Have You Outgrown Cash Basis Accounting? Here’s How to Switch to Accrual Basis.
Simple Doesn’t Always Mean Better
Your business is your baby. Like most long-time shop owners, you’ve poured hours of your time—blood, sweat, and tears—into growing your business. By now, you’re a pro at customer service and fixing cars, but you may still need a little help with accounting, especially if you currently use the cash basis method.
Cash basis accounting, or keeping track of your finances via checkbook and bank account, is the simplest method of accounting; money going into the bank counts as income, and money going out counts as an expense. And that’s all there is to it.
Or is it? As your business becomes more complex—you start growing your team, making larger parts orders, dealing with multiple vendors and suppliers, and taking on a higher volume of jobs—you’ll begin to notice that things don’t always align. There’s more money coming in, and there’s more money going out. It’s no longer as simple as, “I do a job, front the costs, get paid right then and there, and know exactly how much I made.”
One of the biggest problems with sticking to a cash basis method of accounting is that it becomes easy to forget about or ignore the expenses you haven’t paid yet. You might see that you have $30,000 in the bank and think, “Awesome! We’re doing great.” But a parts bill you forgot about is taken out of your account right when you’re about to process payroll, leaving you with far less profit than you thought. Now you’re not able to invest in that new bay you were going to buy this month.
If you’re not tracking your income and expenses as they happen, you really don’t know where you stand until everything hits your account, making it difficult to plan ahead.
Signs That You’ve Outgrown Cash Basis Accounting
- You experience big swings. One week, it seems like you’re making a ton of money, and the next week when payroll and bills hit, it seems like you’re taking a loss.
- You can’t identify where certain expenses came from, or why your income, expenses, and profits don’t add up.
- You forget about major payments before they hit your bank account.
- You want to invest more in your business by building your team, hiring vendors, and acquiring better technology.
Accrual Basis Accounting: Thinking in Terms of Cash Flow
The accrual basis method of accounting, or recording transactions instead of payments, will give you a clearer view of how much profit you're making at any given time. The goal is to have accurate numbers; you don’t want to be misled into believing that you have more or less money to work with than you actually have, or will have. With accrual basis accounting, your finances are balanced as soon as transactions take place.
So, how do you get there?
Minimize Variables
When you’re using cash basis accounting, and your numbers don’t add up, the question becomes, “What am I missing? Did I forget to count a payment? Was there theft?” These are the variables we want to minimize. You want to be confident that all major expenses are being accounted for, so if there is a big chunk of change missing, you’ll be able to quickly figure out what’s going on.
The way to minimize variables in accounting is to pay close attention to the income and expenses that make the biggest difference to your finances. Sure, you could dive into every single detail and penny spent, but for many shop owners, that’s overkill. It can take a lot of time out of your day to accrue every single expense, and a few bucks won’t overly affect your cash flow.
Think Big Picture
Accrual basis accounting is fairly easy to implement in the auto repair industry because there are only two major variables that we need to consider:
- Invoices
- Cost of Goods Sold
Invoices are the easiest place to start accruing your income. What matters most is when the job is done, complete, and set out. Whether it’s by day or by week, you want to make sure that invoices are all dated correctly. Instead of tracking when invoices are paid, you can now base your income outlook on when the transactions took place.
Next, you want to look at the cost of goods sold, which includes the price you pay for parts on each invoice. These figures make up your expenses. Instead of looking at your bank account and waiting for the money to be taken out, you now know how much you paid to complete each job as soon they are completed in your system.
Now, you may have terms with your parts supplier where you pay them at the end of every month. In this case, you may not need to date every single small parts order. Instead, you can keep an ongoing list of parts you’re buying from each major supplier so that you have a good idea of what your parts bill is going to look like before it comes time to pay.
What About Payroll?
You may notice that payroll is missing from the list above. Many shops don’t accrue payroll because it can get tricky. If you commission a large chunk of work, you may want to accrue that into your monthly finances so that you’re keeping track of it.
