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4 Bookkeeping Best Practices for Auto Repair Shops

Bookkeeping is a must for all businesses, but auto repair shops are particularly prone to the need for detailed record-keeping. You have to keep track of a lot of moving pieces ranging from technicians, inventory, parts, and more. 

Here are 4 best practices to keep in mind when bookkeeping for auto repair shops.

1. Track Inventory

Inventory needs to be carefully tracked to monitor overall cost and reorder points so that you aren’t ever left without what you need. This may also help to identify orders that you can safely make in bulk, ultimately saving more money. Beyond parts, there might be additional items you sell like tires or windshield wipers to include in tracking. 

Many repair shops choose to keep a small stock of products that tend to have longer lead times. These items are often difficult to source and can even be quite expensive, which makes it all the more important to accurately track what you have in stock.

2. Have a System for Part Core Return

All auto shop repairs should have a solid system in place for their part core return as handling these returns quickly can introduce a new stream of revenue for your business. With that said, efficient bookkeeping is a must to create a thriving part core return system. It allows you to track where each one is in the process and can enable you to forecast this additional revenue based on those numbers. 

A few best practices for part core return include: 

  • Pricing for both dirty and inherent cores
  • No credits issued until the part core is returned and can be assessed
  • Coming up with a central location to store used part cores
  • Send them back immediately to reduce the likelihood of value loss
  • Refrain from purchasing part cores that have already been sold back

3. Analyze Your Part Margin

Part margin factors in both the cost of the part as well as the price at which it sold. As a key aspect of bookkeeping for auto repair shops, knowing your part margin allows business owners and managers to increase their revenue without pricing themselves out of the market.

To calculate part margin, subtract your ideal markup from 100 percent. For example, a 25 percent markup subtracted from 100% would be 0.75. Divide the cost of the part by this figure and you will reach your desired part margin. 

As the market changes, it’s important to constantly analyze your profit margin. It will not only give you a good idea of what you need to sell to reach your goals but also help you determine if your pricing (and margin) is in line with your competitors. 

4. Automation is Key

By automating many of these areas, you will ultimately make your bookkeeping easier and more accurate. From inspection to tech dispatching and labor inventory management, you need software that can help you put some things on autopilot. Increasing shop efficiency improves productivity and leads to clearer books. 

The old adage that time is money is absolutely true, and AutoVitals can help you save more of both.

We offer a long-term solution for managing everything from the initial touchpoints with customers to a completed repair. You can also easily track your shop’s performance against your goals by setting crucial KPIs. On average, auto shops utilizing our software improve their workflow and ultimately increase their average repair order by 30%. 

By partnering with AutoVitals you’ll be able to monitor every aspect of your auto repair shop and make solid business decisions based on the goals you hope to achieve. 

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