Compliance Is Part Of A Comprehensive Finance Program

 

By Myril Shaw, Chief Operating Officer, Dealer Profit Services

Every dealer, who cares about maximizing profit, needs to be offering complete and inviting F&I services.  To protect that profit, each dealer needs a comprehensive Compliance program.  These are tightly integrated and ultimately, while one is profit-generating and one is profit protecting, are completely complimentary.

The F&I Services offering must begin when the customer first makes any contact with the dealer – be that website, advertisement, marketing campaign, or whatever that first customer contact looks like.  That first contact, and continuing contact, must broadcast the message, “Competitive Financing Available.”  Every customer who comes in contact in any way must know that the dealer offers financing.

Comprehensive compliance starts when the dealer receives anything of value from the customer.  What does “anything of value” mean?  Following is a partial list:

·        Cash (or any equivalent – there will be a point where banks take over)

·        Any personally identifiable information

o   Social Security Number

o   Driver’s License Information

o   Employment Details

·        Credit Card Information (depending on how it is received/taken)

·        Anything that could be used for Identity Theft, Identity Fraud, Money Laundering, Illegal Purposes

F&I Services have to start early to be effective.  Customers have to know you can deliver and then they have to know that you will deliver complete F&I.  The first time they meet with your salesperson, they have to be introduced to the idea that they will also meet their Business Manager to ensure ideal delivery (the Business Manager will also handle contracting and will present all of the available Protective Products.)

When a customer comes in, whether to buy a unit or a part, they may start providing personal information of value, or they may provide cash.  Compliance conformance or failure starts at that moment.

Cash purchases are reviewed by the US Office of Foreign Asset Control (OFAC).  They ensure that cash purchases are not being made by individuals or entities who are terrorists or other entities identified by the US Government as restricted from doing business in the US (such as drug Cartels.)  All cash purchases regardless of amount (while certain reasonableness guidelines should be applied) must be checked on the OFAC Database (an easy online database that only requires basic ID information – name and address is usually enough).

This check is easy – failure is expensive.  A penalty for selling to a prohibited entity can result in a fine of up to $1,000,000 and up to 20 years in jail.  This can put a big hit on F&I profits.

For non-cash customers, the dealer will be receiving a lot of personally identifiable information.  All of it must be verified and protected. 

Obtaining this information provides the Business Manager with the information needed to provide the best financing choices available – and to offer all of the lifestyle protecting Protective Products that make sense – and make money.

On the Finance side, there are two fundamental principles: 1) The Hippocratic Oath of F&I – First, Do no harm – Make sure the deal gets done; 2) Aggressive and graceful in retreat – You never get more than what you ask for the first time – Put it all in on your first conversation and then be able to back down in a reasonable way.  These principles ensure maximum F&I profit.

To get to maximum profit a lot of personally identifiable information has to be obtained, retained, and potentially destroyed.  Failure to do all of these correctly could more than wipe out the profit obtained.

Identity theft costs are almost incalculable.  Failure to properly destroy personally identifiable information could be $2,000 per incident and failure to protect it could be the same, and these are federal penalties beyond the civil suits.  These are costs that can easily reduce F&I Profit to zero.

To maximize F&I Profit a dealer has to start at first contact.

To minimize F&I Compliance loss potential a dealer needs to care that the FTC and CFPB have said that they care about “good faith” (meaning that the dealer has tried to do the right things from a compliance perspective) will be considered in the event of a compliance issue – and the FTC, in particular, has said that they will be looking at dealerships.  It is critical that dealers do “good faith” compliance right.

“Good Faith” Compliance means:

·        Full Compliance Manuals with regulations understood and enforced by a Compliance Officer

o   Red Flags

o   Disposal

o   OFAC

o   Safeguard

o   USA Patriot Act

·        Compliance Training

o   Documented for all employees at all times

·        Compliance Inspections

o   Documented on a regular (weekly) basis

·        Compliance Tools

When a dealer has the best F&I sales practices coupled with the best Compliance practices the results will always lead to the best overall profit results.  Learning how to do both is critical for dealer profits.

