Pentana tackles paper mountain

LEADING dealer management systems group Pentana Solutions has started a campaign to help dealers ease the burden of storing 18 million new pieces of paper each year.

At present, the car-makers require dealers to store every piece of paper generated under each warranty claim for at least five years.

Pentana is seeking the support of every dealer across the country, regardless of whether or not they are a Pentana customer, in order to mount the strongest possible petition.

“You see a lot of dealerships storing paperwork in boxes on the mezzanine floors of the dealership or out in the yard somewhere or in containers they will buy or, in some cases, externally in a warehouse,” said Pentana Solutions executive (Australia and New Zealand) Rick Pinto.

He said it was a costly exercise for the dealer and, if some bits of paper cannot be found when the manufacturer wants to do a forensic audit, the penalties can be horrendous.

“I have seen dealers charged $70,000, $100,000 or $125,000 for non-compliance in warranty documents,” Mr Pinto said.

As a result, Pentana has started a campaign to rally dealers so that they can petition the car-makers for a switch to digital records, which are allowed and accepted by the Australian Taxation Office.

“The only way you can pass a warranty audit by a manufacturer is for the dealer to keep all of the original paper documents that they need in hard-copy storage,” he said.

“It’s in the dealer agreements for each manufacturer. It states how they need to keep copies of the documents.

“You can imagine the volume and multitude of documents when there are around 18 million new pieces of paper per annum.”

Mr Pinto said the documents were needed so that the manufacturers can audit a dealer’s warranty claims to ensure everything is in order.

“Some manufacturers don’t trust the dealers, so they like to conduct an audit of dealer records to try to understand whether the dealer did everything the way the manufacturer requires, like using the right parts, so they can actually pay the dealer for the warranty claim that was made,” he said.

Mr Pinto added that there have been some instances in the past that have generated a level of mistrust.

“So the manufacturers like to be able to do a forensic search through the documents,” he said.

“Are the documents stained, are there pen-marks, how many staple holes are there, was a document added after a warranty claim to ensure the dealer will get paid? These are some of the things they are interested in.”

Mr Pinto said dealers could forfeit their reimbursement for a warranty job if the paperwork was incomplete. And it does not stop there.

“If a document is missing during the audit, it might not just cost you the value of that repair order, it might cost you the value of that repair order extrapolated by the size of the audit,” he said.

“A manufacturer could end up charging the dealer $10,000 or $20,000 or $100,000 for incomplete documents.”

Mr Pinto also said the risk of lost documents was a real danger when dealers have to physically store mountains of paperwork.

“The thing about keeping documents in physical paper is if someone goes into a box and moves a repair order or a warranty repair order for any reason, and they forget to put it back, you’ve lost that document forever.

“At Pentana, we see physical storage of paperwork as an archaic process and one of the things that we want to do is change the industry and drive the industry forward by saying, ‘Well, if conducting audits is the only reason why manufacturers require dealers to retain documents, why don’t they try to do the audits in a paperless environment?&rsquo.”

The scanning and digital storage of documents would save the dealer time, money and storage costs and would provide the same level of integrity as physical paper records, Mr Pinto said.

“The reality is the ATO and the government both accept digital documents for audit purposes and tax purposes, so it’s just a norm that you would think the manufacturers would adopt,” he said.

“The ATO says on its website how you keep those documents is up to you, paper format or digital format, as long as it can be proved the document was scanned and archived at the relevant date and time and there has been no manipulation thereafter, people trying to scribble things or change the document in any way shape or form.”

The requirement to keep the documents in physical form is imposed on dealers under their franchise agreements, and Pentana has mounted the campaign to try to persuade manufacturers that digital records will be just as reliable.

The aim is to obtain supporting signatures on a petition from every dealer in the country and present the data to the manufacturers.

“Once we have enough petitions and the signatures from the dealers, we will write to each chief executive of each manufacturer and advise them of the change we are trying to implement and advise them of all the signatures that we have gathered from the dealers,” Mr Pinto said.

“It’s not just our voice, it’s the voice of the entire dealer body in the Australian market.

“It doesn’t benefit us in any way we are doing this because we are trying to change the industry and work with the industry that we support.”