Cash Flow Example
Selling 75 service contracts per month with a $700 reserve cost
The chart below calculates the cash reserve at a dealership that sells 150 retail units per month, or 1,800 units per year, at a 50% service contract penetration rate. In this participation model, the dealer can immediately make use of the
reserve until it’s needed for refunds, claims and taxes.
Time Period | Cash Reserve Generated |
---|---|
After 1 month | $52,500 |
After 6 months | $315,000 |
After 12 months | $630,000 |
After 24 months | $1,260,000 |
After 36 months | $1,890,000 |