About Dealer Profit Services

As a premier F&I Services Provider, Trainer, Consultant, and Comprehensive Compliance Program supplier, Dealer Profit Services is about improving a dealer’s F&I profit and then providing the tools to ensure that profit is protected.  As a Service Provider, Dealer Profit Services provides complete F&I services and delivers industry-leading F&I Profit Results.  As Trainers and Consultants, we help dealers improve their in-house F&I departments.  Through the Comprehensive Compliance Program, Dealer Profit Services provides an online, on-demand, Compliance Program with documents, training, and tools to make F&I Compliance a process that helps protect the dealer against potential risks from compliance issues.  Get your Comprehensive Compliance Program here - just click. Learn more by visiting dealerprofit.com, email info@dealerprofit.com, or call (470) 326-0966.

Dealer Profit Services Announces Record Results For 2021 – 5% F&I Net Profit on Unit Sales

 

 By – Myril Shaw, COO, Dealer Profit Services

Dealer Profit Services, a leading Financial Services provider for the Marine and RV industry has just released their record-breaking results for 2021.

Results for Financial Service Providers in these industries are measured in terms of profit delivered to the dealer partners.

In 2021, Dealer Profit Services delivered 9.2% Net F&I Profit on the Amount Financed and 5.0% Net F&I Profit on Unit Sales.  The industry benchmark is 3.5% F&I Net Profit on Unit Sales.

“There is no question that 2021 was an unusual year in so many ways.  That said, it was a year in which F&I could have been severely negatively impacted.  We are absolutely delighted to have delivered record-setting results to our dealers.  Driving 5.0% F&I Net Profit is a great result and one that we fully intend to improve on.  That said, our dealers made record-setting F&I profits and we are excited for them!” said Myril Shaw, the Chief Operating Officer of Dealer Profit Services.  He also said, “We have the process and formula for great dealer profit locked and loaded.  We are excited to deliver this to dealers everywhere.  It is interesting to watch other providers try to make news about during deal communications and other features which have always been our trademark while delivering lesser results.  It is entertaining to watch other service providers striving to catch up to both our comprehensive services and our results.  They won’t!”

Dealer Profit Services is a Financial Services Provider delivering full F&I Services from Credit Application processing through customer communication on both contract terms and protective product options to full finance and delivery document production. Communications between the dealer and Dealer Profit Services are always available on the private Dealer Portal. Services are available anywhere in the United States and at a fixed percentage of the profit which is lower than any other provider and lower than any in-house F&I offering.

About Dealer Profit Services

As a premier F&I Services Provider, Trainer, Consultant, and Comprehensive Compliance Program supplier, Dealer Profit Services is about improving a dealer’s F&I profit and then providing the tools to ensure that profit is protected.  As a Service Provider, Dealer Profit Services provides complete F&I services and delivers industry-leading F&I Profit Results.  As Trainers and Consultants, we help dealers improve their in-house F&I departments.  Through the Comprehensive Compliance Program, Dealer Profit Services provides an online, on-demand, Compliance Program with documents, training, and tools to make F&I Compliance a process that helps protect the dealer against potential risks from compliance issues.  Get your Comprehensive Compliance Program here - just click. Learn more by visiting dealerprofit.com, email info@dealerprofit.com, or call (470) 326-0966.

 

 

From First Contact Through Out The Door – Customer Process Drives F&I Profit

By – Myril Shaw, COO, Dealer Profit Services

 “Well, the process is really what you have to do day in and day out to be successful…”

– Nick Saban, Head Football Coach, University of Alabama

When your customer first visits your website or first sees an advertisement or first makes contact with a salesperson, that first contact must begin a consistent, replicable process and experience that will ultimately drive not just success in selling your unit but will also drive your F&I success.

