The toughest obstacle to paint/material profitability is reporting products in the wrong category. I encourage shops to separate paint/materials into four categories: Paint, Supplies, Materials and Tools/Equipment. Since the calculated paint/material reimbursement you receive on damage appraisals is for liquid paint products only, it is important that the products used are accounted for correctly to ensure items outside of the liquid paint category are billed properly.
|Account||Product Category||Category Items|
|1.1||Paint||Paint products used in the refinishing process such as: Toners, Primers, Sealers, Clears and any other liquid products used during a repair.|
|1.2||Supplies||Items used during the repair process: Sandpaper, Masking Paper/tape, Body Fillers, Glazing Putty, Scuff Pads, Cutoff wheels, Fiberglass repair products, Car Cover etc.|
|1.3||Materials||Items needed to complete a repair process: Plastic repair products, panel bonding products, corrosion protection products, seam sealers, two-sided tape, adhesives, sound deadener pads, gravel guard etc.|
|1.4||Tools/Equipment||Respirators, air hoses, plastic spreaders, paint mixing cups, spray suits, razor blades, gloves, booth filters, paint sticks and strainers.|
Knowing which category items go into will make it easier to bill for the items used during a repair. However, regardless of whether you bill for an item or not, accounting for them in the right area is what keeps you profitable. Accounting for paint and materials begins by organizing accounts like the chart above so you can receipt for products properly when they are delivered. Your supplier can assist you with accounting of items by creating a separate invoice for the items according to the account codes when they are ordered. Individual invoices will help prevent errors in the accounting process. The alternative is checking each line on the invoice and identifying the proper account. Ensuring the items you use on a day-to-day basis are properly accounted for is the first step in improving your profitability.
|Read the article?|
Get AMi credits now!
| This article is worth .25 hours toward Automotive Management Institute (AMi) designation programs.|
To receive credit, log in or set up a free "myAMi" acccount at ami.knowledgeanywhere.com. Once inside "myAMi," search for "Using Paint/Material Accounts to Improve Profits" or go to ABRN.com/pmaccounts and successfully complete the quiz.
I commonly see everything used in the paint shop all put into one category; according to the chart above they should be separated into four buckets: Paint, Supplies, Materials and Tools/Equipment. As you can imagine, it would not take long for your profits to dwindle if a can of body filler or a roll of sandpaper was charged against your paint account — even a respirator can skew your profitability.
The Supplies account is also called consumables as they are consumed during a repair. Billing procedures for supplies are different from shop to shop and market to market. Some shops will add a charge for body supplies based on the number of hours on a repair appraisal, others use inventory systems to charge for each item used individually and others do not charge at all.