: Income is recorded when the deal is finalized, even if the cash hasn't been received yet.
: Generally limited to dealerships with average annual gross receipts under $25 million (indexed for inflation, currently closer to $26–30 million). buy here pay here accounting method
: Dealers may owe taxes on profits they haven't actually collected in cash yet. Cash Basis Accounting : : Income is recorded when the deal is
: While simpler and offering a clear view of current cash on hand, it can mask long-term financial health and often fails to meet bank requirements for financial statements. Strategic Dealership Structures Cash Basis Accounting : : While simpler and
: Income is recorded only when actual payments are received from the customer.
To manage the tax burden of accrual accounting, many BHPH operators use a : Money matters: 3 major accounting changes to watch