Why does a full lot not mean a full bank account?
A collision shop can have every bay packed and still scramble to make payroll. The work is done, but the money is tied up in supplements, parts, and insurance payments that arrive weeks later. Busy does not always mean profitable.
What makes collision cash flow so tough?
The collision model has timing traps built into it.
- Insurance and DRP payments arrive long after the work is done
- Parts and sublet work are paid up front, before reimbursement
- Supplements take time to approve, holding up the final payment
- Approved labor times may not match the hours the job really takes
- Storage, rentals, and customer deductibles complicate collection
Are approved hours covering your real costs?
If the labor times you get paid for run shorter than the hours your techs actually spend, you lose margin on every repair. Multiply that across a full schedule and a busy shop bleeds quietly. Knowing your real cost per hour tells you whether the work is worth taking.
How do you steady the cash?
Watch the gap between work completed and money collected, push supplements and invoices through quickly, and know your true cost per labor hour. Manage cash on a weekly basis so a slow insurance month does not catch you off guard.