Counter finance is integral to auto dealerships as a revenue stream and sales conversion tool, facilitating vehicle purchases and enabling financial partnerships. However, it brings forth several challenges that can significantly impact a dealership’s profitability and operational efficiency. Here, we outline the primary operational problems around counter finance.

Problem 1: Discrepancies in Estimated Commission

Dealership executives often base their customer offers and discounts on estimated payout earnings at the time of a sale. These estimates help determine the discounts offered to customers. However, if the final commission from the bank is lower than anticipated, it can lead to significant losses, as the dealership makes sales decisions based on these initial assessments. Accurate tracking of variations between estimates and actual commissions is essential to avoid financial pitfalls and maintain profitability, especially given the high monthly sales volume and the thin margins within which dealerships operate.

Problem 2: Managing Car Releases Post-Bank Approval

A major issue arises when banks initially approve a loan, prompting the dealership to release the car, only to retract the approval later. This can result in the dealership being unable to reclaim the vehicle, leading to financial and logistical complications.

Problem 3: Tracking of payout percentage

Dealerships frequently face mismatches between promised and actual commission payouts. Banks often run various schemes and offer specific payouts, but it is crucial for dealerships to verify if these payouts are being received as promised. Numerous factors, such as loan terms or customer pre-approval status, can affect the final payout, leading to variations. Banks may change the payout on a case-by-case basis, making it essential for dealerships to track and ensure they are, on average, receiving the expected commissions.

Problem 4: Missed Invoicing

Manual processes often lead to missed invoicing, where dealerships fail to bill banks for due commissions, resulting in lost revenue. This oversight can occur due to the complexity of managing numerous transactions and ensuring each one is correctly invoiced.

Problem 5: Misalignment Between Dealership and Bank Records

There are instances where a dealership logs a sale as counter finance, but the bank does not. This misalignment can cause significant financial discrepancies, leading to lost payouts and unresolved financial transactions.

Addressing Counter Finance Challenges with Readywire

Readywire solves the problems of counter finance with a comprehensive workflow that begins at invoicing and delivery and continues until payment is received. The platform captures details at the point of sale, including counter-finance estimates, bank details, payout income, and loan approval numbers. By ensuring all this information is recorded at the inception of the transaction, Readywire enables accurate tracking and verification at every subsequent step, providing detailed MIS (Management Information System) reports for any deviations.

The platform ensures that sales cannot proceed unless all necessary counter-finance details are provided, maintaining a clear record of each transaction from start to finish. This meticulous tracking includes monitoring the current status of counter-finance cases, pending invoices, bank confirmations, and discrepancies between agreed payouts and actual amounts received. It even tracks if there is a change in the bank providing the loan.

Once an invoice is raised, Readywire tracks which bank owes money and how much, ensuring that no revenue is lost. The system meticulously logs each case, recording the estimated versus actual amounts to provide a clear financial picture. Its functionality goes beyond managing counter-finance for the dealership’s own sales. It also supports tracking for used cars and can facilitate counter-finance for other brands and dealerships, even when the dealership itself is not directly involved in the sale.
Readywire’s platform provides comprehensive MIS on targets versus achievements across all counter-finance parameters. Dealerships can set and track targets, such as achieving a certain amount in sales through counter finance or maintaining an average payout per car. The platform allows for detailed reporting by branch, executive, and bank, ensuring that performance can be monitored and optimised at every level.
By eliminating gaps and leakages, Readywire enhances productivity and maximises the profitability of counter finance, making it a crucial, ROI-driven tool for dealerships. With Readywire, dealerships can streamline their counter-finance processes, ensure accurate financial tracking, and significantly improve their revenue streams.