The workshop is full, the phone keeps ringing…
The workshop is full, the phone keeps ringing and customers are booking in. Yet when wages, supplier invoices and other bills come round, there never seems to be much money left.
For an independent garage, a busy diary doesn’t always mean healthy cash flow. Looking at what each job earns, when customers pay and where your money goes can help explain the gap.
Are your prices covering the whole job?
Parts and labour are the obvious costs, but they aren’t the only ones.
Time spent diagnosing faults, sourcing parts, speaking to customers and taking vehicles on road tests all needs to be accounted for when reviewing your prices. The business also has to cover rent, insurance, software, equipment and other running costs.
If your prices haven’t been reviewed for a while, take a few recently completed jobs and compare the amount charged with the actual time and costs involved. A job that looked profitable when quoted may have left very little once the work was finished.
Are you paying out before customers pay you?
Buying parts before starting a repair means your business is funding the job until the customer settles their bill.
That gap can become harder to manage when several jobs are underway or business customers have credit terms.
Agreeing payment arrangements before work starts, issuing invoices promptly and checking overdue balances regularly can help. For jobs involving expensive or specially ordered parts, consider whether an agreed deposit would be appropriate.
Do you know what your bank balance needs to cover?
Money in the bank may already be needed for supplier bills, wages, tax or an upcoming equipment payment.
A simple cash flow forecast helps you look ahead. Record the payments you expect to receive and the bills due over the coming weeks, then update it as bookings and payment dates change.
This can give you time to deal with a shortfall before a bill becomes urgent.
What should you check each week?
A short weekly review is a useful starting point:
- Completed work that hasn’t been invoiced.
- Customer invoices that remain unpaid.
- Supplier payments and other bills coming due.
- Parts awaiting return or supplier credit.
- Jobs that took longer or cost more than expected.
Keeping your bookkeeping up to date makes these checks easier and gives you a clearer picture of how the garage is performing.
How can Davenports Accountancy help?
If you’re spending your evenings sorting receipts and trying to work out where the money has gone, speak to Davenports Accountancy.
We can help with your bookkeeping and accounts, giving you clearer figures to support decisions about pricing, spending and the next steps for your business.
Get in touch through our website or call us at 0161 713 0157 to discuss your garage’s accounting needs.
