Steve had a clearly defined opinion on how to run a business office. He was excellent at establishing standard procedures and sticking with them. You might say he was a disciplinarian. Here are some of his policies and procedures:

1. Separating the F&I Profit Center

Steve viewed the F&I office as its own profit center. While sales and F&I must depend on each other, they must also be separate.

In order to maintain checks and balances on this “equal-but-separate” profit center, Steve answered directly to the general manager — not to the sales manager, which seemed to work well for our dealership. Remember, the sales manager’s responsibility is to sell units, not F&I products.

2. Recognizing Your Profit Priorities

Most business managers feel they are unjustly losing F&I profits to the sales department. Steve had a different view. He believed that unit sales and gross profit take priority over F&I income.

See, Steve and I were paid not only on what happened in the F&I office, but we also got a portion of the entire sales department’s profit. The reason was the sales department’s No. 1 priority was to deliver units at the best gross profit possible. That’s because gross profit is usually permanent and can’t be charged back. F&I profits can.

3. Emphasizing the F&I Bottom Line

F&I success is measured on the net result. What good is it to sell products if they’re going to be charged back? Therefore, F&I successes should be based on net results (i.e., after charge-backs).

4. Upgrading the Business Office’s Environment

Steve was fussy in regards to the look of the business office. Here are some of his requirements for a professional business environment:

Ensure Privacy: Customer satisfaction is enhanced when customers feel their conversations are confidential. You also have a legal obligation to maintain the privacy of a consumer’s credit documents.

Communicate Professionalism: A dealership’s business office is competing with the customer’s bank or credit union. Therefore, the retail environment should be just as professional.

Eliminate Distractions: Avoid hanging pictures of new units on the walls. If customers see another model, they may become indecisive and delay finalizing their documents.

Limit “Pitch” Materials: Too many marketing pieces communicate that the business office is really a sales office.

Eliminate Interruptions: Permit-ting interruptions when discussing F&I with a customer is unacceptable.

5. Maintaining 100% Coverage

My first F&I job was as an F&I assistant. I was promoted when the dealer principal realized that every unit sale could generate hundreds of dollars in F&I income. He felt the dealership needed F&I coverage every single moment. He even insisted that our sales manager become the back-up F&I person, which proved invaluable during peak business times, vacations, etc.

6. Keeping Pace

The time a F&I manager spends with a customer may be limited for several reasons. But whatever the case, the unit sale must never be jeopardized because the F&I manager takes too much of the customer’s time.

The customer should be introduced to the F&I manager briefly so preliminary documents can be started, and rate and payment questions can be addressed. Next, consider having the salesperson introduce the customer to a parts and accessories specialist. You are more likely to increase parts, apparel and accessory sales if you follow this process.

While the customer is with the P&A specialist, the F&I manager can get the credit approval process started. When the P&A returns with the customer, he or she should provide the salesperson and F&I manager with the dollar value of the add-on sales. The salesperson then reintroduces the F&I manager to the customer.

7. The 100 Percent Rule

Steve felt that if a dealer is to maximize profit opportunities, then every customer must see the F&I manager! Customers must never be allowed to check with another lending source before seeing the business manager. If F&I managers are paid on commission, the chance to present to the customer is critical to their income potential. In addition, F&I managers must maintain 100 percent compliance with all regulations.

This article is an excerpt from Gart Sutton’s book, “The Best Operators Guide to Finance & Insurance.” Sutton serves as president of Gart Sutton & Associates Inc. He can be reached at gart.sutton@bobit.com.