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2016-10-19 Two Major Developments Since Last NABD Conference

By Nick Zulovich
Senior Editor


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 telephone conversation.

“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 carefully.”

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 industry.

“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

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.