By - June 3, 2025
Categories: Bookkeeping, Cash Flow, Financial Statements
Running an auto repair shop means staying busy with customer vehicles, managing your techs, ordering parts, and trying to find time to breathe. But halfway through the year is the perfect moment to hit pause and look under the hood of your auto repair business finances.
A mid-year financial checkup for auto repair shops helps you evaluate how your shop is performing, identify what’s working (and what’s not), and make smart adjustments before year-end sneaks up on you.
Let’s break down what to review and how to use this financial checkup to set your shop up for a stronger second half.
1. Review Year-to-Date Financial Statements
If you haven’t looked closely at your Profit & Loss (P&L) or Balance Sheet in a while, now’s the time. These reports give you a snapshot of your income, expenses, and overall financial health of your auto repair business.
Here’s what to check:
Revenue vs. Expenses: Are you bringing in more than you’re spending? If not, where’s the gap?
Profit Margins: Are you charging enough to maintain healthy margins, or are rising part costs eating into your profits?
Trends: Are your numbers higher or lower than the same time last year?
Understanding your current numbers gives you clarity on what’s really going on, beyond just how busy the shop feels.
2. Check Your Cash Flow
You can be profitable on paper and still run into serious trouble if cash flow is tight in your auto repair shop. Just because the numbers show a profit doesn’t mean you have the cash on hand to pay your team, cover parts, or handle unexpected repairs. That’s why reviewing your actual cash movement is critical, not just your profits.
Look at
Accounts receivable: How many invoices are still unpaid?
Payment timing: Are you waiting too long to get paid from insurance companies or fleet contracts?
Recurring expenses: Are there any that can be reduced, renegotiated, or eliminated?
Now’s a good time to tighten up your payment processes. Send invoices promptly, follow up on overdue accounts, and consider automated reminders or payment incentives for faster turnaround.
3. Analyze Labor Costs and Efficiency
Labor is one of your biggest costs, but also your biggest asset. Your techs are the heart of your shop’s productivity, so making sure their time is being used efficiently is key to maintaining profitability in your auto repair shop and keeping your operations running smoothly.
Take a look at:
Labor efficiency ratios: Are your techs producing enough billable hours compared to what you’re paying them?
Scheduling gaps or bottlenecks: Are there times of day or week when your bays are underutilized?
Overtime trends: Are you consistently paying overtime? That could indicate a staffing or scheduling issue.
Improving efficiency might mean investing in better auto repair shop software, adjusting your scheduling, or providing more training for your team.
4. Assess Your Pricing and Profitability
If your pricing hasn’t changed in a while, you may be losing money without realizing it, especially with the rising costs of parts, labor, and new tariffs on imported goods. These added expenses can quietly chip away at your margins.
Use this mid-year point to:
Review your current labor and parts pricing against your actual costs
Compare rates with local competitors to ensure you’re not undercharging
Factor in new expenses like tariffs or vendor price hikes
Adjust your pricing to reflect your expertise, quality, and turnaround time
Raising prices doesn’t have to scare off customers. Communicate the value you provide clearly: things like warranty-backed repairs, experienced techs, and fast service matter to your clients. People don’t mind paying more when they trust they’re getting quality.
5. Forecast for the Rest of the Year
Once you know where you stand, start planning where you want to go. Forecasting for auto repair businesses helps you anticipate cash flow highs and lows, set realistic goals, and avoid surprise expenses that can throw your whole operation off track. It also gives you clarity on whether you can afford to hire a new tech, invest in new diagnostic equipment, or launch a seasonal promotion.
Ask yourself:
What big expenses are coming up? (e.g., equipment upgrades, hiring, tax payments)
What goals do I want to hit by December?
Do I need to shift my marketing, pricing, or staffing to hit those goals?
A cash flow forecast or budget update helps you prepare instead of react, and avoid any end-of-year surprises.
Finish the Year Strong
Mid-year is the ideal time to recalibrate your financial strategy for your auto repair shop and make sure your shop is set up for success. By checking in on your numbers, tightening up where needed, and making proactive decisions, you’ll keep your business running like a well-oiled machine through the rest of the year.
Need help reading your numbers or planning ahead?
At Three Rivers Bookkeeping, we specialize in bookkeeping for auto repair businesses, helping shop owners like you understand their finances, improve cash flow, and grow with confidence.
👉 Schedule your free consultation today and take control of your year before it speeds by.