This is clearly only important if you care about demonstrable F&I success.  How much can demonstrable success look like coming from F&I?  Here are some measures:

·         65% plus Protective Product Penetration on all sales, both Finance and Cash

·         9% Plus F&I Gross Profit on the Amount Financed

·         7% Plus F&I Gross Profit on Unit Sales (Cash and Finance)

·         Maximum F&I Total Cost of 25% or less of F&I Gross Profit

You may recall the conversation that Alice had with the Cheshire Cat in “Alice In Wonderland”:

 

If you don’t know where you want to go the process does not matter.  If you do care (and to get those store-changing results, you should care), then the process driving the experience and resulting in the profitable outcome is critical.

The first contact matters.  Are you letting your (potential) customer know that you care about enabling this fantastic lifestyle and not just enabling it but also in helping them sustain it through both highly competitive financing and important, affordable, protective products which will enable your customer to continue their fantastic experience even when things go wrong.  This has to be a message (partially subtle and partially loud) from the very first contact.

Once the customer enters the store there are two things that MUST happen.  First, they must be introduced to the Finance/Business/Delivery Manager before they start looking for a unit.  “Hey Mr. Customer, before we even get started, let me introduce you to our Finance/Business/Delivery Manager, Bob/Beth.  As soon as we have settled on what you are in love with, he/she will go through all the delivery details to ensure that we ensure that we exceed your expectations everywhere.”  It is this introduction, before any conversations about cash versus finance, about finance terms, about specific protective products, that ensure that every customer gets the same great treatment and that you maximize your opportunity for both finance and protective product sales.

The second thing that needs to happen on entry is that your customer is greeted by signs and videos about your awesome finance capabilities and the fantastic value of the protective products being offered.  There need be no conversation about these – let them all be subliminal.  Just warm the customer up for what is to come.

Ensure that your salespeople are trained to tell stories about protective products – without EVER talking prices or terms. “Oh, I had a customer a little bit back who got that engine warranty and they broke down out on the lake.  Their tow was covered, the lift-out was covered, the repair was covered and they were back in the water in four days and only out of pocket for the $100 deductible.  They were so happy that they had it…Oh, when you to Bob/Beth, your Finance/Business/Delivery Manager, they actually have that information about price – I just don’t know – my earlier customer was happy though!”

Now the actual turnover does happen – 100% of the time – you ensured that earlier.

Your Finance/Business/Delivery Manager takes over.

If the customer says that they are paying cash, the first question is, “I know that you are paying cash, you must have great credit, wouldn’t you at least like to see what your options are and maybe preserve your cash to have more fun with?  These are simple interest loans, so if you decide after a year or two that you really would rather pay cash, you can convert with no penalty.”  Some percentage of customers will convert from cash to finance.

On “true cash buyers” (no matter what they say, 80% of cash buyers are not paying with liquid cash – they are using home equity, converting stocks or other equities, etc.), you now present all the relevant protective product offerings.  50% plus of “cash” buyers will buy one or more properly presented protective products.

Now you are on to the finance buyers and your Finance/Business/Delivery Manager takes a consistent approach following two key principles.  First, no matter what, make sure that the unit gets sold – even if that means no F&I profit.  Second, be aggressive and graceful in retreat.  Always look for the maximum reserve and the largest possible protective product profit – always with one eye on how to back down gracefully in the face of customer resistance.  This is the finance approach that maximizes F&I profit.

Do you care about adding 5% plus net profit to your store’s bottom line?  If you do, this is the road to follow!

