For years, car salespeople have been issued cash “spiffs” as an incentive to sell, sell, sell!

Salespeople generally get excited to “win” a spiff and nothing beats a little cash in hand to make your weekend a little brighter but the reality for most dealers is that the majority of the cash they have designated as spiff money is being misappropriated.

Back in the heyday of big weekend unit sales it was not unusual to issue cash of $1,000 or more to management to use to giveaway to the sales department for their efforts.  Today there is still nothing wrong with doing business this way but it is in your best interest to adjust that figure and implement some controls.

The following are some guidelines to help you keep the spiff contests honest and prevent fraud in your dealership:

  1. Determine a reasonable, maximum amount you wish to designate for the weekly spiffs.
  2. Designate ONE manager to be in charge of spiffs and have them sign off when receiving the monies.
  3. When issuing cash to the designated manager, the accounting department should set up a receivable for tracking purposes rather than take monies from a cost of sales account.
  4. A spreadsheet or spiff voucher should be used for EVERY spiff distributed and should be signed by the salesperson receiving the spiff as well as the authorizing manager.
  5. Any excess cash should be returned to the accounting office on the following Monday morning along with the supporting documentation (spreadsheet and/or spiff vouchers).
  6. Spiff monies should only be used for spiffs.  The monies should not be used for any other expenses such as lunches, gas, etc. 
  7. No additional cash should be issued to the designated manager until all previous monies are accounted for.
  8. The accounting office should promptly post the spreadsheet/vouchers to credit the original receivable and then set up a receivable to the proper salesperson for payroll purposes.  (All cash spiffs should be taxed through payroll.)
  9. Keep a monthly spreadsheet of spiff activity to track the amount of spiffs issued and use as a tool to determine the effectiveness of spiffs as well as what amount should be issued weekly.

Jennifer Enck