Asset financing is the answer to bodyshops' cash flow woes

Yet, as we know, while producing first class workmanship many bodyshops suffer less than attractive margins from their work providers. Cash flow is further compounded as owners are often forced to endure lengthy delays for payment, while facing mounting pressure from trade creditors. This is a state of affairs capable of producing many victims. Prime amongst these are the bodyshops that fail, while the majority of those remaining struggle financially. Restricted cash flow stops investment in new equipment, staff training and the necessary upgrading of aging systems. Faced with the ever tightening noose of cash flow, and the fear of failure, many bodyshops are increasingly looking at alternative ways to fund their companies. A practical solution is asset financing or finance factoring. The asset, in this case, being invoices to blue chip or triple A insurance companies which bodyshops can convert into instant cash. Not only can asset funding be remarkably low cost, it can often free bodyshops from costly overdrafts and bank loans. Armed with a steady stream of fast cash they can negotiate better deals on parts and paint. Not to mention sleeping better if the deeds of their house come back! The first rule, for any bodyshop wishing to explore asset finance factoring, is to identify a company that fully understands the accident repair industry. Be aware that the better an external funding company understands the bodyshop, the better the financial offer, and support, the owner can expect to receive. Find a company that understands the needs of work providers, effective management, efficiency in the bodyshop, seasonal troughs, quality estimating and the maximising of gross profit. Take a moment to visit www.bodyshopfellowship.co.uk and look at Management Matters. Modules 2 and 5, The Anatomy of Profit and Managing the Cash Flow may be of particular interest. Now take a closer look at asset financing. Given that bodyshop sales are primarily on credit to respected companies the business asset is the debtor book. An asset that can be used to raise the working capital needed to fund business development, and provide much needed security. Bodyshops have a long history of concentrating upon repairs and, while this must continue, they must still address some broader issues. Can margins be increased? Are the estimates being maximised? Is the business being marketed effectively? Is poor cash flow dragging the business down? Asset financing is a clear, and clean, way to make a change for the better. Study the options and decide wisely. Peter Warrilow Managing director Bodyshop Fellowship 01476 514610