Lobsiger: Your Shop Isn’t a Bank. Stop Treating it Like One.

Tight accounts receivable control and daily oversight are crucial to stop cash from slipping through the cracks and jeopardizing profitability. 
Oct. 1, 2025
4 min read

It is interesting how different businesses work. Let’s say I go to Walmart to buy $150 worth of items. Then after filling my cart, I head to the checkout lane and ask the clerk, “Could you just send me a bill?” I am sure we would get back a snicker at first and then an abrupt, “No, we can’t send you a bill, and you can’t leave the store with those items without paying.” We would get the same response from the gas station clerk, home improvement center, restaurant and most every other retail business. Now, let’s look at a bank. What if I met with the loan officer and said, “I need to borrow $50,000 for 30-90 days, but you can’t charge me any interest.” I bet it wouldn’t take long to be escorted to the entry door and asked to leave.

The unfortunate truth is, about 90% of the body shops in the US do extend credit to vehicle owners. We allow them to pick up their vehicle without being paid in full. The worst part about extending this credit is we don’t even collect one dime of interest! What a lousy bank we make, right? 

Back in March of 2023, I wrote a column for FenderBender called “The Cashflow Fix,” based on the book Profit First. If you have not read the column, I encourage you to find it in the FB archives. Since I manage every incoming dollar for my shop based on Profit First, it is a driver for me to keep my accounts receivable (AR) as low as possible. AR is just a black hole. And on top of that, it’s taxed as ordinary income with accrual accounting.  

Obviously, the reason shops allow AR is for our customers’ repair experience. Most shops that have, say, a $15,000 repair and have been paid $13,000 will probably let the car go while still waiting on the check from the insurer for $2,000. Even if we have proof of payment from the insurer, it could take 7-10 days for the payment to arrive. It’s hard to grow a business when we hold cars for an extra 7-10 days. Granted, we can force the insurer to pay overnight by FedEx etc. Don’ t forget the basics of having your shop set up for EFT as much as possible with insurers. Along with this, always track down initial photo estimate payments at drop-off and supplement payments while the car is in process.  

First, let's establish what is a reasonable amount of AR for “ABC Auto” Body that does $3,000,000 in yearly gross sales or $250K per month. For this size shop, the amount of AR would preferably be $25K - $37.5K (10-15% of monthly revenue). I know some of you are thinking, “Greg, we often have jobs over $25,000!” Trust me, I get it. But I am talking about on AVERAGE. 

So, how does ABC Auto Body allow their AR to get to $50K+ (20%+ monthly revenue)? For starters, the owner needs a kick in the pants. Granted, ABC could have some fleet accounts etc., that have credit terms established. I get that, but I am talking everyday average retail vehicle owners here.  

When it comes to AR, someone needs to be monitoring it every day, not once per week or even every other day. Whether it’s the shop owner, bookkeeper/controller etc. that oversees AR, we must be contacting the paying party (insurer, vehicle owner etc.) prior to the 31-60 days overdue. I am talking even by the ten day or two-weeks mark here. Make sure notes are left in the RO of who was emailed/called etc. Some shop owners may be saying, “Well, I don’t want to put too much pressure on my bookkeeper.” If that is your case, then you must allow your body techs to send pinholes to paint or let the painters shoot the wrong color plus runs. We pay people to do a job, and therefore they must do it. I do have some fellow shop owners’ friends who incentivize bookkeepers to keep a low AR. It’s not for me, but it works for them. Either way, if you have a bookkeeper, you should be getting weekly AR aging reports from them.Another major reason for high AR is not processing supplements after blueprint or not pre-closing jobs before vehicles leave. It just blows my mind how some shops that produce, say, 15 cars per week and have 30 cars in “Delivered Not Closed” buckets. I get dry heaves if I see mine over 6-7!!! The longer you let those jobs just sit there before sending in the supplement, the less likely you will ever get them collected, or at least, paid in full.  

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