As a dealer, you’ve probably heard that it’s important to document your processes seven different ways. The Consumer Financial Protection Bureau (CFPB) is rallying for them. Lenders are asking for them. And, soon it will be a requirement for all dealers to have documented processes.
But what does this mean? I get a lot of questions from dealers asking some variation of, “Do I just need to document my processes with regards to regulations, or all my processes?” In short, the answer is invariably, “You need to document all your processes.”
But, here’s the kicker: there are so many processes in a dealership that not everyone knows where to begin. And, so many processes are simply just part of the routine, that many dealers haven’t conceptualized how to define them beyond, “just do it”.
Just like with any big project, think about tackling this project one bite at a time. Start with the checklist on your deal jackets. Define and write down the process behind each item on the list. Each process should consist of three components:
- What you do
- Why you do it
- How you do it
Here’s a good example of a defined process:
- What: we verify the insurance of every potential buyer.
- Why: to protect the dealership and the eventual lender from the risk of potential liabilities to people and property.
- The salesperson will inform any customer that we need proof of insurance to protect the dealership from liability.
- With insurance in-hand, they will make a copy to include in the deal jacket.
- The salesperson will verify the dates to ensure the insurance is still valid.
- The F&I Manager double-checks that the insurance is included in the deal jacket and verifies the dates once again.
- Accounting also checks the insurance information is valid and checks the deal jacket checklist, showing completion.
It’s important to note that no one is asking dealerships to all abide by the same processes, rather to simply write them down. Every dealership has their own way of doing things and that is perfectly fine, as long as it is compliant.
For example, one dealership’s driver’s license verification process might include a step to photocopy the driver’s license at 200% as part of the way to ensure the dealership doesn’t get suckered by an identity theft. Another dealership might have a completely different process for driver’s license verification and both ways might make complete sense for each dealership.
Once all your processes are documented, your dealership will actually be in a better position to streamline the car buying experience. The exercise itself could uncover inefficiencies, where a small tweak to the process could potentially cut the time it takes to complete a task in half.
By taking the time to document, train and audit your processes, your dealership will be set up to complete all the tasks in a vehicle purchase the right way, the first time. This results in saved time and in creating a better experience for the customer. The last thing you want is for your team to come across as unprofessional, by making statements that start with “Oh, by the way …”, or “Can you come back”.
In addition, with documented processes in hand, training and auditing your team will become much simpler because everyone will know exactly what is required of them. And, of course, maintaining compliance will be that much easier, as everyone takes accountability for all the T’s, all the I’s, and all the other letters of the alphabet.
Don’t think you have to tackle these hurdles alone. With our AFIP-certified field team, we understand compliance at EFG Companies. Let us perform a compliance audit and help you implement the compliance procedures you need to stay profitable in the years to come with advanced training, product development, and consultation.