Financing an Auto Repair Shop

Working Capital for Auto Body and Rebuild Facilities

Factoring Finance for automotive repair and body shops beats the problems of slow paying customers and weekly expenses. Auto and truck service facilities working with rental car companies, dealerships, fleet operators, and insurance companies can wait up to 120 days for payment. Options are available for companies struggling to keep up with cash flow.

Invoice factoring provides Auto Repair and Body Shops with the following:

• Fast funding period: receive cash in your checking account 3 to 5 days after sending an online funding application
• Outsourced accounts receivable (A/R) department allowing your team to focus on customers and vehicles at the shop
• Credit protection from bad debt if your customer does not pay its invoices
• The approval process is easier for factoring services than other business financing methods such as SBA loans, bank lines, or credit. 

Auto Body and Mechanic Shop business funding solutions

Local automobile repair shops work with many customers, from regular tune ups to crash repairs. Mechanics do business with insurance companies; from 2015 to 2019, the auto insurance industry collected $1.1 trillion in premiums keeping shops busy. It can be tough for small facilities or garages to keep up with administrative demands. Auto shop financing with invoice factoring helps overcome obstacles of business funding.

See more at Invoice Factoring FAQ.

Why does my repair shop have cash flow issues?

Large customers like rental car companies, fleet operators, and auto dealerships do not pay invoices for 30 to 60-day payment terms. Auto shops and mechanics work long hours and require constant parts purchasing. Your company waits months to get paid, causing cash flow issues. Cash flow issues in repair facilities impact paying employees, overhead, and parts vendors on time.

What are the financing options for Auto Mechanics and Body Shops?

Business financing is available through SBA Loans, traditional bank loans, personal funding, and accounts receivable (A/R) factoring. Quick capital injections are necessary for service and parts departments with weekly payroll funding. Mainstream funding through A/R factoring or selling unpaid invoices for cash helps speed up the time to receive funds.

Small Business Financing Options for Auto Repair & Auto Service Shops:

• SBA Loans
• Traditional bank loan or line of credit
• Personal funds
• Asset-based Lending
• Receivable Factoring

Aside from securing third-party finance options, your business can take steps to improve its financial position:

Cash Reserves

If your business has cash in savings or other liquid vehicles, it helps offset cash flow gaps. It is natural for automotive companies to have quicker payable cycles than receivables. This means your shop continues to pay employees, buy parts, and service vehicles while waiting on large sums of money from your customers. Cash on hand helps reduce the need for funding.

Include Early Pay Discount Terms

If the extended payment period (slow-paying customer) hurts your business, offer 2-3% discounts for payments within 7-14 days. Depending on how long you provide credit terms.

13-week cash flow forecasting

Shop management can better project revenue and expenses with cash flow forecasting. The 13-week cash flow forecasting model considers the timing of your inflows and outflows, then provides an estimated net cash balance. Small or large shops can become more efficient with enhanced financial planning.

Why do auto repair shops choose invoice financing?

Factoring companies offer quick funding processes and have more accessible qualifying standards than traditional banks. The collection process can be timely and costly for shops waiting on insurance companies or dealerships waiting on warranty coverage. Bankers Factoring provides back end administrative support for your receivables department. Keeping your staff focused on operational excellence is essential in such tight labor markets.

Invoice factoring is simply the process of an automotive company selling unpaid receivables to a factoring company for working immediate cash. Bad debt protection is the added benefit of working with Bankers Factoring. We cover overdue receivables if your customer cannot pay its bills (insolvency), runs out of money (bankruptcy), or has slow pay.

Program for Body Shop Repair Factoring

• Quick funding: 3 to 5 days after your application
• Outsourced A/R department
• Bad debt protection covering your shop from A/R losses
• Straightforward approval process versus banks
• No balance sheet debt

What type of automotive service businesses qualify for Invoice Factoring?

Car and truck service businesses with large commercial customers qualify for financing. The automotive industry has a large chain of customers and vendors that require parts and services.

Repair teams of all sizes and credit standards can qualify for A/R factoring.

• Auto repair shop
• Truck Repair
• Engine Rebuild facilities
• Body shop
• Mechanic facility
• Dealerships
• Fleet services

How to get automotive company financing?

Contact Bankers Factoring to begin working with your automotive financing specialist. Backlogged service departments with parts delays put a strain on your cash flow. Insurance companies are slow-paying and require constant tracking down to get payment.

We understand the struggles of third-party collections from fleet services, large corporations, rental car companies, and your other customers. Remove the burden at your shop by selling unpaid invoices to receive fast cash funding.

Ready for the owner-employees of Bankers Factoring to help you grow your business with auto shop invoice funding, including bad debt protection? Use our fast online factoring application or call the toll-free number 866-598-4295

• Facebook
• Twitter
• LinkedIn