If your dealership is part of a franchise dealer network, then it is usual business practise for that franchise to set vehicle sales targets. When you achieve these targets, the franschise manufacturer pays a bonus.
The amount of bonus paid by each manufacturer varies considerably, but the thing that you should keep in mind is this. When do you show this bonus payment within your reports?
Some dealers show the bonus in the period within which it has been earned and other dealers show this bonus when they actually receive payment, the difference could be two months apart.
Example:
Discussion:
The variance across this method of accounting causes a sizable distortion in profitability. Some franchise manufacturers are now informing their dealers to enter bonus payments at a specific time so that these distortions are eradicated and composite reports are more meaningful.
When comparing your profitability with another dealer, it is always worth establishing how and when this element of bonus is allocated.