Why Match Parts from Repair Orders on Purchase Orders?

March 12, 2024

Read time: 3 min

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The Art of Knowing Where Everything Is

In auto repair, there are many moving parts to keep track of—both the literal parts your shop uses to repair vehicles, and the parts of your business that determine your shop’s efficiency, security, and ability to grow. If you want your shop to flourish, it’s crucial to devote part of your business to keeping track of the parts you order.

Many shops track parts in terms of cost of goods sold. The parts you need for the job are included on every repair order, so it’s easy to see what parts your customers are paying for as long as you have a solid process for building repair orders.

But what about in terms of accounts payable? How does your shop track how much you’re spending for parts from the supplier?

Should You Use Purchase Orders or “Save Time?”

For your accounts payable, or determining how much you’ll owe your parts suppliers, there are typically two routes you can take:

Wait for the parts bills to come in and trust that you’re being charged the correct amount, or
Create a formal purchase order each and every time you order parts from a supplier.

The advantage of going with the first route is that you save a little bit of time; there’s no second step of reconciling the part you need to purchase on a purchase order. But the cons far outweigh this advantage—because this is where shops can start to lose money.

For example, your ROs may indicate that you have a 30% profit margin on parts, but if you don’t accrue your parts bill, you won’t know for sure if that’s the case until the parts bill hits your account. Suddenly, when the money gets taken out, your margins are razor-thin.

So, what happened?

Did a supplier charge too much? Were you double-charged? Was an unauthorized person ordering parts on your account? Was there theft?

It’s hard to tell if there is no paper trail or purchase order for you to look at.

If you’re not paying attention to your parts orders on the accounts payable side, you could be losing money, and it will typically take a large missing chunk of change for you to realize that something is wrong. Without a paper trail, figuring out the problem is not only difficult but also extremely time consuming. Once you notice that there is a loss you can’t account for, all the “time saved” by skipping the purchase order step comes back in the form of time spent trying to figure out the issue.

By reconciling your parts orders on both repair orders and purchase orders, you can easily check to see what’s going on, protecting your shop from incidents where you are losing money due to overages, slip-ups, theft, and overcharges.

How to Build a Better Parts Ordering System

When it comes to tracking parts on repair orders and purchase orders, consistency is key. Shops that have strong, consistent processes and procedures—and follow them every single time—rarely have issues with leakage and theft; they instill habits in their team to keep careful track of all parts.

As long as your shop has a repeatable process for adding parts to repair orders and putting in purchase orders, you will be able to quickly identify any issues as soon as they crop up. Every service advisor and employee that orders parts and builds repair orders for customers should use the same method for filling out repair orders, creating purchase orders, and inputting this information into your shop management system and accounting system.

Create a standard process for each of the following:

How jobs get posted
How repair orders are built
How repair orders are approved
How parts orders are posted
How purchase orders are written and sent to suppliers
How purchase orders are approved
How parts and purchase data get analyzed

Instill Parts Ordering Best Practices with Tekmetric

Standard procedures for ordering parts and creating repair orders are built into Tekmetric. We give shops the tools and guardrails needed to effortlessly track parts throughout each step of the repair process.

From our intuitive repair order builder to our integrated parts ordering and inventory systems, we aim to align your team so that no money slips through the cracks. And our industry leading analytics and reporting tools allow you to keep track of your shop’s financial history in realtime.

This article was written with the guidance of automotive repair industry
CPA Hunt Demarest of Paar, Melis, & Associates, P.C.

👉 Ready to grow your automotive business? [Book a personalized Tekmetric Demo Here]

FAQ

The checkered flag is in sight, moving to the last stretch of the race at a good pace! As Tekmetric kicked off Q3, we focused on two main priorities: streamlining the customer experience and enhancing our relationships within the auto repair industry. With a customer-obsessed approach, Tekmetric is committed to driving product innovation through these two avenues, as we continue to evolve and better serve you – our partner shops.

Streamlining the Customer Experience from Beginning to End

This quarter, we made it our goal to continue helping shops improve the customer experience from start to finish. The customer experience involves streamlining operations at every level, so the vehicle can be safely repaired and back on the road as soon as possible. From estimate to the final payment, our end goal is to help you be as efficient as possible.