Eventually, you will probably want to accrue your payroll, too, so that you have the clearest idea possible of where your finances stand.
When you are confident about your cash flow and know approximately how much money you have on hand without guessing, you can do a lot more with your business: invest in new technology, give your team a nice bonus, open a new shop, or help your community.
How to Get Started With Accrual Basis Accounting
If you start by accruing the major items—invoices and cost of goods sold—you can get things rolling fairly quickly. Remember to date all transactions, and keep those payment dates as close as possible to the transaction date. Move the parts bill back to the date where the transaction actually happened, and you’ll start to gain a real-time idea of your finances.
Once you get the hang of dating transactions, you can become more sophisticated with accruing and feel more comfortable with how you’re spending money on your business.
Leverage Tekmetric’s Realtime Insights
Tekmetric’s shop management system makes it easy to track transactions in realtime. As jobs are completed, Tekmetric inputs all transaction information, including the price paid by the customer, the cost of goods sold, and the date of that transaction, into a variety of metrics that you can analyze. From end-of-day sales and end-of-month sales to gross profit percentage and gross profit dollars, Tekmetric makes it easier than ever to visualize the financial story of your business—anytime, anywhere.
This article was written with the guidance of automotive repair industry CPA Hunt Demarest of Paar, Melis, & Associates, P.C.
👉 Ready to grow your automotive business? [Book a personalized Tekmetric Demo Here]
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Introducing Recommended Campaigns
Tekmetric Marketing now builds ready-to-send campaigns. The message is written and the audience is selected. All that's left is to review, personalize, and send.
Most shop owners know the fastest way to fill this week’s bays is by bringing back customers who already trust them — the ones whose vehicles you serviced months ago but haven’t seen since. Re-engaging existing customers is one of the most effective ways to generate new repair orders.
The problem is finding the time to do it. Figuring out what to send, who to send it to, and when to send it almost always loses out to the car on the lift or the customer standing at the front counter
That's where Tekmetric Marketing's Recommended Campaigns come in.
Instead of starting with a blank page, Tekmetric Marketing does the heavy lifting for you. It analyzes your shop’s data and recommends campaigns that are ready to go. The audience is selected, the message is drafted, and all that’s left is for you to review it, make any changes you’d like, and send.
No blank screen. No guesswork.
Just a campaign ready to help bring customers back.
How It Works
Recommended Campaigns automatically surfaces ready-to-send campaigns tailored to your shop using the information Tekmetric already knows — your customers, previous campaigns, location, and seasonality.
You’re always in control.
Review the recommendation, personalize the message so it sounds like your shop, adjust the audience if you’d like, choose when to send it, and you’re done.
What used to take an hour staring at a blank screen can now be done in just a few clicks.
How Fox River Tire & Auto Uses Recommended Campaigns
Like most shops, Fox River Tire & Auto in St. Charles, Illinois, wants to stay connected with customers and bring them back when the time is right. But deciding what campaign to send, then building it from scratch, takes time most shops don't have.
Recommended Campaigns gives Tammi and her team a starting point instead of a blank page. They review the recommendations, edit the suggested content to fit their brand, and send with confidence.
"Recommended Campaigns provide an excellent launchpad for re-engaging with our customers. Instead of starting from scratch, we refine the suggested content to fit our brand and send it with confidence. The process is straightforward, time-saving, and always delivers."
— Tammi Vest, Business Manager, Fox River Tire & Auto
From Reports to Results
Recommended Campaigns is part of a much bigger shift in where Tekmetric Marketing is headed.
For years, marketing platforms have been good at showing you what already happened: campaign reports, open rates, clicks, and dashboards. That’s valuable, but it still leaves the work on you.
Tekmetric Marketing is evolving beyond reporting. Increasingly, it’s helping you decide what to do next, and doing more of the work for you.
You’ve already seen this with Recommended Review Responses. When a customer leaves a Google review, Tekmetric drafts a thoughtful response for you to review and approve.
Recommended Campaigns is the next step.
