Finding the ‘Income’ in F&I

Finding the ‘Income’ in F&I

No one has to tell us that deals in 2008 are smaller than previous years. Front-end profits are down, margins are down, and once again, the focus should be on every area of opportunity.

Could your dealership use more cash? Could your profit and loss statement use improvement?

While many dealerships have an F&I department, they do not realize the full potential of it as a critical profit resource. Why, you ask? The answer could be any or all of the following:

1) F&I presenters could be members of the office staff, processing deals, and not presenting any F&I products and services to customers.

2) F&I people may not conduct presentations due to disbelief in the product or simply because they do not want any additional work.

3) F&I presenters are either paid a salary or a minimum guarantee and their incomes do not change regardless of what customer response is to presentations.

4) There are no products to present to customers. A department simply cannot live by reserve alone.

5) No processes are set to follow.

6) There are no expectations of results from management.

There might be additional reasons, but we will address these as a starting place to increase your profitability.


Many engage in this practice from a controlling-the-expenses view. However, the presenter of F&I goods and services is often pulled in different directions. At some point, they may view the customer as an interruption to the paperwork flow. The presenter may not present additional items because he has to write additional documentation and is already at the breaking point with a large workload.

Many people multi-task when business is slow. When staff members are off work due to illness or vacation, someone picks up the slack. All of this teamwork is great and works in the short term. However, it kills production on the bottom line in the long term.

While the F&I process touches every department, the producer should never view customers as an intrusion. Professional F&I presenters always remember that customers are the reason they have a job and are an opportunity to contribute to the financial wellbeing of both the company and themselves. Nothing begins until the customer says, “Yes. I will buy that unit.” Never let your eyes stray from the goalpost.


If you have a compensation plan of a salary or guarantee for the F&I presenter, you have set the stage for accepting under-performance as the norm. F&I is a selling position. To salespeople, increasing their incomes by increasing the profitability of the company is motivating. I call this “share the wealth.” Base compensation on the level of performance. When you make a sale, presenters must see a financial reward. Anything less and you have an environment that breeds paper processors not major contributors.

If you are in a small town, your business may be seasonal. You may fear the good producers will leave when business slows down. You may feel a bit like a hostage to the current marketplace. Remember, you are the business owner and you always have options. If the old guard leaves, hire a new one. The only person who cannot be replaced in business is the owner. No owner should be hostage in his or her own business. If an employee threatens to leave, hold the door open and wish him well.

New people have a learning curve and are hungry. In addition, the new people in most cases out-produce the old ones right from the start. New hires do not come with all the excuses for lack of performance. They adhere to the established process and profitability once more becomes visible.


Every ballgame needs a pitcher, a catcher, and a ball. In other words, every F&I center needs products and services to present to every customer. Many dealerships claim to be able to maximize their reserve and sell some service contracts along the way. What about the other F&I products and services that have become F&I stables? Opportunities are everywhere. Complete due diligence, make a choice, sign up, and get the supplies. Read the policies, get informed and begin to present. Ask for the additional business in a consistent manner and watch your profits and customer satisfaction grow. Remember, a sales position requires something to sell.


As with any department, it is easier to manage a process than to listen to excuses. You should have each department’s processes identified and placed in writing. People like to know what you expect and how you monitor them. How do you define success or measure a great job? Written processes are a great guidepost in mapping out and staying on course for success. You can only manage what you can measure. In business, you must inspect what you expect.


What are the levels of expectation in your company? Share company growth and visions with all employees. Employees take great pride in knowing they have contributed in the company’s growth. I know a dealer who said, “Jan, when F&I produces $XX, then we can expand the showroom, provide offices and install doors.” The F&I production in this dealership became so great that it fueled the expansion of two additional locations.

Envision great things and then write out a plan for great things. The final steps are to take action, review the progress, revise the plan when needed, and re-implement.

Nothing comes easy. It all takes effort. That is why it is work and not vacation. The results will be worth the journey. All it takes to begin is one step.

RV Executive Today, August 2008, P. 36 &38