Auto dealerships closely monitor vehicle margins, inventory costs, and operating expenses. But how often do they review what it actually costs to accept customer payments?
Payment processing fees are only part of the equation. Returned checks, declined transactions, delayed deposits, and time spent resolving payment problems can all affect a dealership's bottom line.
Charles Dortch III, Senior Vice President of Sales at CrossCheck, brings 29 years of industry experience and has worked with thousands of automotive dealerships throughout his career. He encourages dealers to look beyond processing fees and consider the full financial impact of accepting customer payments.
One way to do that is through a 90-day payment audit. By reviewing recent transactions, dealerships can identify hidden costs, evaluate payment risk, and find opportunities to improve efficiency across sales, finance, parts, and service. Just as importantly, they can determine whether their current payment methods provide adequate financial protection.
Why Should Dealerships Review Their Payment Processes?
Dealerships should regularly review their payment processes to identify unnecessary costs, reduce exposure to returned payments, and improve efficiency across departments. A 90-day audit provides a practical way to evaluate these factors using recent transaction data.
Dealerships accept payments for vehicle purchases, down payments, service repairs, parts, and other transactions. Each department may use different payment methods, procedures, and providers.
Without a regular review, dealerships can overlook expenses that accumulate over time.
Consider a returned check for a $5,000 vehicle down payment. Employees must contact the customer, arrange another payment, update records, and potentially involve additional staff to resolve the issue.
Even when the dealership eventually collects the money, the process consumes time and resources.
A payment audit helps management understand where these problems occur, what they cost, and whether existing safeguards adequately protect the dealership.
Step 1: Review 90 Days of Payment Activity
Start by gathering three months of payment records from your dealership's accounting system, merchant processing statements, and department reports.
Review activity across the dealership, including vehicle sales, F&I, parts, and service.
Look for:
- Total payment volume by method, including checks, ACH, credit cards, and debit cards
- Processing fees and other transaction-related charges
- Declined payments and returned checks
- Payment disputes and chargebacks
- Delays between payment acceptance and funds availability
Reviewing 90 days provides a useful snapshot of payment activity without requiring an extensive financial analysis. It can also reveal recurring problems that might not stand out in a single month's reporting.
Keep in mind that a low number of returned payments doesn't necessarily mean your dealership has little payment risk. Existing payment safeguards may be doing exactly what they're designed to do.
Step 2: Calculate the Costs Beyond Processing Fees
Many dealerships evaluate payment providers primarily on transaction rates. While processing fees matter, they don't tell the whole story.
A payment method with a lower transaction fee may become more expensive if it exposes the dealership to returned payments or requires significant administrative follow-up.
Consider the additional costs associated with:
Returned payments: A returned check or ACH transaction can create collection expenses, additional processing fees, and potential financial losses.
Employee time: Sales, accounting, and administrative employees may spend hours contacting customers, correcting records, and reconciling payment discrepancies.
Delayed funds: Payment delays can complicate cash flow management, particularly when dealerships handle large transactions.
Lost opportunities: Limited payment options can prevent customers from completing transactions when they cannot use their preferred payment method.
The goal is to understand the total cost of accepting a payment, not simply the fee charged to process it.
Dealerships should also consider the value of existing payment protection when evaluating costs. Eliminating a service that helps prevent financial losses may reduce an immediate expense while increasing exposure to a much larger loss.
Step 3: Evaluate Payment Risk and Financial Protection
A dealership may accept thousands of dollars in payments from a single customer. That makes payment protection especially important.
During the audit, review how your dealership handles checks and ACH transactions.
Ask these questions:
- What happens when a customer payment is returned?
- Does the dealership absorb the loss, or does an existing guarantee provide protection?
- Are employees following consistent payment acceptance procedures?
- Does the current provider offer verification, guarantee, or collection services?
- Which transactions create the greatest financial exposure?
It's also important to understand the difference between payment verification and payment guarantees.
Verification helps assess a payment before acceptance, but it does not necessarily protect the dealership if the payment is later returned.
A payment guarantee, by contrast, provides financial protection for approved transactions according to the provider's terms.
Consider a dealership that accepts a $15,000 check for a vehicle purchase. If that check is returned and the dealership cannot recover the funds, the financial loss would be $15,000—far more than the cost of guaranteeing that transaction. Check Guarantee helps protect dealerships from this type of loss on approved transactions, subject to the provider's terms.
Even dealerships with few recent returned payments should evaluate their financial exposure. A strong payment history is encouraging, but it doesn't eliminate the possibility of a significant future loss.
Step 4: Identify Payment Delays and Inefficiencies
Not every payment problem results in a direct financial loss. Some create unnecessary work or slow down transactions.
Talk with employees in sales, F&I, accounting, and service to identify recurring challenges.
For example, does the dealership require customers to return with another form of payment when a transaction cannot be completed? Do employees spend time manually depositing checks or following up on outstanding balances?
These issues may seem minor individually, but they can affect productivity and the customer experience.
Consider whether your current payment solutions allow the dealership to accept payments conveniently while maintaining appropriate risk controls.
Options such as Remote Deposit Capture, guaranteed check acceptance, and ACH payments may help streamline workflows and reduce unnecessary administrative tasks.
Step 5: Create a Payment Improvement Plan
Once you've reviewed the data, identify the areas with the greatest potential for improvement.
Your dealership may discover that certain payment methods generate more returned transactions, specific departments spend too much time resolving payment issues, or existing processing arrangements no longer meet operational needs.
Before changing providers or procedures, determine which existing safeguards help protect the dealership from financial losses.
Prioritize improvements based on three factors:
- Cost: Where can the dealership reduce the total cost of accepting payments without increasing financial risk?
- Risk: Which payment methods or procedures expose the dealership to preventable financial losses, and what protections are already in place?
- Efficiency: What changes could help employees accept and process payments more easily?
Establish measurable goals and review the results after implementing changes.
Remember that the value of payment protection cannot be measured solely by comparing guarantee fees against returned payment losses during a 90-day period. A guarantee helps manage financial exposure even when losses are infrequent.
Protect Your Dealership's Revenue with Guaranteed Payments
A payment audit should do more than identify opportunities to reduce costs. It should help dealerships determine whether their payment processes provide the right balance of efficiency, flexibility, and financial protection.
CrossCheck helps auto dealerships accept customer payments with greater confidence through Check Guarantee and guaranteed ACH payment solutions.
With options designed for automotive transactions, dealerships can offer customers more ways to pay while reducing exposure to returned payments. CrossCheck's solutions help dealerships protect revenue, simplify payment acceptance, and reduce the administrative burden associated with payment problems.
A successful payment strategy isn't necessarily the one with the lowest transaction fee. It's the one that helps your dealership accept payments efficiently while protecting the revenue you've worked to earn.
Protect Your Dealership's Revenue with CrossCheck. Learn how our guaranteed payment solutions can help your dealership reduce payment risk, improve efficiency, and offer customers more ways to pay. Explore CrossCheck's payment solutions for auto dealerships.