Preventive Medicine for the F&I Department
When you think of the phrase “preventive medicine,” what comes to mind? For me, prevention means taking a dose of proactive measures to ward off unfavorable consequences. Preventing results that we don’t want requires that we assume nothing and verify everything.
A new year brings new opportunities to proactively evaluate policies and procedures and determine if performance matches the standards we have established. In today’s litigious environment, knowing and doing are equally important. Most experienced F&I managers are fully aware that their department is the last doorstop between the dealership and the courtroom. The operative word seems to be documentation: what is in writing? What was acknowledged? What was disclosed? How was that information controlled?
Last year, I heard some F&I managers say that customers who wanted to buy their dealerships’ advertised vehicles also had to purchase the $1,000 protective coatings. While I am not an attorney, I think it is safe to conclude that this type of requirement will litter the playing field with yellow flags. Make sure this practice is not occurring at your store.
Another refrain I have heard in recent months is, “Our town is not even on the radar screen of the legal front so there is no need to change the way we do business.” Apparently these folks have forgotten that difficult situations can occur anywhere and people in difficulty everywhere can do some desperate things. Desperation resides anywhere that paychecks do not match incoming bills and bill collectors start calling. Being proactive and evaluating your procedures will deter acts of desperation from occurring on your property.
In 2006, identity theft was the number one crime in America, and it is an odds-on favorite to retain that rank in 2007. The age of information delivers an unequivocal mandate to secure your employees’ and customers’ non-published information alike. While we do not want to choke the business model, we must also exercise common sense and impeccable ethical measures to safeguard information that is entrusted to us in the course of conducting business. Are your safeguarding policies up to date? Do you conduct self audits and then document them? Does your new hire orientation include a session on your safeguarding procedures?
An ounce of prevention is surely worth far more than a pound of cure. As the New Year begins, ask not who has been audited or who has been fined, and can my bank account and attorney forestall a similar fate. Ask instead what you can do now to prevent the need for anyone to question your business activities later.
P.S. If you do not know which preventive medicine to take, visit the NADA floor where you are sure to find exhibitors willing and able to prescribe the right dose at far less cost than a fine or court settlement.
World of Special Finance, February 2007