Instead of simply telling you that you should market to your customers more often, Tekmetric Marketing puts a campaign directly in front of you — already drafted, targeted, and ready to send.
Your marketing should keep working even while you’re heads-down under a hood.
One Year of Continuous Innovation
Since launching Tekmetric Marketing in the fall of 2025, thousands of shops have made it part of how they attract new customers and bring existing ones back.
We’ve also continued investing in the platform based on feedback from shops like yours.
Recent additions include:
Rich text and custom links in every email so you can create more engaging emails and link directly to booking pages, review sites, and promotions. Bold a headline, organize services into a list, and drop in links to your booking page, review site, or a promotion, in both campaigns and automated emails like review requests and service reminders.
Recurring blocks for your calendar for lunch breaks, holidays, staff meetings, and other recurring events. Easily add recurring lunch blocks, staff meetings or holidays to your calendar with a few clicks. No more appointments booked over your team events without you knowing.
Smarter marketing-source tracking on appointments and ROs: Automatically associate appointments and repair orders with the latest marketing campaign or automation that reached the customer. When a customer books after getting a message, the marketing source pre-fills with the most recent campaign or automation sent to them, so attribution is accurate without the guesswork.
Recommended Review Responses, helping you respond to Google reviews in just a few clicks.
Every one of these improvements started with feedback from shop owners looking for simpler, smarter ways to grow their business.
Keep it coming.
Already using Tekmetric Marketing?
Head to Marketing → Campaigns to see what's recommended for your shop and send your first campaign in just a few clicks.
New to Tekmetric Marketing?
See how Tekmetric Marketing helps shops bring customers back with online booking, automated reminders, review generation, and Recommended Campaigns.
At Tekmetric, we understand that data security is more than just a priority—it's a responsibility. That’s why we are excited to announce that Tekmetric is now ISO/IEC 27001 certified! Combined with our SOC 2 Type II certification, this achievement underscores our commitment to keeping customer and partner data safe and maintaining systems that operate at the highest standards.
What is ISO/IEC 27001?
ISO/IEC 27001 is the internationally recognized standard for Information Security Management Systems (ISMS). It represents a comprehensive framework for managing and protecting an organization’s information assets, ensuring confidentiality, integrity, and availability of data.
To obtain this certification, Tekmetric went through rigorous audits and a thorough examination of security protocols, risk management practices, and data protection measures.
As we continue to innovate shop management solutions to best support our customers, achieving this certification reinforces that our platform and internal workflows protect the highly sensitive data customers and partners trust us with.
What This Means for Tekmetric Customers
For Tekmetric customers, achieving ISO/IEC 27001 certification means you can trust that we adhere to the highest standards for information security.
- Enhanced Data Security & Trust: Our certification guarantees that Tekmetric has stringent security measures in place to safeguard sensitive data, including customer information, financial records, and business data.
- Reduced Risk of Data Breaches & Security Incidents: By adopting a proactive approach to risk management, Tekmetric minimizes the likelihood of security breaches and disruptions
- Compliance & Regulatory Alignment: Our ISO/IEC 27001 certification helps customers demonstrate compliance with data protection regulations, such as GDPR and CCPA.
This certification reinforces our commitment to safeguarding your data, providing you with peace of mind and confidence in our Shop Management platform. To learn more about all our certifications and our commitment to security, visit our Trust Center.
Effective customer communication is crucial in the auto repair industry, no matter how big or small your shop may be. In fact, customer communication is at the heart of the most successful shops. However, there’s more to it than just writing a repair order or making a phone call and leveraging effective strategies for communicating can make the difference in a shop’s level of success. In this guide, we will go over qualities of great customer communication and how you can leverage digital tools like your auto repair shop management system to be a better communicator. Together, these assets can help you enhance customer loyalty and grow your shop’s bottom line.