About Dealer Profit Services

As a premier F&I Services Provider, Trainer, Consultant, and Comprehensive Compliance Program supplier, Dealer Profit Services is about improving a dealer’s F&I profit and then providing the tools to ensure that profit is protected.  As a Service Provider, Dealer Profit Services provides complete F&I services and delivers the industry leading F&I Profit Results.  As Trainers and Consultants, we help dealers improve their in-house F&I departments.  Through the Comprehensive Compliance Program, Dealer Profit Services provides an on-line, on-demand, Compliance Program with documents, training and tools to make F&I Compliance a process that helps protect the dealer against potential risks from compliance issues.  Get your Comprehensive Compliance Program here - just click. Learn more by visiting dealerprofit.com, email info@dealerprofit.com, or call (470) 326-0966.

F&I Compliance Fear Mongering Is Bad – Except When It Is Justified

 

By – Myril Shaw, COO, Dealer Profit Services

 

An even worse thing to do is to ignore your risks when it comes to F&I Compliance.

F&I Compliance is always a topic that draws momentary attention and then quickly drops out of view.  Compliance issues are rare – especially compliance issues that actually result in anything happening to your store.  That is not the issue though.  Being compliant and demonstrating “good faith” is actually easy.  On the other side, one single compliance issue can close your store forever.  You can try and balance that equation.  Do what is right and easy and keep your store – take the risk and ignore compliance and potentially lose everything.

Identity fraud is up over 100% over the last 18 months.  The types of identity fraud are becoming increasingly sophisticated.  The CFPB (Consumer Financial Protection Bureau) has teeth again and now Rohit Chopra has been named as its head by Congress – they are back to being aggressive.  OFAC has taken on new meaning with enforcement being up.  Class Action Lawsuits are intensely profitable for aggressive attorneys – and it is easy to caught up in one that you don’t even suspect.

Fines and penalties from violations of the Red Flags, Disposal, OFAC, Safeguards, and USA Patriot Act can range from a few hundred dollars to over a million dollars and jail time.  Selling a unit to a fraudulent buyer can cost you the full price of the unit.  Getting caught in a class action (or a directed) lawsuit can cost you countless hours, hundreds of thousands of dollars, and endless headaches.

Let’s look a little deeper at the class action suit.  An individual or couple goes to their attorney and says, “ We are the victims of identity theft and we did in the last nine months was buy a boat/RV and now we are here.”  The lawyer says (thinking of profit and opportunity for success), “Well just give me the names of all the dealerships you visited – I’ll serve them all.”  Now, you are into legal proceeding and if you have not been diligent, you have no easy off-ramp.

With Synthetic Identity Fraud the fraudster builds a credit profile around a fictitious name and identity, build it over time and then make a big purchase.  They buy from you and your unit is gone – they are gone – and you get paid nothing.  That is the definition of a bad day.

So, what do you do?  Care!  Care about being compliant and being able to document that caring.  Care about the warning signs for identity fraud.  

When you know what to look for – you protect yourself.  When you know that you can demonstrate the you are doing all the right things relative to compliance you protect yourself.  

Just do it!  Protect yourself when it comes to F&I compliance.  You are protecting yourself, your store, your employees, and your livelihood.

Just do it!  It is not fear mongering any more than insisting on insurance is fear mongering.

Don’t worry – be happy – be compliant.

About Dealer Profit Services

As a premier F&I Services Provider, Trainer, Consultant, and Comprehensive Compliance Program supplier, Dealer Profit Services is about improving a dealer’s F&I profit and then providing the tools to ensure that profit is protected.  As a Service Provider, Dealer Profit Services provides complete F&I services and delivers the industry leading F&I Profit Results.  As Trainers and Consultants, we help dealers improve their in-house F&I departments.  Through the Comprehensive Compliance Program, Dealer Profit Services provides an on-line, on-demand, Compliance Program with documents, training and tools to make F&I Compliance a process that helps protect the dealer against potential risks from compliance issues.  Get your Comprehensive Compliance Program here - just click. Learn more by visiting dealerprofit.com, email info@dealerprofit.com, or call (470) 326-0966.

