Cashflow is critical to managing the business

PARTNER FEATURE: With the average price of a new car on the UK market around £38,000, and the average used price now north of £14,500, managing cashflow is vital for the survival of a motor dealership.

Cashflow, not profit, is necessary for daily operations, taxes, purchasing inventory and paying employees and operating costs. Get the cashflow wrong and you could find yourself struggling to pay the bills, even if you’re forecast to be profitable further down the line.

The disruption caused by Covid-19 has further brought into sharp focus the need to manage cash very carefully. Dealership managers need to forecast any cash restraints at the earliest opportunity to provide confidence to banks and other lenders, and to allow the ability to plan accordingly.

Still manual input?

Many dealerships are still operating with a manual cashflow process, based on Excel spreadsheets, probably updated by admin staff on a weekly basis, but with little link to actual performance or budgeting. The margin for error may be high and the level of granular detail limited.

Clearly there is a case here for online automation, and the new cashflow module of our Mazeinsight end-to-end business intelligence platform has been developed to achieve just that. Originally slated for development later this year, it was brought forward to meet the specific needs of auto retailers in the current, less predictable business environment.

Mazepoint’s experienced automotive finance professionals have worked alongside our customer base in an agile development mode to deliver the new module.

Simon Rees, finance director of SG Petch, which worked with Mazepoint on the development, says: “We’re now working with the Mazeinsight cashflow module, moving us to an online and automated process with improved tracking and reporting, making it much more efficient for us to operate and implement changes quickly.”

Faster and more accurate

The first phase has been to produce a web-based system to replicate current processes but significantly reduce the admin tasks and providing formatted output. This allows more time for accuracy review and reconciliations with actual performance and latest forecasts.

Now we’re working on the cashflow forecast that reconciles with the latest budget and forecast and delivers an accuracy level of 90% plus, to provide confidence to business users and lenders alike.

While the cashflow module can be used as a standalone product, we believe linking it to the full Mazeinsight suite will provide ultimate levels of detail and control to improve accuracy and granularity of forecast.

By Tracy Ellam, commercial director at Mazepoint. Find out more at Mazepoint.com or call 07375 675384 to book a free demonstration.