As part of our efforts this quarter, we sought to identify and eliminate bottlenecks to enhance shop efficiency while meeting customers where they want to be. We also implemented updates that many of you, our partner shops, have recommended to keep Tekmetric relevant to the entire shop experience. Together, these updates combine to create a stronger shop management system that helps your shop run smoothly and ultimately supports growth over time:

Simpler Day-to-Day With Enhanced Data Integrations: With ALLDATA and TireFitment, service advisors can now get labor and tire data directly from these integrations within the Tekmetric platform.
Tire Purchasing Made Easy: With Tire Suite you can manage all tire operations directly from the platform including compliance, regulatory standard adherence, inventory management, and even purchasing via our integration with PartsTech.
Increased Transparency in Inspections: Through our integrations with Advance’s MotoVisuals, you can now more easily educate your customers with repair animations. iCustomer Comms Simplified: We added template messages and the ability to adjust text verbiage for estimate, inspection and invoice links, which limits redundancy and streamlines communication.
Increased Payment Flexibility With BNPL: Our partnership with Affirm allows shops to meet vehicle owners where they are with flexible payment plans for nearly any budget or repair need, including Buy Now, Pay Later (BNPL). Customers who introduce BNPL see a 3x increase in ARO.

Growing Relationships Within the Industry

As Tekmetric continues to streamline and enhance the customer experience, we are also focused on strengthening our relationships within the auto repair industry. As a customer-obsessed shop management system, we aim to support shops in providing the highest quality service to vehicle owners they can – and this wouldn’t be possible without valuable feedback and insights from you, our partner shops. This approach allows us to better understand the real challenges you face, so we can provide innovative solutions that help you accomplish your goals and succeed in a market where the consumer expects more from their repair shops.

You may have seen us at the Shop Hackers Conference in Murfreesboro, Tennessee, where Adam McInturff, VP of Sales and Phil Acree, Head of Payment Sales presented on our latest features and upcoming innovations. We also spoke to many of you about the trends you are seeing in the industry and how Tekmetric can support your needs – from hiring service writers to succession planning. We continued these conversations at ATE Spokane in Washington and ASCCA in California and gathered key insights as we look ahead to the end of 2024 and the beginning of a new year.

Thanks to you and your key feedback shared through these conversations, Tekmetric has been able to provide excellent service and innovative solutions throughout this quarter, resulting in recognition from the G2 Summer Awards in these categories: Overall Leader, Best Usability, Most Implementable and Momentum Leader. In addition, Tekmetric was named the best auto shop management software by G2. This recognition is a significant testament to the support of each of you, your teams and the valuable insights you provide.

Aspiring To Inspire with Thought Leadership

For Tekmetric, customer relationships aren’t confined to the walls of a conference room. We also aimed to share the knowledge through webinars and conversations with industry outlets that sparked important conversations about what’s changing in our industry.

With our webinars, our aim is to help you uncover actionable insights that you can apply to grow your shop. Some of these conversations included our webinar, “Innovate to Elevate,” led by John Phelps, Director of Channel and Partnerships, where he talked about transforming the customer journey with the end goal of streamlining operations and boosting customer satisfaction. Similarly in our payments webinar, Phil Acree, Head of Payments covered the current state of consumer financing and how shops can enhance the customer experience regarding the payment process.

We also shared this knowledge through key industry outlets, so you can share and discuss with your team, including:

Future proof your shop exit strategy. P.J. Leslie, Director of Business Development, along with Matthew Schwab, owner of Clutch Automotive, shared tips to prepare your shop for the future and retirement by building a well-crafted exit plan so exiting shop owners can confidently step into the next phase of their lives, knowing they have set up a legacy for their shop.
Strategic use of evergreen and real-time data. We also published an article with Vehicle Service Pros titled, “Using numbers to supercharge your shop’s performance, where we discussed how to use real-time and evergreen data to expand your shop.

As we leave an upbeat Q3, Tekmetric continues to keep its eye on the finish line for this year: helping shops enhance the customer experience through product innovation. We are very proud that our commitment to a two-way relationship with our customers has been the driving force behind every improvement and our collaborative approach with other leaders in the industry enables us to build a steady foundation for continuous innovation. We aim to continue measuring up as we enter the final quarter of 2024.

Tekmetric Community

Accelerating Excellence: A Roadmap of Our Q3 Achievements

October 11, 2024

Read time: 3 min

In auto repair, a smooth cash flow is the anchor of your business. When something is off within the shop, the first place that can give answers is the shop’s financial data. It’s not just a tool to diagnose problems or spit out a paycheck – it holds the key to unlocking greater efficiency. By taking control of your money flow, you can not only uncover bottlenecks, but also increase profitability and ultimately grow your business.

