Running a successful collision repair shop has always required a careful balance of craftsmanship, customer service, and operational efficiency. But today’s market brings new challenges—tighter margins and mounting pressure from insurers, suppliers, and customers.
Growth is not just about opening more locations; it is about strengthening the business’s financial foundation. Successful collision repair shops know this and have achieved profitability through technology.
By leveraging new technology, shops can streamline processes, minimize errors, and gain insights into financial reporting. Ultimately, success is not just about fixing vehicles well—it is about running a sharp and financially sound operation.
Jim Bethune, Bethune Consulting Services
Challenges repair shops face when it comes to profitability
Collision repair shops are caught between two types of customers: insurance companies and vehicle owners. While both are critical to their business, insurance companies often dictate pricing, leaving shops with limited control over revenue. This creates a margin squeeze that can feel unrelenting, especially in provinces like Ontario and Alberta, where insurance companies have more leverage.
Adding to the challenge is the growing capital requirement. Upgrading equipment, like installing a new paint booth, can easily cost $300,000 to $400,000—and that is just one example. If the business is not growing, it becomes increasingly difficult to justify or recover these investments.
On top of that, many shops unknowingly lose money due to inefficiencies—whether it is delayed financial reporting, poor inventory management, or not reclaiming parts returns. Inconsistent processes, outdated technology, and underdeveloped financial skills contribute to profitability leaks that can accumulate into serious business risks.
Why accurate and efficient financial reporting is essential
Timely and accurate reporting directly impacts profitability, making financial reporting one of the most essential tools for success in today’s collision repair industry.
Many collision repair shops fall behind in closing work orders and producing financial statements, sometimes waiting months to finalize reports—and understandably so, as some shops are incredibly busy. That being said, though, reports should be ready within days of month-end. Having timely financial reports allows shops to spot problems quickly, adjust pricing, control expenses, and optimize cash flow.
Financial statements are more than just compliance documents—they are a guide. They help measure gross margins, cash flow health, and operational efficiency. Moreover, they help prepare for unexpected opportunities or challenges, such as expanding to new locations or negotiating with lenders and paint suppliers. Without reliable numbers, shops risk leaving money on the table or making poor business decisions.
How to increase profitability
Fortunately, shops that commit to improving their financial processes have multiple ways to boost their bottom line without sacrificing service quality.
1. Make processes clean and fast
Optimize mundane, repetitive processes by eliminating paper-based systems and automating other timely processes, such as closing work orders, parts returns, and invoice processing, which can help avoid costly delays and errors. Additionally, monthly inventory counts are critical—especially for paint and parts. Completing inventory every month provides shops with a clear idea margins and can prevent costly surprises.
2. Embrace new technological solutions
The collision industry is in the midst of a quiet technology revolution. Modern management systems like Mitchell or Body Shop Connect now integrate smoothly with accounting platforms such as QuickBooks Online (QBO). This means less manual entry, fewer keystrokes, and real-time financial visibility.
Additionally, moving operations to the cloud and using tools like Microsoft Teams, cloud-based accounting, and online payment systems saves money and creates flexibility and scalability for future growth.
Today, having tech-savvy staff is essential, especially in accounting. Bookkeepers should be as comfortable with information technology (IT) systems as they are with financial statements. Technology is no longer optional—it is part of profitability.
3. Be diligent with cash flow and expenses
Focusing solely on net income can be risky—after all, cash flow keeps a shop running. Even profitable shops can run into trouble without enough cash, so prioritizing daily cash management, staying on top of receivables, and carefully managing payables are key to financial stability.
Planning for the future
The most successful shops do not just look at historical numbers—they actively track key performance indicators (KPIs) to guide day-to-day decisions. KPIs like gross margin percentage, parts return efficiency, cash flow forecasts, and inventory turnover should be reviewed regularly.
A strong KPI system helps shops:
- Detect problems early
- Benchmark against industry peers
- Spot underperforming areas
- Improve accountability across your team
Maintaining accurate and well-organized financial records is essential, especially for shop owners considering a future sale or expansion. Unfortunately, many collision repair operators only begin refining their financials when a transaction is imminent—often limiting their valuation and leaving money on the table.
By investing in strong financial reporting and processes today, collision repair shops position their business to capitalize on future opportunities, whether through a sale, merger, expansion, or succession.
This blog has been created based on Jim Bethune’s presentation, Improving your financial puzzle, at CCIF Toronto 2025 at the Canadian Auto Care Industry Conference.