Accounting accuracy and strategic financial planning are essential for making informed business decisions, optimizing operational tasks and boosting profitability in the long run. However, it is easier said than done. Managing an auto care business successfully requires rigorously following accounting practices and processes that can easily turn overwhelming if you are trying to do everything in-house.

While you try to juggle different priorities along with day-to-day accounting activities, you often end up compromising on quality service and delivering exceptional customer experience. Not to mention all the accounting lapses and workflow inefficiencies you tend to ignore due to time and resource constraints.

Owing to these challenges many auto care business owners like you have realized the true potential of outsourced accounting for the auto care industry. Thanks to all the reclaimed time post outsourcing, you can now focus better on business growth, and your staff can fully dedicate themselves to improving client experience and service delivery.

Best Practices for Outsourced Auto Care Accounting

When it comes to hiring an outsourced accounting partner for your business, there are a few handy pointers that can help you in deciding the right partner that ensures long-term success.

Fleet A/R Management

It involves regular tracking and managing the money owed to you by customers, particularly in fleet services. Timely invoicing ensures that customers are billed promptly after services are rendered, reducing delays in cash flow.

Returned Part Management

It is crucial for maintaining inventory accuracy and financial health. Establishing clear policies regarding returns will help you manage customer expectations and reduce disputes. Implementing a system to log returned parts ensures accurate inventory levels and will help you identify patterns that may indicate broader issues with suppliers or products.

Part Level Margin Reporting

This provides you the insights into the profitability of individual parts sold. Tracking the cost of each part, including purchase price, shipping, and handling, allows you to calculate accurate margin. Generating regular reports on auto part margins helps identify which parts are most profitable and which may need pricing adjustments or discontinuation.

 

Parts Tracking & Reconciliation

This involves monitoring inventory levels and ensuring that your records match physical counts. By utilizing specific software (e.g. WikedFile, more details below) that provides real-time updates on inventory levels can help you prevent stockouts and overstock situations.

 

WickedFile: A short note

Wicked File is an AI enabled automated parts tracking software that can organize your documents, capture additional profits, and seamlessly connect with your existing tools. It provides auto repair business owners with an end-to-end automated solution that seamlessly integrates with popular POS systems like Tekmetric, Protractor, Napa, Shop Ware, and more, to strategically manage their financial operations with ease, confidence, and conviction.

Cash Deposit Tracking

This is essential for maintaining accurate cash flow records. Regularly reconciling your cash deposits against sales records ensures that all cash transactions are accounted for. Integrating point-of-sale systems with accounting software streamlines your cash tracking and reduces errors in recording transactions..

Strategic Advantages of Outsourced Accounting in Auto Care Industry

In addition to saving you from accounting blues and reclaiming all the hours that otherwise could have been lost after maintaining records, outsourced accounting serves a distinct strategic advantage to your business. Let’s take a look at them.

Cost Savings

It goes without saying that your in-house accounting team incurs a lot of financial constraints, especially when the auto repair operations are being managed at a small and medium level. But when you outsource your accounting chores to an expert team, you only pay for your requirements minus the full-time employee benefits, office space, equipment etc.

Access to Expertise

By outsourcing your accounting activities, you gain expert accounting advice and insights about the latest compliance risks, tax benefits, industry specific nuances, laws, etc. The outsourced accounting team is adept in the latest accounting software and tech stack which prove to be crucial from the long-term perspective.

Scalability and Flexibility

Your auto care business is prone to seasonal fluctuations and the outsourced accounting model perfectly fits into the varying nature of your business. You can easily scale up or down the resources required to match the evolving demands. Moreover, you no longer have to worry about hiring more staff or letting go of the in-house staff.

Improved Focus & Efficiency

One of the biggest advantages of outsourced accounting is that you can focus on improving business offerings, customer satisfaction, and employee growth without worrying about mundane accounting tasks.

Continuity and Reliability

Outsourced accounting firms have robust systems and processes in place to ensure continuity of service, even in the face of unexpected events or staff turnover. This reliability ensures that your financial records and reporting remain uninterrupted, providing you with the information you need to make critical business decisions.

Deep Domain Expertise

Outsourced accounting firms specializing in the auto care industry possess extensive knowledge and experience required for this field. This expertise allows them to understand industry-specific regulations. They can remain well-versed in compliance requirements, tax laws, and financial reporting standards relevant to your businesses.

Reduced Responsibilities

By outsourcing accounting functions, you can focus on core operations. You and your staff can concentrate on providing quality service and customer satisfaction rather than getting bogged down in financial tasks.

Control Over Payables

Outsourced accounting firms help you maintain better control over the accounts payable processes by streamlining invoice management. They ensure timely processing of vendor invoices, reducing the risk of late payments and associated penalties.

