Why its important to implement
Credit processing timing prevents costs from unused parts. Timely management prevents thousands in losses. Good system prevents fraud accusations.
Fraud Prevention Protection
Have a good parts return system will also ensure that the shop has not invoiced the work provider for parts not fitted, as this can be classed as fraud and losing the work from the work provider.
Credit Processing Timing
If the part is not accepted as a credit with the parts supplier, then the shop will take the cost for the parts if the invoice is already completed, therefore it is important to send all credits and confirm receipt of them to reduce additional costs and loss of profit.
Credit Management Best Practice
Returning parts for credits in a timely manner is always a good practice as left unmanaged the total unused parts could run into thousands of dollars.
Business Impact
Shop pays for unused parts if credits not processed. Work provider relationship damaged by incorrect invoicing. Risk of fraud accusations affects business.
Profit
If the shop is left with the unused parts at no fault of its own and the invoice is completed the body shop will have to pay for the part.
Profit
If the work provider is invoiced for parts not fitted due to internal mistake, this will not be seen in a good light by the work supplier.
action steps
Assign credit management responsibility, implement credit check policy before invoice completion, enforce with warnings.
Credit Management Policy Enforcement
Strong internal warnings if policy not followed once established.
Invoice Credit Check Policy
Implement internal policy, do not finalise an invoice unless there is a check for any credits.
Credit Management Responsibility
Employ a parts manager or for smaller body shops assign the task to a foreman or other staff member to manage the credits and remind the administration staff of the credits.
Related tasks
Milestone:
07: Optimizing Parts Management & Storage