Compliance Matters - A Lot

                                               By – Myril Shaw, COO, Dealer Profit Services
 

Like it or not, this is NOT a political statement – it is a reality statement about today’s real climate.  As a dealer who handles personally identifiable information and who could be responsible or accountable for identity theft or identity fraud, you need to be aware that the government is now VERY actively involved in looking at all potential compliance issues.  Even without the government concern you should care about an area that has seen a dramatic increase over the last couple of years – identity fraud is a real problem.

Now, let’s go a step beyond that.  We know a dealer who, had they not been diligent in their OFAC processing (cash deals less than $10,00), would have suffered potentially crippling fines and penalties.  The rules about checking for OFAC includes, even for cash purchases less than $10,000 are no joke.

Now, with an active CFPB, an incremental increase of both actual and synthetic identity fraud, and an increase in OFAC named individuals/entities (especially in the area of drug cartels), the risk of falling afoul of compliance standards is VERY high.  You can ignore this or you can protect yourself.

Do you have the full set of Compliance documents (Red Flags, Disposal, OFAC, Safeguards, and USA Patriot Act)?  Do you have a trained Compliance Officer?  Are you physically compliant?  Do you do regular inspections to make sure that compliance standards are being followed and that compliance is top of mind among your team?

Compliance is not just important to prevent legal issues and huge fines, compliance is customer service.  You should have signs around your store saying that “We care about you and your privacy”, “We protect your identity”, “You are safe doing business with us”, and more.  You need to let customers know that you care about them and their identity.  This is one of the critical ways that you treat your customers correctly

Caring about compliance, and being able to demonstrate and document that compliance caring can save you millions and potential jail time, it can also add customers who know you care. 

                     Compliance is not a head-nod.  It is not an “Yeah, I know”. Compliance is customer service                         that saves you money!

About Dealer Profit Services

As a premier F&I Services Provider, Trainer, Consultant, and Comprehensive Compliance Program supplier, Dealer Profit Services is about improving a dealer’s F&I profit and then providing the tools to ensure that profit is protected.  As a Service Provider, Dealer Profit Services provides complete F&I services and delivers the industry leading F&I Profit Results.  As Trainers and Consultants, we help dealers improve their in-house F&I departments.  Through the Comprehensive Compliance Program, Dealer Profit Services provides an on-line, on-demand, Compliance Program with documents, training and tools to make F&I Compliance a process that helps protect the dealer against potential risks from compliance issues.  Learn more by visiting dealerprofit.com, email info@dealerprofit.com, or call (470) 326-0966.

Make F&I A Star In Your Dealership

 

By – Myril Shaw, COO, Dealer Profit Services

F&I should be an equal, or, perhaps, a leading contributor to your Net Profit.  If it is not, then you can do better – even if it is, there may well be room to grow your F&I results.

Generally speaking, if your F&I Net Profit is not 3.5% to 4.0% of your unit sales, there is probably a process issue.  Rarely, it could be a people problem – but if the process is strong, consistent, and enforced, most people can make F&I a star.

The F&I success process starts far earlier than many think and it ends only after the customer no longer owns your unit.

F&I Profit and selling success begins when your customer first makes contact with you and your store.  Whether that is online, in print/TV/radio ads, or just driving past your location.  Every ad and every view needs to tell the story that you offer “Competitive Financing and the convenience of One Stop Shopping.”  There also need to be visible signs that you offer the Protective Products that add value to their purchase and help ensure that all they need to do is enjoy their lifestyle without worrying about damage or repairs.  Plant the seed – that is the first step.

The next step is to think about the messaging.  The Finance Office and the title F&I Manager have clearly been tarred by the auto industry.  In A car dealership, the Finance Office is where you are sent to be punished for having actually selected a vehicle.  So, the name is critical.  Don’t refer to F&I or a Finance Manager.  You should be introducing your Business Manager and the Business Office or Delivery Coordinator and Delivery Office.

