When it comes to managing your dealership’s largest asset—the parts inventory—surprises are the last thing you want. Yet, every year, dealers find themselves shocked by the results of their physical inventory. Whether you’re facing a shortage or an overage, those words can send any Parts Manager into a frenzy: “Go find it.”
In our latest PartsEdge Webinar, co-founder Chuck Hartle dug into one of the most requested topics lately—Parts Reconciliation. Here’s a breakdown of why monthly reconciliations matter, the biggest causes of variances, and how Parts Managers can work more effectively with their accounting departments.
Every Parts Manager dreads hearing one of two things:
“Your physical inventory is short.”
“Your inventory is over.”
Shortages and overages both bring stress—and often confusion. And the follow-up question is even worse: “Go find it.”
But here's the hard truth: many of these surprises happen because of one root issue—a lack of proactive reconciliation throughout the year.
Doing a monthly reconciliation between your inventory system and the accounting general ledger can be a game changer. Here’s why:
Early error detection: Spot discrepancies quickly before they snowball.
Needle in a pin cushion vs. haystack: Monthly reconciliations make it easier to identify issues, unlike year-end cleanups where you're searching through months (or years) of data.
Clarity between departments: Regular communication between parts and accounting prevents misunderstanding and finger-pointing.
Chuck shared an example of a dealership that was consistently $100K short. After working through the process, they discovered $120K in write-offs that hadn’t been reconciled in accounting. Once corrected, the next month’s reconciliation was off by only $496.
Here are a few real-world scenarios that often cause the biggest issues:
Inaccurate reporting of WIP or counter tickets
Untracked dirty cores, especially in DMS systems like CDK
Claims, returns, or shortages not accounted for
No monthly depreciation booked
Emergency purchases from other dealers misposted
Parts not billed out properly (aka missed sales)
Overstated WIP
Unreconciled dirty cores
Appreciation in inventory cost not tracked
Special orders not billed or filled correctly
Bulk oil or freon pricing updates not applied
Tracking dirty cores is one of the most overlooked issues in reconciliations. Different DMS systems handle dirty cores in different ways:
Reynolds has the easiest core tracking via the 2222 report.
Dealertrack and PBS use core status tracking on part numbers.
CDK requires manual tracking unless you activate a specific program (which is complex and rarely used).
Bottom line: if your dirty cores aren’t being tracked and updated properly, your variance will be off—period.
Chuck reminded us of the infamous “11th Commandment” in dealerships: “The controller is always right.” But that doesn’t mean controllers understand what parts managers are doing day-to-day—or vice versa.
Successful reconciliation requires collaboration. Controllers and parts managers should have a shared understanding of how to handle:
Prepaid orders
Parts received but not invoiced
Invoiced parts not received (in transit)
Depreciation and write-offs
Special orders and emergency purchases
Here are a few takeaways to help Parts Managers stay on top of things:
Daily/Weekly Tasks:
Monitor negative on-hand inventory
Review override reports on emergency purchases
Track dirty cores and pending credits
Verify special order bin accuracy
Monthly Tasks:
Reconcile all reports before month-end
Check bulk oil and freon cost updates
Ensure all adjustments and restocking fees are correctly posted
Use a standardized reconciliation form tailored to your DMS
“Parts inventory management is not a perfect science—maximize the good, minimize the bad.” – PartsEdge Motto
PartsEdge offers a monthly reconciliation form tailored to your DMS system (CDK, Reynolds, Dealertrack, PBS, etc.). If you want a copy, just reach out and we’ll send it your way. Email us or schedule a call today.