Finance Manager 101: Avoid the Funding Nightmare

Perhaps you’re new to the business office or you’ve been at it a while. Maybe you’re a sales manager or dealer who has funding issues in your business office and are struggling to fix them. Either way, getting deals funded by the banks is a very important part of the business office activity and if you have an issue, you need it fixed.

I’m going to tell you about two business managers. If you’ve been in the car business a while, you probably know them both.

The first business manager is super organized. Office is clean. Desk is organized. Customers are happy. Files get funded right away by the finance institutions. Only problem. Can’t sell. Average gross is either horrible, or well…average. Accounting department loves them.

Then there is the other one. Office is a mess. Paper everywhere. Smells like garlic or philly cheesesteak. Customers calling because they didn’t get this or that, funding is a nightmare. Delivery files are a mess. They look like some kindergartner’s morning project, one that’s not very good at art, by the way. Great average gross. Accounting hates them. First because they make their life a living hell, and second because they probably make twice as much as the accounting person does.

Now occasionally both managers come in the same package, but it’s rare. Usually, the business manager that is unorganized becomes more tolerable over time, but not always. Which one do I like? Well, I like things clean and organized, and I like to make money, but I like to make money way more, even if I have to put up with the occasional funding nightmare.

Funding issues happen when important items are missed during delivery.

But there is a cure to the funding nightmare. It’s cured the way most things are: process. It all starts with putting a file together properly. Funding issues happen when important items are missed during delivery. It’s really that simple. It’s about the file, and it’s how you put it together. Do it right, no issue. Do it wrong, rush it, screw it up, issues.

OK, here goes, so pay attention. When putting a file together you start with a master checklist, your dealership checklist. Now in my world that checklist has three sections.  Now I’m talking about a finance file, if it’s a cash file and you screw it up, I can’t help you.

The first section is the dealer section. Your company’s checklist. The things you need as a business that are part of the deal. The dealer needs some items that banks don’t. Trade registrations, lien checks, accident histories, customer authorization forms, basically a whole host of items that set customer expectations and protect against liability. Important stuff.

The second part of the master checklist are the standard requirements or stipulations from the finance institution. It should have in it ALL possible items that are standard requirements from any institution you deal with.

The third section of the checklist are the items that are unique to the deal that either must be dealt with on delivery or may have to be dealt with on delivery. Proof of income or some other bank stipulation. Insurance. Moneys due on delivery. Etc.

How you put a file together is the key to funding. Now in addition to your master checklist, you have two other important checklists. One is the standard stipulation checklist from whatever finance institution you’re dealing with, and the second is the stipulations unique to the deal, usually on the approval itself. Now let's put it all together.

How you put a file together is the key to funding.

You start with three checklists: your dealership master checklist, the checklist from the institution with standard stipulations, and the bank approval with the additional stipulations. Even if there are no additional stips on your deal, always following the same process means you won’t miss one of those one day and create a massive headache for yourself.

Now you have three checklists. You grab a highlighter and a pen.

Starting with the master checklist, go through all the dealer items, highlighting what you need and writing N/A, or “not applicable” next to what you don’t. Next, you grab the bank's checklist of standard stipulations, and in the bank section of your master checklist, follow that same process of highlighting the items you need and writing N/A next to the ones you don’t. Finally, you grab the approval and in the third section of your checklist you again go through the process of highlighting the items you need, including any additional stipulations unique to that deal, and anything you need to collect on delivery, like downpayment or licensing. Important stuff. At this point you are highlighting what is part of your deal and writing N/A next to what is not. It’s not about what you already have in the file or don’t. It’s only what is needed as part of the deal.

By now you have narrowed everything down to one checklist: your master checklist. Everything you need in the deal. You can now use that same checklist to actually create and put together your file, going item by item and preparing the documents. And believe me, these days there are tons, especially if you’re the type of dealer that has been sued a few times. Item by item you use the checklist as you put together the file. The items that just need to be there, and don’t need signatures from the client, you can check off as complete. The ones that require signatures, you don’t.

By now you have a complete file. A highlighted list of everything you need. The ones you have that are complete, are checked off. The ones that aren’t, you need to deal with before the car rolls. One helpful tip is to have the number of copies you need next to each item on the checklist. It helps when it’s time to break down the file if you have all the copies you need already prepared.

When the customer arrives, it’s as simple as going through your checklist one by one to make sure you don’t miss anything, checking off items as you go, or at the very least before the customer leaves your office. Once the customer leaves, it’s as simple as separating the bank documents for funding using the same bank section of your checklist, creating a copy for your happy accounting department using the dealer section, and signing off on the deal. Easy peasy.

The bottom line is this: in this massively complicated world of automotive finance with so many finance sources, so much liability, and so much paper, it all breaks down into three things. Three checklists. What the dealer needs. What the bank needs. And what’s unique about the deal. If you always follow the process of starting with those three checklists, to prepare a master checklist of what you need in the deal, then use that master checklist to first prepare the file, then check off what you have and don’t, and then to break down the file after delivery, you can’t possibly miss. You’ll have a clean file every single time. Guaranteed. Good luck and good selling!

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