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Every dealership is focused on finishing the year strong. The attention is on factory incentives, moving aging inventory, maximizing profitability, and hitting year-end objectives. Too often, however, the balance sheet gets pushed into the thirteenth month – by then, opportunities to improve cash flow, reduce interest expense, identify tax savings, and resolve accounting issues before year-end has already passed.
The remedy is not more work – it is doing the work earlier, while there is still time to act.
Don't Bury Everything in the Thirteenth Month
The thirteenth month serves an important purpose, but it should not become the catch-all for issues that could have been resolved earlier. Waiting until January often means missed tax planning opportunities, avoidable audit adjustments, and financial statements that require revision after they've already been shared. A focused schedule review before year-end allows the thirteenth month to be reserved for its intended purpose – final estimates and true year-end adjustments.
Reviewing a handful of schedules covers many of the dealership's higher-risk balance sheet accounts: bank reconciliations, contracts in transit (CIT), vehicle receivables, factory receivables, F&I income and its chargeback reserve, new and used inventory, parts, and floor plan. The objective is to identify aged items, unsupported balances, and reconciling differences while there is still time to resolve them before year-end. Unlike the income statement, balance sheet items carry forward, making schedule reviews critical to preventing larger year-end problems.
Free Up Cash by Reviewing Contracts in Transit Timely
Review CIT routinely. CIT are often one of the fastest ways to improve cash flow without selling another vehicle. Many dealerships expect funding within three to five days. Investigate anything outstanding beyond your normal funding timeline. Items may have aged due to incomplete finance-source documentation or contracts submitted before lender approval. Every additional day unfunded increases floor-plan interest expense and raises questions about collectability. A timely review allows the team to work with lenders to secure funding before year-end which strengthens liquidity and reduces thirteenth-month adjustments.
Turn Receivables into Cash Before Year-end
Vehicle receivables should also clear routinely. Review the schedule for higher-risk items such as hold checks and side notes for down payments, where the dealership's exposure exceeds the recorded receivable if financing falls through. Factory receivables, including holdback, warranty, incentives, and rebates, should reconcile to the factory statement. Investigate significant reconciling items and confirm subsequent collections. Review warranty receivable aging for outliers; as a guideline, no more than 10 to 15 percent of open claims should exceed 30 days, and a trend of rejected claims may indicate they will ultimately be charged back. Rebates falling outside the factory's normal payment cycle should be discussed with the factory representative while corrective action is still possible.
Protect Inventory Values and Reduce Floorplan Costs
Confirm bank reconciliations are current and reconciling items are documented. Reconcile the floor plan payable to the lender's statement; because lenders often record vehicles from factory shipping notices, the reconciliation helps identify in-transit units the dealership owns but has not yet recorded. Also review cutoff, since recording a sale before removing the related inventory overstates both earnings and inventory. Aged used vehicles should be evaluated for write-downs to estimated selling price. Reconcile the parts inventory to the physical count, review the cost index for reasonableness, and remember—a thin year-end inventory can reverse deferred income.
Capture Tax Savings Before They’re Gone
A disciplined schedule review also supports a more complete and timely tax close. Reviewing fixed asset additions, repairs and maintenance, accrued expenses, inventory write-downs, and bad debt reserves before year-end gives management and its tax advisor time to identify related deductions, elections, and planning opportunities while ensuring transactions are properly classified before tax return preparation.
A Strong Close Starts Before December 31st
Timely schedule reviews pay off. A year-end schedule review is more than an accounting exercise. It improves cash flow by accelerating collections, reduces floor-plan interest, supports proactive tax planning, and strengthens confidence in the dealership's financial information.
Before year-end, ask your controller or accounting manager one simple question: "Which balance sheet schedules have not been reconciled this month?" The answer often highlights opportunities to resolve issues while there is still time to act. The best time to identify opportunities is before the books are closed—not after the calendar turns to January. A proactive Q4 schedule review reduces thirteenth-month adjustments, streamlines the year-end close, and allows your team to focus on the business during Q1 instead of explaining adjustments.
Author: Logan Donahue, CPA, Albin Randall & Bennett, an NHADA Silver Partner