Good communication in your shop is characterized by:
- An efficient and accurate workflow
- Understanding and fulfilling customer needs
- Creating trust and driving safety by educating customers on their vehicles
Maximizing and Streamlining Your Workflow
Good communication starts internally. Streamlining communication between your service writers and technicians is key to ensuring the customer’s needs are met in the most efficient way possible. To master this, encourage your team to leverage internal tools like your shop management system to streamline internal conversations. This can help create a more efficient communication process, allowing you to both maintain a continuous workflow and enhance your overall customer experience. Some of Tekmetric’s features to streamline workflow include:
- Job Board. Within Tekmetric, internal and external notes can minimize the back-and-forth during a repair process. For example, internal-facing notes on a job board allow for immediate communication between your technicians and service advisors with just the click of a button. Additionally, job boards also have customizable statuses that share the state of a repair at a glance – no more chasing down a technician after your day off for a progress update. Together, these features streamline your shop’s internal communications, driving efficiency and allowing smoother behind-the-scenes operations for everyone.
- Inventory and Ordering. To help streamline the ordering process, Tekmetric includes a feature that allows the technician to find the parts that they need for the vehicle, rather than going through a service advisor. By empowering the technician to review labor times, order the correct parts and note their needs internally, this feature can reduce communication bottlenecks and enhance communication – from the technician to the service advisor, and eventually to the customer.
Meeting Customers Where They Are
The best way to reach a customer is whichever method they prefer. Some may prefer email or phone, but many people are on-the-go and also appreciate text updates. In fact, 81% of Americans text regularly, with 90% of text messages opened within the first three minutes since it was sent. Because of this, Tekmetric has built-in, two-way texting to help you make your customer experience more convenient. Whether sharing repair updates or enabling a parent to make a payment for their college student from states away, texting enables customers to reach your shop for important matters without inconveniencing themselves. This includes features like:
- Two-way texting. With two-way texting, customers no longer have to deal with phone tag hassles and can reach the shop at the tip of their fingertips. This capability gives the customer more autonomy in the repair process, allowing a convenient way for them to ask questions, view photos or video and approve repairs.
- Text-to-pay. Payment is the final touchpoint you have with a customer. The text-to-pay feature makes this process virtually painless. Customers can pay from their office, in the evenings at home or even from miles away if they are traveling. By offering this option, you can simplify the payment process, and the customer can pick up their vehicle sooner – resulting in a happier customer and more efficiency in your shop.
Facilitating A Culture of Trust, Safety and Education
In the auto repair industry, shops have a responsibility to ensure the safety of their customers’ vehicles. Utilizing digital tools in your shop can demonstrate your commitment to vehicle owner safety, as well as help you facilitate a culture of trust that seeks to educate the average customer about the health of their car. Some tools might include:
- Digital vehicle inspections. DVIs provide two key qualities your customer highly values: information and benefits. A complete DVI with photos, video and clear notes gives customers the autonomy to examine the repairs your technician proposes and decide which recommendations they want to approve. It benefits your shop too: when you share eight photos or more, your ARO can actually increase because the media allows the customer to see where the vehicle needs repairs with their own eyes. With two-way texting, you can send photos directly to the customer’s phone as well, enhancing both the convenience and the level of trust they have in your shop.
- MotoVisuals integration. One of the responsibilities of the service writer is to educate the vehicle owner on why the repair is needed for their car. With Tekmetric’s MotoVisuals integration, you can share clear, easy-to-understand animations and videos with voiceovers that talk about why a repair is important. This helps drive the vehicle owner’s confidence in the repair, creating a culture of education that ultimately drives trust and loyalty and keeps your customers coming back for more.
The Bottom Line?
Ultimately, communication is a strategic business tool that can drive efficiency and enhance your shop’s performance. By prioritizing clear, consistent and personalized interactions, you can build lasting relationships, enhance customer satisfaction and elevate your shop’s performance. Embracing digital tools and strategies like Tekmetric can empower you to optimize your communication efforts and achieve sustained growth. This commitment to maintaining a customer-first mentality is reflected in your ability to communicate both with your team and your customers and, when done effectively, can increase customer retention and lead to more profit for your shop.
Shop Management
Customer Experience
September 16, 2024
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