Automotive services
An automotive shop sells technician hours and parts through a fixed number of bays, and every one of those three is a number that can be measured daily and usually is not. Labour efficiency drifts, parts margin erodes on supplier price increases, bays sit empty on Mondays and overflow on Fridays, and insurer and fleet accounts pay on their own schedule. We bring shop-level finance to automotive service businesses across British Columbia, working alongside their CPA.
How the money works
- Technician efficiency, which is billed hours against hours paid, decides labour margin, and it is often well below what the owner assumes
- Parts margin is set by a matrix that was built once and eroded as supplier prices rose
- Bay utilisation and the booking pattern across the week set the revenue ceiling
- Insurer, warranty and fleet work pays on terms and at negotiated rates, so the mix of retail and account work sets both margin and cash timing
The moves we make
- A daily shop scorecard: hours billed, hours paid, efficiency by technician, parts margin, average repair order and bays used
- A parts pricing matrix rebuilt from current supplier cost and reviewed quarterly
- A mix review of retail, insurer, warranty and fleet work by margin and by days to pay
- A cash forecast that models seasonal tire and service peaks and the slow weeks between
Where cash and margin leak
Margin leaks in labour hours paid for and not billed, in diagnostic time given away, in parts sold at a matrix that no longer reflects cost, in sublet work marked up too little, in comebacks fixed for free, and in shop supplies that are not charged.
Cash leaks in parts inventory bought for jobs that did not come, in insurer and fleet receivables that take weeks, in tire stock bought for a season that was warmer than expected, and in equipment leases that outlive their usefulness.
The numbers to watch every week
Billed hours against available hours. Technician efficiency and productivity, individually. Average repair order. Parts to labour ratio and parts gross margin. Bays used by day of the week. Cars in and cars booked for next week. Receivables by account customer. Cash on hand against the next payroll and parts statement.
These numbers, on the wall and in the Monday meeting, give a shop owner the levers to fill the quiet days, price the work and pay the technicians on results.
How pricing works in an automotive shop
Labour is priced by a door rate that should be rebuilt from the technician's loaded cost, the shop's overhead per available hour and a margin. Parts are priced through a matrix that applies a margin by cost band, and the matrix needs updating as supplier costs change. Both together produce the average repair order, which is the number that pays the rent.
Insurer and fleet rates are negotiated and often below retail, so the mix matters. We model the margin and the cash timing by type of work and show what each account is actually worth.
Questions from automotive services owners
How should we pay our technicians?
On a plan that rewards billed hours and quality together, such as a base with efficiency bonuses and a comeback rule, modelled against last year's results so the cost is known. Flat rate alone drives speed without care. We design and model the plan, and your HR adviser confirms the employment side.
Our parts margin keeps falling. Why?
Because supplier costs have risen and the pricing matrix has not. Rebuild the matrix from current cost, review it quarterly, and watch the parts gross margin weekly. Most shops recover margin quickly once the matrix is current.
How do we fill the slow days?
Know which days are slow from the bay utilisation report, price and promote maintenance work into them, book fleet and account work to fill them, and schedule technician hours to the pattern. The scorecard shows the pattern and the result of each change.
Start with a finance review.
Ninety minutes with Ali on your cash, margin and pricing. You leave with the four numbers to watch and the two or three moves that change them, whether or not we work together.