Dealer audits F&I staff monthly; revenue rises

A legally compliant finance and insurance manager also is a highly productive one.

That's a lesson the Phil Long Dealerships, of Colorado Springs, Colo., learned over the past year and a half after introducing monthly audits of the 18 F&I managers at the company's 13 locations.

Scott Arnold, chief administrative officer for Phil Long, said the F&I managers who score 100 percent in the evaluations can average as much as $150 more per vehicle retailed than those with a few slip-ups. The companywide average is $1,200 per vehicle retailed.

Many of the F&I professionals get close-to-perfect scores. The company's average score is 98 percent.

"The ones who consistently score 100 percent are the ones who have been employed here for a while," Arnold said in an interview. "They are always presenting the product menu consistently. That way, they are not telling one customer one thing and another something else."

Here's how the audit system works:

1. Phil Long uses a third-party auditor to select at random 20 transactions per manager and evaluate the paperwork.

2. For each deal, the auditors examine a dozen tasks. If anything is omitted or done improperly, the F&I manager's score is reduced.

One task, for example, is to present the entire product menu to every customer. Customers must sign off on the overall menu as well as sign a written acknowledgement whenever they buy aftermarket products. The company has price ceilings for each product, and the manager must stay within those parameters.

The manager also must get customers to sign a form acknowledging they are in a negative equity position if they owe more than their car is worth. Another form that customers must sign recognizes that they don't have to buy aftermarket products to obtain financing through the dealership.

Customers also must agree in writing to settle disputes with the dealership through arbitration and that they understand the dealership's privacy policy on handling information.

3. F&I managers who score below the companywide average get a written reprimand. Managers scoring below average a second time must meet with the company's chief financial officer, who advises them on how to improve their compliance record. Ultimately, managers who repeatedly score below average can lose their jobs.

Arnold said he has had to fire a few managers since the audit program was introduced.

The newest staff members typically earn the lowest scores because they are the least familiar with the paperwork that the Phil Long network requires.

"They think we won't audit them every month," said Arnold. "But they have to do it the way we say they should -- it's their job."