Once your customer hits the store, make F&I welcoming and visible without calling it F&I.  Big, highly visible signs advertising “Competitive F&I” must be all around the store and lot.  There must be brochures and samples for your Protective Products everywhere – in your units, scattered around the walkways, and on signs.  Don’t be shy about what you offer – and why – “We care about your lifestyle.”

Once a customer engages in your store in any way, you must do a couple of things.  First, have the receptionist, or the salesperson capture their name, address, and phone number so that you can do a soft credit pull and determine their eligibility for financing.  Soft pulls can be run, and they have no impact on the credit score.  The customer never even needs to know that this was done unless you decide not to offer financing based on the results.  You will know that you can be aggressive on your F&I offerings with a strong result.

After your customer meets the salesperson, they should be introduced to the Business Manager – “Once you have picked the unit you love, you’ll be seeing Tom (Business Manager) to ensure that we have everything right and that your delivery is perfect.”  If possible, there should be face-to-face introduction – if that is not possible, every customer needs to know that they will visit the Business Manager to conclude the transaction.  This tees up the ability to meet even the Cash buyers (remember, only 15% or less of cash buyers are paying with liquid cash – meaning that they are borrowing on home-equity, drawing down savings, selling stocks or bonds, or using some other non-liquid cash – financing can help them conserve cash) and allows for potential conversions to finance and the sale of protective products.

Now your customer engages with the salesperson.  They explore the units and see the brochures and samples of protective products throughout the store.  They fall in love and now the Business Manager reengages.

“Fantastic,”, the salesperson says, “Let’s get you with Tom (Business Manager) so that we can be sure your experience is perfect.”

This part of the conversation happens 100% of the time.  Every customer, cash or finance goes to the Business Manager.  This was set up at the outset and it is followed through at the end.  100% Turnover is ALWAYS the rule.

Now the Business Manager takes over with this mantra in mind, “Aggressive and graceful in retreat – you never get more than you ask for first.”  What this means is that for finance customers maximum reserve and maximum Protective Product Profit is asked for initially – every time.  For Cash buyers there is always a request to convert to finance (“Gee, if plan to pay with cash you must have great credit – wouldn’t you like to at least explore your finance options and maybe conserve your cash?” – remember, only 15% of cash buyers are paying with liquid cash.). With cash buyers, the maximum potential Protective Product Profit.

Graceful in retreat means being able to talk back from the maximum without seeming like your customers were being over sold in the first place.  On Reserve that means, “Well, that was just lender return, let’s see what we can do.”  On Protective Products, there are many options for “graceful in retreat”.  Shortening the term of some protection may be a possibility.  Just dropping some coverage may be another.  Being creative is the critical factor.

So, now you have maximized profit – it is time to make sure that you have protected it.

How is your Compliance Program?  Do you have a Compliance Officer?  Do you have a full set of Compliance Manuals signed by the Compliance Officer and that your team is trained on?  Do you have a Compliance Training Program?  Do you regular, documented Compliance inspections?  With the newly invigorated CFPB (Consumer Financial Protection Bureau), claims regarding Compliance violations (identity fraud in particular) will be skyrocketing.

Follow these steps and you’ll make more and protect more.  Add profit to your dealership today.

About Dealer Profit Services

As a premier F&I Services Provider, Trainer, Consultant, and Comprehensive Compliance Program supplier, Dealer Profit Services is about improving a dealer’s F&I profit and then providing the tools to ensure that profit is protected.  As a Service Provider, Dealer Profit Services provides complete F&I services and delivers the industry leading F&I Profit Results.  As Trainers and Consultants, we help dealers improve their in-house F&I departments.  Through the Comprehensive Compliance Program, Dealer Profit Services provides an on-line, on-demand, Compliance Program with documents, training and tools to make F&I Compliance a process that helps protect the dealer against potential risks from compliance issues.  Learn more by visiting dealerprofit.com, email info@dealerprofit.com, or call (470) 326-0966.