Automotive Group Reveals the Secret to Visibility and Control in AP

When Peterson Automotive Group’s Director of Operations Patsy Price set out to automate invoice workflow and vendor payments, she sought to both eliminate paper and speed up the AP process. She did both with Yooz and Nvoicepay, forging a transparent process that gives general managers the visibility and control they need to operate efficiently and be accountable to the larger organization.

Peterson, a locally-owned dealership group serving the Boise, ID area, has five stores—BMW, Chevrolet, Dodge, Toyota, and Lexus—and a centralized accounting office. Each store’s GM is responsible for their location’s profit and loss, and they share some expenses with the entire group.

automotive group GM looks closely at a car on the dealership lot

The group’s growth had made manual payment processing so complex and time-consuming that at one point a controller started approving invoices and signing checks herself instead of chasing paper and answering questions. That made life a little easier for AP, but more difficult for GMs to be accountable for their stores’ financial performance—and it occasionally led to suspicions of internal fraud.

“I don’t know how much [internal fraud] really happens, but it’s a common concern when you don’t have visibility into what’s going on,” says Price, a 32-year industry veteran.

“Our GMs really had no idea where their expenses were. If they were going to be responsible for their expenses, they needed to see these bills,” she said, “So we went back to having GMs approve and sign everything.” But how to do that without returning to the costly, error-prone process of moving paper all over Boise?

Getting buried in paper

Peterson’s hub-and-spoke financial structure is common—the development of dealership groups has changed the strategic landscape in retail automotive. With dealership groups, invoices for individual stores are charged directly to their accounts, which involves moving invoices and checks back and forth between the store and the central office.

At Peterson, the main office received roughly 2,500 invoices per month from the stores by either mail or courier. AP would manually code the store to which the invoice is charged, write a general ledger and expense account entry, then send the invoice back to the GM, who would approve and return it to the main office.

The messiest part of the process was shared expenses. Roughly 30 percent of all invoices for items like advertising, group charities, and fees for CDK, the company’s DMS—are shared and require multiple approvals. The same bill would travel among the stores and the main office five times until everyone signed off. Inevitably, a few invoices would get lost, buried on a desk somewhere covered in coffee stains, or in the trash.

“The GM’s priority is to sign and approve deals,” says Price, not keep track of invoices. “We had no way to know a bill was missing until we’d get a call from a vendor or notice that, say, the power bill wasn’t on the financial statement. Then there’d be lots of scurrying around and hunting.” Overall, about five percent of payments were late.

It took a lot of paper shuffling just to get the invoices to the point of payment. Then there was check signing. “We did a round robin where the GM at the Toyota store signs the checks one week, and then BMW signs the checks the next week," says Price. Checks and backup documents would be assembled in a big banker box, and sent to the GM whose turn it was to sign. The signed checks eventually returned to the office, where they’d be sorted and mailed. Backup would be scanned manually into the document archive. The process required two full-time employees to do the scanning alone.

As cumbersome as this process sounds, it’s the industry standard. “That’s how it is for every single dealership that doesn't use Yooz and Nvoicepay,” says Price. “And the bigger you get, the worse it gets. Groups are where the industry is going. But if you don’t have an organized way to handle that huge volume of paperwork, it can become overwhelming. A lot of dealerships have gone out of business because their accounting office was not efficient.”

Something new

Because Price had spent part of her career working for CDK, the industry’s dominant Dealer Management System vendor, she knew there was a better way. CDK had developed new integrations with Yooz for invoice scanning and workflow automation, and with Nvoicepay for automating payments.

This integration with the DMS enables dealerships to issue a PO and recognize an expense before the invoice is paid, so that all expenses associated with a particular car can be accounted for before it’s sold. For example, if a vendor comes to a dealership to replace a windshield for $300, the dealership can issue the vendor a purchase order that goes into Yooz and creates a soft add on that car. When that invoice is paid, the soft charge goes away and the hard cost is added to the car.

Without the ability to issue that purchase order, the car may sell without the dealership knowing that an invoice was still outstanding. That knowledge gap affects gross profit, short-changes the dealership $300, and results in overpaid commissions. When you’re selling between 900 and 1,400 units per month, having that integration becomes a big deal.

Paperless at last 

But it’s not a big deal to actually do the integration. Peterson implemented Nvoicepay first, which took about two days’ time for Price, the controller, and the accounts payable person. Integrating Nvoicepay immediately freed Peterson from printing hundreds of checks, getting them signed by the GMs, stuffing them into envelopes, and reconciling them. That whole process was replaced with just a few clicks thanks to Nvoicepay.

“Nvoicepay is a clearinghouse for us,” says Price. “Say we're paying $85,000 today to 100 vendors. Instead of sending out 100 checks, Nvoicepay takes care of those payments through ACH transfers, electronic print checks, or on a credit card. We don’t have to worry about how they get paid.

Once Nvoicepay was running, Peterson implemented Yooz for workflow and scanning, a process that involved the AP group and GMs, and took about three or four hours per store.

Now Peterson has an email address dedicated to payables, which the majority of vendors use. Yooz reads and codes the incoming invoices and—based on the general ledger account that’s being charged—routes them to the right people for approval. An AP person checks the information to make sure it’s correct. According to Price, it takes about 15 seconds to get an invoice ready for approval, as opposed to five minutes per invoice with the previous system.

Once in the system, approval workflow is completely automated. An emailed invoice that requires approval at all five stores gets sent to all five GMs sequentially after the previous GM approves it until all have approved. Invoices that are walked in or come via U.S. mail get scanned in and emailed to the payables inbox. Nobody else has to physically touch that piece of paper. After all the approvers sign off, invoices drop into the payables person’s email, and then reviewed once more before being sent to Nvoicepay for payment. 

No more filing cabinets 

Gone are the drawers for payables, and all the filing cabinets. One of the full-time scanning team members has been reassigned to more productive tasks. The other scanning team member is still needed for factory trade credits, which don’t go through AP but through accounts with the manufacturers. The time freed up by automating AP is being used far more strategically.

The biggest challenge during the transition to electronic payments was resistance from the general managers, who contended that logging into a system to approve invoices was doing accounting’s work for them. Once they were able to approve payments remotely, they warmed up to the idea—but it was the ability to research any invoice or payment online that really got them excited.

“Previously, the GMs would have to call the office to get somebody there to pull all that information,” says Price. “They were just dependent on other people. Now they have more control.”

And so does AP. “At any point in time, we know where every invoice is. We know who hasn't gone through and done their approvals.”

Now Price sits down in person with every department manager and GM in the company to review their quarterly departmental expenses. “In two hours we can go through every account and every item, and if there are any questions, I can immediately double click and get that information for them,” she says. “Before, I’d write down their question, research it, and bring back the answer.”

“With Yooz and Nvoicepay, we have complete transparency throughout our stores and departments. With all these applications in place, these GMs can look up anything themselves.”

Read the Full Case Study with Peterson Auto Group

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