate your liability in this area.  Anytime a bill is received from a vendor without tax, gross up the expense or asset to include that sales tax and post to the appropriate accounts.  Stamp the document (get a custom stamp) that the tax has been set up.  Make a copy of the invoice and keep in a separate file that will accompany your monthly sales tax documentation.  If/when the time comes you can share with an auditor to prove compliance.  Keep this in mind for any Amazon, out of state, EBay, etc., purchases for items that are going to an expense or fixed asset account.  Just because the vendor did not charge you sales tax does not relieve your responsibility to calculate and pay tax as the end user. 
This link can provide you with more information on your state's sales tax laws.  

"What you do today can  improve  all your 
tomorrows."  - Ralph Marston 

Phyllis Goldie and Associates, LLC | | 239.826.9544 |

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