Increase Revenue

Outsourcing can lead to increased revenue through enhanced financial insights. With accurate financial reporting and analysis, you can identify profitable areas for growth and make informed decisions about pricing and service offerings.

Cost Savings Between 30 - 50%

Outsourcing accounting functions can result in significant cost savings by reducing overhead costs. You save on salaries, benefits, and training costs associated with hiring in-house accounting staff.

More Productive Hours

With outsourced accounting handling financial tasks, you benefit from increased productivity. Your staff can dedicate more time to core business activities rather than administrative tasks, leading to improved overall productivity.

Effective Tracking of Parts from Vendors

Outsourced accounting firms implement systems that facilitate accurate inventory management. They help you track parts received from vendors accurately, ensuring that inventory levels are maintained without overstocking or stockouts.

100% Reconciliation of Vendors

When you ensure all vendor accounts are reconciled accurately, it leads to financial accuracy. Regular reconciliation helps identify discrepancies early, preventing issues that could affect cash flow or financial reporting.

Verified Cash Deposits

Outsourced accounting firms ensure that your cash deposits are tracked meticulously by implementing secure processes. They establish secure methods for handling cash deposits, reducing the risk of theft or loss.

Scalability and Flexibility

Outsourced accounting services provide scalability that allows you to adapt to growth. As the business expands or contracts, outsourced firms can adjust their services accordingly without the need for hiring or layoffs.

Case study: Fine-tuning Midas Franchise Accounting Through Outsourcing 

To illustrate the transformative power of outsourced accounting in the auto care industry, let's explore a real-world case study:

In the bustling heart of Saint Paul, Minneapolis, Joe and Mark Stranik were at the helm of a family legacy—13 Midas locations, each a testament to their commitment to quality automotive repair. As a third-generation business, they offered everything from engine repairs to tire replacements, but as their operations expanded, so did their challenges.

The Growing Pains

With multiple locations came the complexities of managing accounts receivable and payable. Joe and Mark found themselves grappling with late payments that strained vendor relationships and fragmented sales records that made financial oversight a daunting task. Lost credits, overpayments, and underpayments began to chip away at their operational efficiency, leading to rising costs that threatened the very foundation of their business.

Seeking a Solution

Recognizing the need for a transformative approach, the Straniks turned to PABS, a team of experienced auto care accounting professionals. They understood that outsourcing their accounting could alleviate many of the burdens they faced.

The PABS Approach

PABS implemented a suite of solutions tailored specifically for Midas:

• Invoice Precision: They introduced rigorous three-way reconciliations with RO Writer, ensuring accuracy in every transaction.
• Daily Financial Management: Real-time tracking of sales, purchases, and expenses provided Joe and Mark with immediate insights into their financial health.
• Efficient Payroll Processing: Payroll was seamlessly managed through checks or credit cards, eliminating delays and errors.
• Inventory Mastery: PABS verified part transactions meticulously, ensuring precision in inventory management.
• Vendor Statement Checks: Detailed cross-referencing with vendor statements helped maintain strong relationships and trust with suppliers.
• Comprehensive Services: From zero margin analysis to account management and consolidated financial reporting, PABS offered a holistic approach to Midas’s accounting needs.

The Transformative Impact

The results were nothing short of remarkable. With PABS’s support, Midas achieved a 30% reduction in payment processing time, allowing them to improve cash flow significantly. Their financials became audit-ready, providing full visibility across all 13 locations. Most impressively, operational expenses dropped by an astounding 40%, freeing up resources that could be reinvested into the business.

A New Chapter

As Joe and Mark reflected on their journey, they realized that outsourcing their accounting had not only streamlined their operations but had also revitalized their passion for the family business. With the burden of financial management lifted, they could focus on what truly mattered—providing exceptional service to their customers and nurturing the legacy they cherished. This case study illustrates the transformative power of outsourced accounting in the auto care industry. By partnering with outsourced accounting, independent auto repair shops and franchises can navigate complex financial landscapes with confidence and clarity, ultimately paving the way for sustainable growth and success.

“We made a decision to use PABS as our bookkeeping firm a few months ago and I must say that it has been one of the better decisions we have made in a long time. PABS has been incredibly professional and responsive. They do a lot of Midas Franchise, and they get all the unique things with Midas making this transaction incredibly smooth and very positive. I would highly recommend considering PABS for your bookkeeping services.”

Joe Stranik, Midas Owner, Minneapolis

Conclusion

In the fast-paced and competitive auto care industry, outsourced accounting for independent auto care shops and franchises have emerged as a game-changer, enabling owners to optimize their operations, gain financial visibility, and position themselves for long-term success. They can access a wealth of expertise, leverage advanced technologies, and benefit from strategic advisory services. Are you ready to take your shop to the next level?