Oh, how rental dealers love to count. Most dealers get computer reports counting things by the day, by the week, by the month, by the quarter and by the year that are beyond the understanding of most mortal minds. When that is not enough, or the counts look funny, they send out auditors to count some more things. Dealers are always wondering, “Am I counting the right stuff? What else can I count to measure this company?” When they aren’t counting things to measure the performance of the organization, they are counting things to control the organization. It is no wonder that the industry has attracted more than its fair share of CPAs and other accounting types because there are so very many things to count and so many different ways to count them.
To an outsider, counting might seem simple. It is a cash business, after all. Count the money coming in (revenues), count the money going out (expenses), and then count the money left before taxes (pre-tax income), then count the money that’s left after taxes, if any (after-tax income). But it is so much more deliciously complicated than that for rental dealers.
Dealers do count the money every day. Experienced dealers count projected dollars by the day into the future, and can do so very accurately for months out at a time.
But they don’t just want to count the dollars that come in through the door. They also want to count the dollars that did not come in and what dollars might have come in the door. That means counting units first, usually the balance on rent (BOR). But not always as some dealers count accounts on rent (AOR); other dealers count agreements on rent and some count customers. Many, of course, count all of these things. Then they count how much money would have come in if every customer had paid in full on time, which never happens, but is fun to count anyway. Then they can count lost rental income and future potential fee income and free time both by days and by dollars, measuring actual free time given against free time allowed.
They can count how many dollars are lost with each pick-up and by all pick-ups in a period to learn how much more profitable it would have been to get a renewal payment instead of picking up the unit.
They can count dollars received on initial payments, dollars received from club programs, late fee revenue, late fee revenue that was waived, total dollars lost from promotional coupons and store specials.
None of which contemplates counting future revenues. To do this, dealers count up potential rental dollars on existing agreements. Some dealers add future potential fees as a whole and per agreement. Some count how many customers or accounts or agreements or units or all of these things will pay out tomorrow, in one week, in one month, etc.
Rental dealers like to count how much is lost from skips and stolens, both in absolute dollars and in percentages of revenues. Some do it daily, some weekly, some monthly and some all of the above.
Rental dealers count all of these things because they want to know how they are doing. If they aren’t doing well enough, and no rental dealer is ever doing well enough, then they count more things. They count control items that, if counted completely and accurately, will tell dealers where the dollars that should have come into the store actually went.
Toward that end, they count past dues several different ways. They categorize and age them. They count inventory every day to check for shrinkage. Rookie dealers count boxes in the back room. Veteran dealers shake the boxes as they count them to see if any are empty. They count supplies: remote control units, operation manuals, UHF loop antennas, furniture legs, receipt books, written receipts, contracts, customers, customer file folders, out-of-service inventory, office supplies, mileage on trucks, postage stamps and the list goes on and on.
They spend a lot of time counting aspects of inventory both as a performance measure and as a control measure. They count new units versus used in the system. They count idle versus active units. They count units by product category. They count the number of employees per BOR, the number of times a unit has been out on rent, the number of times a product has been serviced, the number of products charged off by category, by date and sometimes by zip code. They count the number of turns on disposed-of units, the total dollars received on disposed-of units and the number of switch-outs altogether and by product category.
Dealers count deliveries and measure highs and lows and try to figure out which advertising is working and which ads are duds. As part of measuring performance, dealers measure employees in a number of ways. They count employee hours, employee turnover, BOR per employee, customers per employee, number of phone calls made per employee, number of rental applications taken per employee, number of deliveries per employee, revenues per employee and fees per employee.
Since they are the source of all revenues, customers are of great interest to dealers. Some stores keep maps on the wall with pins showing where customers live. Different color pins show multiple unit customers, new deliveries, past dues or charge-offs. Dealers count customers with more than one unit. They count the number of accounts per customer, the number of agreements per customer, the number of customers per delivery route and the number of accounts per delivery route. They count repeat customers versus new ones. They count referrals. Dealers count the number of times a customer has paid late fees and the total dollars in late fees paid by a customer. They may count the number of customers who pay late on certain days of the week.
It might be tempting to argue that rental dealers spend too much time counting and not enough time renting and collecting, but that is just not so. As the tools for counting, computers and specially designed software, have become more sophisticated, dealers can count things more efficiently. In the old days, before computers, dealers struggled to count card closes on Saturday night and how much money got put in the bank each day. Today, there is no end to what can be counted in the rental industry. Counting some things is doubtless more productive than counting some others, but no one has yet developed the final formula for what to count and what to ignore. This rental counting science is still evolving.
One of the remarkable things about rental dealers is that they know all these numbers, all of this incredibly complicated detail about their businesses and they know it every day. An experienced dealer will look at all of these numbers every day and absorb them. Then, like the captain of a ship, when the dealer senses a shift, however subtle, in what the countings tell him, he will take corrective action to right the course.
It is a fact that dealers love to count. People in the business who don’t aren’t rental dealers long. Counting is a good thing. Rental dealers know their businesses profoundly, inside and out. That kind of working knowledge inevitably maximizes profits and lets lenders sleep securely at night. And besides, it is all just so much fun. That’s what counts.
