Top 5 financial challenges bodyshops face in winter and how to overcome them

“Seasonality” for the bodyshop industry used to be something you could set your watch to. You were all too well aware that during the colder months, there would be an influx of new repair jobs coming through to the shop floor, especially when the clocks went back.

However, the impact of COVID, threw the biggest spanner in the works, knocking everything out of kilter. But, given the most recent data published by the Department of Transport, stating that car usage was back to pre-COVID levels in August 2024, could seasonality be coming back to our industry? And if so, what are the main financial challenges bodyshops will face?

In this article, we will explore the top 5 financial challenges bodyshops face during the colder winter months and explore practical solutions to overcome them.

Challenge 1: Reduced Customer Spending

There is no guarantee that the old “seasonality” boom will return this winter. Drivers are still concerned about claiming on their insurance, following policy price hikes, and are either opting to pay privately or not bother with the work at all. In turn, this reduced work capacity puts a strain on the bodyshop’s finances as it enters a costly period.

However, the complete opposite may happen, and there could be a significant upswing in repair volumes coming through, so the bodyshop must have processes and procedures in place to meet the demand, ensuring their financials are in a strong place.

Challenge 2: Increased Operating Costs

There’s no denying that operational costs for a bodyshop soar in the winter months, squeezing profit margins even tighter. Increased utility bills, supply costs, and other expenses, all play their part in the financial strain, ensuring the need for productivity, workflow management, and cash flow to be at peak performance.

Heating spray booths, proper inventory management, and additional prep can take their toll on productivity and impact the bottom line. However, proper cash flow management frees up the time of the bodyshop owner or manager to review these blocks to maintain peak productivity performance and minimise downtime.

Challenge 3: Fluctuating Workload

Repair volumes have been all over the place for the past four years, even more so over the last 12 months. However, during the upcoming winter months, which typically is a boom period for bodyshops, how can they remain resilient and ready for fluctuating repair volumes off the back of storm events, bad weather, and holiday shutdowns?

These fluctuations can have an impact on the bodyshop’s cash flow and the need to have readily available funds for the repair works is critical.

Challenge 4: Parts Availability & Disruption

Parts availability and delays have been a constant headache for several years, and although things might look like they’re changing, it won’t be enough to establish a stronger footing before this year’s winter season. Ongoing lead times for parts cause clogs on the shopfloor with part-done repairs and costly hire cars out on the road – creating a problematic customer experience.

Plus, the need to have the funds available to purchase the parts ahead of the repair work commencing, puts the need of having a substantial working capital to draw down from.

Challenge 5: Insurance Repair Payment Delays

Although network and insurance repairs are a lucrative and steady revenue stream for bodyshops, the most common issue with them is the speed at which they pay their invoices. With a high volume of repairs coming through the bodyshop over the colder months, and owners waiting anywhere up to 60 days or more for payment, this can lead to significant cash flow challenges.

One solution to consider is funding support from companies like ACG, which can settle authorised repair invoices within 24 hours, giving bodyshop owners a quick and cost-effective solution to access their monies owed.

Conclusion

Whether “Seasonality” comes back or not, the upcoming disrupting winter months are not one to be ignored. In response to these financial challenges, ACG’s Managing Director, Ian Budsworth commented.

“What’s clear about these 5 financial challenges that bodyshops will face this winter, is the significant role that cash flow plays in resolving the issues and promoting an efficient way of operating. By prioritising cash flow, a bodyshop owner or manager can proactively plan and adapt to winter-specific challenges and maintain financial stability.

For 15 years, we have supported bodyshops across the UK to meet these challenges head-on and promote a different way of managing their funding requirements to fulfil their cash flow needs.”

For more information on how ACG can support your bodyshop to meet its financial requirements for the upcoming winter months, simply get in touch.