Powersports Business January 2025 | Page 14

14 • January 2025 • Powersports Business

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The case for total transparency

As a dealer , you pride yourself on being transparent with your customers . You empower your staff to assist your customers in making the right decision by understanding
ZACH MATERNE their needs and offering guidance . Yet , when it comes to your own business , especially your insurance program , transparency can feel like a double-edged sword .
I get it . As a former dealer myself , I ’ ve been in your shoes . Sharing every detail - revenue , employee counts , dealer plates , building value , inventory , and yes , even your current premium - can feel risky . You might worry it will limit your negotiating power or expose you to potential drawbacks .
In my current role as a commercial insurance consultant , I ’ ve learned that withholding information often works against you . Total transparency isn ’ t just helpful ; it ’ s essential . It empowers your broker to secure the best
possible coverage and pricing while avoiding inefficiencies that could leave you vulnerable .
TRANSPARENCY MATTERS Insurance isn ’ t just about finding the lowest premium ; it ’ s about protecting what you ’ ve built . Every piece of information you provide helps your broker understand the unique risks your business faces and allows them to act as your advocate in the marketplace .
Here ’ s how transparency benefits you :
PREMIUM While premium is often a primary focus , it ’ s only one component of a comprehensive insurance strategy . Sharing your current premium gives your broker a benchmark to evaluate which markets are viable options . Many carriers have minimum or capped premiums , and knowing your current costs allows your broker to target markets that are effective players for your renewal .
Transparency about premium also helps your broker leverage competitive pressure among carriers , ensuring they bid aggressively for your business . But this only works if your broker has the full picture , premium included .
COVERAGE A low premium with incorrect exposures could mean you ’ re paying more for less coverage . For example , if your policy doesn ’ t accurately reflect your inventory ’ s peak value , updated property values that reflect inflation in construction costs , inaccurate revenues or payroll or the correct number of dealer plates in use , your rate might seem
lower , but the coverage won ’ t align with your actual needs . In the event of a claim , this discrepancy could leave you severely underinsured or subject to additional cost during a premium audit .
EXPOSURES Your exposures , like revenue , employee count , and property values , drive your premium and shape your coverage needs . Providing accurate , updated information allows your broker to position your dealership effectively with carriers , demonstrating that you ’ re a well-managed , low-risk operation .
AVOIDING A TRANSACTIONAL APPROACH
A transactional approach to insurance often leads to a transactional result . When dealers view their insurance renewal as a one-time negotiation focused solely on price , they limit the potential for long-term benefits . This mindset often results in :
Inadequate coverage that leaves you exposed during a claim .
Missed opportunities to secure better terms through strategic planning .
Inefficient use of time chasing shortterm savings at the expense of long-term protection .
In contrast , transparency and an intentional strategy can transform your insurance experience . By collaborating with your broker , you build a relationship where they understand your business holistically . This enables them to advocate for you more effectively , target the right markets and structure a program that aligns with your goals — not just for this renewal , but for the future .
SAVE TIME AND MONEY Being upfront from the start , you allow your broker to focus their efforts on carriers that are the best match for your needs , avoiding unnecessary roadblocks and inefficiencies .
TRUSTING YOUR BROKER Transparency requires trust , and that trust is built on a strong partnership with your broker . Your broker should be more than just a service provider ; they should be your advocate , working tirelessly to protect your interests and secure the best possible outcome for your business .
When you treat your broker as a partner and provide them with a complete picture of your operations , you empower them to deliver solutions that truly align with your goals .
FINAL THOUGHTS Transparency isn ’ t about losing control ; it ’ s about gaining a competitive edge . By providing your broker with the full scope of your business ’ s exposures , premium and operations , you ’ re setting the stage for better coverage , competitive pricing , and long-term peace of mind .
Insurance is a critical part of your business strategy , and total transparency is the key to making it work for you . Trust your broker , be open , and let collaboration drive your success .
This article was written by Zach Materne , a Property & Casualty risk consultant for Apiar Commercial Risk Management , LA Resident License # 871096 ; Cell Brokerage CA LIC . # OG83985 ; NPN # 14775635

