By Nick Zulovich
It was just a little more than four months ago
that the National Alliance of Buy-Here, Pay-Here Dealers hosted its annual
convention in Las Vegas. However, Ken Shilson emphasized that two significant
developments have happened since NABD gathered ahead of Memorial Day weekend,
making its next BHPH Conference during the first days of November all the
more important for operators to attend.
The conference, whose theme is “Best Practices
to Succeed Now,” is designed for both new and experienced operators. The event
that runs Nov. 1-3 at the Rosen Shingle Creek Resort in Orlando, Fla., will
take a deep look at what Shilson called one of the “most significant accounting
changes buy-here, pay-here operators will ever encounter.” That change is
the American Institute of Certified Public Accountants passing new credit loss
measurement standards that require operators to estimate future anticipated
losses on their receivables.
“There’s nobody who is going to be helped by
this rule. There’s no silver lining in this cloud. It’s going to adversely
affect everyone,” Shilson stressed to BHPH Report during a recent
“Every time you book a receivable in the
future, you’re going to have to book a corresponding reserve. It’s the gift
that keeps on giving,” he continued.
The BHPH Conference will have a trio of experts
who will break down the complicated accounting change that Shilson stressed
simply cannot be ignored by BHPH dealers.
“All operators are currently accounting
bad-debt reserves in a different manner and may have different covenants and
relationships with their bank,” Shilson said. “It’s not easy to generalize how
big an impact it’s going to have in each situation, but it’s sure important
they determine what it’s going to be on an operator-by-operator basis. It’s
incumbent upon them to determine how big the impact is going to be and get out
in front of it.
“You can’t sit back and hope for the best and
hope your bank is going to ride along with it no matter what the impact is.
That just isn’t going to be the case,” he continued about the accounting change
that goes into effect in 2020 to give businesses time to prepare.
“Some are erroneously thinking it’s just an
accounting change, the bank is going to look the other way and they’ll figure
out a way around it,” Shilson went on to say. “The reason they’re not going to
figure out a way around it is the banks are going to be impacted, too. If the
bank has to provide a bigger reserve for their loans, that reduces their
capital and reduces their lending abilities, which can reduce what they can
lend to you and how they lend to you. It’s a domino effect.”
Along with a special conference segment
dedicated to this accounting change, the BHPH Conference also has an
interactive workshop with capital providers on the docket where operators can
find answers to a wide array of questions such as:
—What do these capital providers look for and
how can you qualify?
—How much equity do you need?
—What advance rate can you expect?
—Who is lending and what are your options?
The other area where new developments have
arrived is another crucial segment for any BHPH operator: collections. Shilson
shared with BHPH Report a recap of a recent conversation he shared in
Washington, D.C., with a high-ranking official at the Consumer Financial
Protection Bureau — an individual who specializes in collections and is
guiding the regulator’s possible actions in the buy-here, pay-here industry.
“Collections is absolutely under the regulatory
microscope,” Shilson said when asked to summarize the private discussion. “The
CFPB is going to be focused on collections in buy-here, pay-here. They’re
definitely going to be scrutinizing collection practices in our industry very
To help operators sharpen their collection
practices. NABD is bringing in a trio of experts from ACA International, the
Association of Credit and Collection Professionals. ACA touts itself as is the
comprehensive, knowledge-based resource for success in the credit and collection
“We are bringing in ACA’s best talent to help
us get better in buy-here, pay-here collections,” Shilson said.
The conference also features dual-track
workshop sessions that will focus on best operating practices, compliance,
technology and new developments that operators must learn in order to succeed
in today’s highly competitive subprime auto finance market.
The program includes several of the nation’s
leading attorneys, experts and successful operators who will share their tips
and techniques to help attendees succeed.
The event — marking the 13th annual fall
conference hosted by NABD — opens with a first-time attendee reception at 2
p.m. ET on Nov. 1.
A conference agenda and speaker information is
available at www.bhphinfo.com.
If operators can’t be away from their
dealerships for long, NABD also is offering day passes. More details can be
found by going to NABD’s website or
calling (832) 767-4759.
“These workshops will not be infomercials, and
will contain important information for operators to compete successfully
today,” Shilson said.