Understanding the numbers is the first step to maximizing earnings. Don’t limit your financial knowledge to just sending out paychecks and collecting payments. Instead, embrace the numbers, contextualize reports and leverage the information you gain to make strategic decisions that propel your shop’s success.

The road to profitability must include a strong understanding of your finances. Here are four ways to take control of your money flow and elevate your shop’s business:

1. Track your inward and outward flow through detailed reports

The best way you can get familiar with your money flow is by intentionally reviewing the numbers. Whether real-time or evergreen, you can use data and information in all forms to learn the direction of money flow within your shop and how to influence profitability. These numbers can provide clear insights into your shop’s performance and any adjustments you could make to grow your profit. Therefore, it’s important that you review key reports on a regular basis.

For example, when it comes to your inventory, you can review Tekmetric’s Parts Orders section for information on cores and returns. This knowledge is particularly useful for anticipatory orders and core returns that can easily be tracked and returned as needed. If you have anything eligible for return, you can review that information in real-time and make the return when your parts provider arrives to get that credit back on your statement. By strategically tracking the parts you need to keep and those you can return when unused, you can anticipate future needs and streamline cash flow into your shop.

2. Utilize real-time data to make strategic financial decisions throughout your day

Using real-time data of both posted and unposted data gives you a clearer picture of the shop’s finances in real-time, allowing you to make decisions more efficiently and generate more profit to meet your short- and long-term goals. Additionally, it enables you to adjust your operations as soon as a problem comes to light. Rather than waiting until the end of the day, week or month, you can monitor money flowing in and out of your shop in real time and make strategic decisions that directly impact your final profit.

This might include monitoring your end-of-day (EOD) report in Tekmetric and delegating tasks that can help bring in more business to meet your goals. For example, if you review your shop dashboard early in the week and see $17,000 in approved work that hasn't been finished, you can implement some strategies to close out that work by the end of the week, whether it’s calling customers to follow up on an approval or announcing a bonus for your technicians that incentivizes them to finish the work quicker.

3. Provide financing options for customers

In addition to reporting, another way to influence money flow into your shop is by providing financing options for your customers. After all, if you can make a customer’s payment process easier for them, you can create a better cash flow for your shop. Providing financing options allows the customer to get the needed repair done without compromising their personal budget.

Furthermore, when you provide alternative payment methods, you increase sales. For example, at Tekmetric, we have found that a “Buy Now, Pay Later” option can help increase your average RO amount. The national average RO amounts to approximately $260. By contrast, according to Affirm, the average purchase when using a feature like “Buy Now, Pay Later” is approximately $1,800. Customers are more likely to approve higher-ticket items when they have a financial option like “Buy Now, Pay Later,” which helps increase your ARO. It’s a win-win situation for you and your customers. Not only do you reduce friction with the customer through a convenient payment option, but you also increase your cash flow into the shop.

4. Leverage outside resources to monitor your cash flow

As important as money inflow is, you must also monitor your outflow. Without understanding how both elements work together, you cannot accurately measure – or grow – your profit. This may be daunting, but you can ask for help.

Don’t hesitate to leverage outside resources to gain a better understanding of how to interpret money flow and use that information to grow your shop’s bottom line. Whether through free webinars, basic accounting courses or coaching organizations like our partners at Transformers Institute, Shop Fix Academy, Automotive Training Institute, Autoshop Answers, Elite and more, you can utilize external tools to gain invaluable knowledge that helps you run your shop more efficiently.

Bonus tip: Ask plenty of questions

Knowledge is power – and knowledge of your shop’s finances can lead directly to profit growth. Therefore, make sure to question everything. Ask for documentation, whether it’s an explanation of why a part was ordered or a receipt for a new coffee machine in your lobby. Small purchases add up, and if you do not ask questions and track them, you could end up reducing your profitability without noticing.

Do not be afraid to question the validity of transactions or ask for help in understanding the big picture of why purchases were made. Learning to control the flow of money into your shop is crucial, but implementing strategic decisions regarding money outflow is how you make a profit. By asking for help and closely monitoring your data, you will have a better understanding of the money flow in and out of your shop, leading to more efficient processes, a better customer experience and ultimately, more business.