Industry
Bookkeeping for Rhode Island auto repair shops
Parts margin and labour margin separated so you can see which one is carrying the shop, with cores, sublet and warranty claims tracked as the money they are.
Parts and labour are two businesses
A repair shop sells two entirely different things through one invoice. Parts are a resale business with a markup. Labour is a capacity business limited by how many hours your techs can bill. They have different margins, different problems, and different answers when one of them is underperforming.
Booked as a single line of revenue, you cannot see either. The shop knows it is busy and knows the bank balance is not growing, and there is no number available to explain why.
Separating parts from labour is the highest-value change in most repair shop books. It usually reveals one of two things: parts margin eroding because pricing has not moved with supplier costs, or an effective labour rate well below the posted door rate once unbilled hours are accounted for.
Where the money leaks
- Core charges. A deposit you pay and get back when the old unit goes home. It is a receivable, not an expense, and untracked cores are money left at the supplier
- Sublet work. Machine shop, alignment, glass, paint. It runs through your invoice at a markup and needs to be visible as its own cost, not buried in parts
- Warranty claims. Money owed by a manufacturer or a parts supplier, sitting unpaid because nobody is watching the balance
- Shop supplies. Rags, fluids, fasteners, disposal. Often billed as a percentage and rarely reconciled against what is actually spent
- Customer deposits. Money taken before a job on a special-order part. A liability until the work is done
Cars on the lift at month end
Work in process is the repair shop version of a contractor's WIP. On the last day of the month there are vehicles torn down, parts ordered and hours already spent, none of it invoiced. Ignore it and the month it started in looks poor while the month it finishes in looks unusually good.
For a small shop this does not need to be elaborate. It needs to be consistent, so that month-to-month comparisons mean something.
Parts inventory that reflects the shelf
Most independent shops carry more parts inventory than their books show, usually because everything is expensed on purchase and nothing is ever counted. That understates assets and it makes gross margin swing wildly depending on how much stock was bought that month.
A periodic count, recorded properly, smooths that out and tells you how much cash is sitting on the shelves.
Technician efficiency, from the books
Once labour is clean you can compare hours billed to hours paid. The gap is where shop profitability actually lives, and it is invisible in books that treat wages as one lump and revenue as another.
Who this suits
Independent general repair, transmission and driveline shops, tyre and alignment, collision and body shops, mobile mechanics, fleet maintenance, and specialty and performance shops. One bay or eight.
Common questions
Can you tell me if my labour rate is high enough?
I can tell you what your labour is actually earning once parts are separated out, which is the number that question depends on. Most shops have never seen it cleanly.
We use Mitchell 1 / Shopware / Tekmetric. Does that matter?
Only in how the sales data comes across. What matters is that the invoice detail reaches the books split between parts, labour, sublet and supplies rather than as one total.
What about cores and warranty credits?
Both are receivables until they land. Tracked properly they are real money; untracked they are the most commonly written-off asset in a repair shop.
Where to next
Which side of the shop is making the money?
Parts or labour. Most shops cannot answer that from their books. Tell me what system you invoice from and I will tell you what it would take to see it.
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