Enhancing cash flow and preparing for tax changes

BY BRAD STANEK AND PAULINA MATEL CONTRIBUTING WRITERS
As 2024 created new challenges for dealerships , many are experiencing lower volumes , reduced margins and increased overhead . To navigate these financial difficulties , dealerships must focus on enhancing cash flow which includes preparing for potential tax changes coming in 2025 . Effective management of cash flow , along with proactive tax planning , can help dealerships preserve their hard-earned dollars and position themselves for future success .
MANAGING RECEIVABLES Effective cash flow management begins with a close examination of receivables , which include accounts receivable , warranty receivables and contracts in transit . Brad Stanek and Paulina Matel , financial advisors for the Stanek-Haack Group at Morgan Stanley , highlight the importance of “ regularly reconciling
Accounts payable management also plays a significant role in cash flow . Timely and efficient payment practices can positively impact cash flow . receivables to ensure timely collection and prevent errors .” This involves not only monitoring accounts receivable but also processing warranty claims promptly to avoid missing out on critical reimbursements . By addressing these elements diligently , dealerships can improve their cash flow and reduce the risk of financial discrepancies .
OPTIMIZING INVENTORY MANAGEMENT
Coming out of the Covid pandemic , we saw firsthand that excessive inventory can tie up cash and increase floor plan costs . Jane Saxon , managing director of CBIZ Somerset , advises that dealerships should “ conduct regular audits and ensure physical inventory matches records .” She also points out that monitoring inventory and your day sale of inventory ( DSI ) helps prevent carrying aged units at high interest rates . “ Implementing cycle counting for parts inventory not only helps manage obsolete items but also reduces theft ,” Saxton notes . Such practices contribute to better cash flow management by minimizing unnecessary financial strain related to inventory .
EFFICIENT ACCOUNTS PAYABLE MANAGEMENT
Accounts payable management also plays a significant role in cash flow . Timely and efficient payment practices can positively impact cash flow . According to Saxton , dealerships should “ leverage early payment discounts where available and strategically manage payment terms .” On the other hand , negotiating extended payment terms with suppliers can provide short-term cash flow relief , while maintaining good relationships with vendors . “ Keeping a close eye on accounts payable aging reports is essential for optimizing cash flow ,” Saxton says . This approach helps dealerships effectively manage their cash outflows and maintain financial stability .
PREPARING FOR TAX CHANGES As we look to 2025 , preparing for potential tax changes is going to be crucial for financial stability . With the sunsetting of the Tax Cuts and Jobs Act ( TCJA ) and new tax regulations potentially on the horizon , it is important for dealerships to stay informed about legislative updates that could affect their financial planning including the top marginal tax rate increasing from 37 % to 39.6 %, and the elimination of the Qualified Business Income ( QBI ) deduction .
Brad Stanek underscores the importance of “ proactive tax planning to understand and anticipate how changes may impact dealership operations .” Consulting with tax professionals and utilizing available resources can help dealerships make informed decisions and adapt their strategies . Paulina Matel says , “ staying informed of potential changes is key to effective financial planning .”
CONCLUSION In the face of current financial pressures , dealerships must adopt a strategic approach to managing cash flow and preparing for tax changes . By focusing on effective receivables management , optimizing inventory and accounts payable , and staying informed about tax regulations , dealerships can navigate these challenges and position themselves for future success . Proactive financial management not
In the face of current financial pressures , dealerships must adopt a strategic approach to managing cash flow and preparing for tax changes .
only preserves cash , but also strengthens the overall resilience of the dealership .
Ultimately , dealers must prioritize exit planning to protect their legacy , secure their financial future , and ensure the continued success of their dealership and their personal financial wellbeing . With the right approach , dealers can navigate the uncertainties of exit planning and achieve a favorable outcome that aligns with their personal and financial goals .
To see how prepared you and your financial plan are , or if there are additional gaps or opportunities to protect and grow your wealth , our team offers a complimentary Second Opinion Service , which is a 360−degree review of your dealership and personal financial situation .
Brad Stanek ( brad . stanek @ ms . com ), is an executive director and financial advisor with The Stanek- Haack Group at Morgan Stanley in Chicago , and Paulina Matel ( paulina . matel @ ms . com ), is a financial advisor with The Stanek-Haack Group .