Invoice Factoring and Seasonal Cash Flow: Keeping Your Bodyshop Running Smoothly Year-Round

With income entirely dependent on work volumes it can pose a challenge for bodyshop owners to keep a close eye on finances throughout the year, but they become even more prominent when it comes to seasonality changes. So, let’s look at how implementing invoice factoring into your business structure can keep things running smoothly all year round.

By utilising invoice factoring and switching invoices into immediate cash, businesses gain the luxury of having funds available. This can help bodyshop owners cover day to day expenses, such as payroll and operational costs. It also means they can be more flexible with their finances as invoices can be factored when required, so they can adapt to any unexpected expenses and fluctuations.

Understanding seasonal cash flow challenges in the Auto Body Industry

Seasonal changes cause a wave of repair demands due to a spike in road accidents, which can make it much harder for bodyshops to keep up with cash flow.

The transition from summer sun and lighter evenings to harsh winter weather conditions increases the risk of accidents greatly. With this influx of accidents around colder months, it generates a rise in insurance claims where drivers require repairs to their damaged vehicles.

These peak periods are often followed by slower months. Therefore, it is even more crucial for bodyshops to have consistent cash flow management to ensure smooth operations so that the business can handle both busy and slow periods. This is where invoice factoring can support.

What is invoice factoring and how can it help with these challenges?

Invoice factoring is a strategy where a bodyshop sells its unpaid invoices to a third-party company, such as ACG. Once repairs are complete and an invoice is issued, the bodyshop can factor that invoice to get cash quickly. This allows the bodyshop to receive immediate cash rather than relying on networks or insurance companies to pay out which can sometimes take up to 90 days.

With this quick access to funds, bodyshops can keep a continuous flow of work during peak periods but even more so in the quieter months. Ensuring that they have the funds to pay for parts, expenses and payroll without the worry of incurring debts along the way. It provides a seamless service between all involved parties and ensures the customer needs are being met.

Key benefits of invoice factoring:

Invoice factoring can be a powerful asset when it comes to maintaining a smooth operation within bodyshops, some of its key benefits include:

Improved cash flow: By having a regular cash flow from using invoice factoring, bodyshop owners can easily monitor their finances. They can ensure that financial obligations are met.

• Cover during seasonal periods: Invoice factoring can help bridge cash flow gaps during slower periods, ensuring that operations can run smoothly throughout the year.
• Quicker access to funds: Traditional methods could mean bodyshops are waiting 30 to 90 days to receive payment from networks and insurers, whereas the use of invoice factoring can provide payment within 24 hours.
• Focus on growth: With the help of invoice factoring, bodyshop owners can shift focus from financial worries to the growth of their business.
• No incurred debts: Invoice factoring is not a loan, so businesses will not incur any debts, therefore nothing is added to your balance sheet and credit rating is not affected.

If you are considering utilising invoice factoring in your business, the first step is to select a reputable factoring company that suits your needs. With ACG, this is made very simple, you can find out more information about our products and find customer case studies by visiting their website.

Case study.

ACG work with many bodyshops that understand the struggles of cash flow management. They have been able to offer services that can tailor to the needs of businesses and have the privilege of seeing how invoice factoring has made a difference in their customer’s day-to-day operations.

Lewis Barker, Director at Europa Crash Centre shared his experience of working with ACG and how this has aided his business in managing cash flow.

“ACG have helped massively in taking away the stress and time pressures that come with monitoring invoices and cash flow. Working with ACG has allowed us to get back to focusing on growing our business, and we now have full financial control across all our sites. It’s allowed us to shift energy from the financial worries to doing what we do best, repairing vehicles and getting our customers back out on the road as quickly as possible.”

Cash flow management can be a daunting task, especially as each year brings new changes. By implementing invoice factoring and addressing cash flow challenges head on, bodyshops can ensure their business has long term success.

For more information, speak to the experts at ACG and see how invoice factoring can support your business all year round.