"Help, I've been sued by AFC, but I have no idea how they are coming up with saying that I owe so much money" - the role of the Forensic Accountant

 We have had a lot of calls in the past few months from people who have been sued by Automotive Finance Corporation (AFC) either for breach of contract, or breach of guarantee, but the amount claimed is an order of magnitude greater than what the dealer or guarantor believes might be legitimately owed.  (Note that this article could apply to any floorplan lender, but we have mostly been fielding inquiries of this nature about AFC.  We have generally been able to work out disputes over numbers with Nextgear Capital without as much difficulty.)  

We have found that these cases are challenging, because the person calling us may not even have access to the books and records of the dealership, and AFC may have cut the dealer off from online access of their account with AFC.

The documents that AFC provides with the litigation don't have all the information to solve the problem, and even when AFC provides more documents by formal or informal discovery, that doesn't tell the whole story. What AFC provides is in a form that they use to bolster their case (because, of course).   There is always a possibility that your accountant will dig into the numbers and find that AFC's numbers are good.  

The unfortunate truth is that there may be no cheap way to resolve these cases unless you have meticulous records from your dealership backing up your position.  If you have a readily presentable paper argument supporting your claim, we can advance that argument and negotiate with AFC, or oppose summary judgment, at a low cost.  If you don't, litigating against AFC is likely to get much more expensive.

If you need to build a paper case supporting your proposition that you don't owe AFC what is claimed, you may need a forensic accountant to evaluate AFC's paper claims. The forensic accountant can cross reference it against the company's books, and can tell us (the attorneys) what additional information that is needed to fully do a forensic audit of the claim.  In the context of a case in litigation, the goal is to get a report from the forensic accountant that supports our position in the case, usually that the amount claimed is too high.  This report can be used in mediation or arbitration, and the accountant can testify if the case goes to trial as an expert witness.  

The Catch: Forensic accountants are niche professionals with extra training that typical accountants don't have. It is likely that any forensic accountant you can get will charge significantly more than your company's regular accountant. Forensic accounting can be time consuming.  You may have to pay more for your forensic accounting than you do for your attorney.  Also, it isn't always easy to find a good forensic accountant.  

For more information on the role of a forensic accountant, here is a link.  Planning for Fraud: Using Forensic Accounting to Protect Your Business - Tire Review Magazine