Workshop labour and commissions in the ledger
How the Automotive pack posts workshop labour, services and finance and warranty-plan commissions to their own revenue accounts, apart from vehicle sales.
By Achekam · · 4 min read · For Automotive businesses in South Africa, Nigeria, Kenya
Launching soon. The Industry CRM add-on described in this article is launching soon. This article describes it as it will work at launch.
A dealership is several businesses under one roof. It sells new and used vehicles, it runs a workshop, it sells parts, and it earns commission from the banks and plan providers whose products it arranges for customers. Each of those has a different margin, a different risk and a different manager. Yet in many dealerships' books, everything except vehicle sales is lumped into one line, and the dealer principal cannot tell whether the workshop pays its way or is being carried by finance commissions.
The Automotive pack in Achekam's Industry CRM sets up the ledger so that those streams arrive in their own accounts from the first invoice. This article explains what the pack adds, how the invoice lines post, and the decisions that remain yours.
What the pack adds when it is switched on
Switching on an industry pack adds that industry's revenue accounts to the chart of accounts and its starter items, without prices, to the catalogue. The Automotive pack's starter catalogue lists:
- workshop labour;
- scheduled services;
- diagnostics;
- pre-delivery preparation; and
- finance and warranty-plan commissions.
These post to two revenue accounts, 4390 and 4400, which the pack adds to your chart. If either code is already used in your chart for a different type of account, activation is refused and the clashing account is named, so your accountant can resolve it before trying again. Nothing is quietly renumbered.
Commission income is not workshop income
The two kinds of income on the starter list behave very differently.
Workshop income, from labour, scheduled services, diagnostics and pre-delivery preparation, depends on technician hours, bay capacity and how efficiently jobs are run. It tells you whether the workshop is busy and whether it is priced right.
Commission income, from finance and warranty plans arranged for vehicle buyers, depends on how many vehicles you sell and how many of those buyers take finance or a plan. It is closer to the sales floor than to the workshop, and it can disappear quickly if lenders change their terms.
Mixing the two hides both. A strong month of commissions can mask an idle workshop; a busy workshop can mask falling attachment of plans on the sales floor. The pack's items post to two accounts rather than one, and each invoice line names its account. When you activate the pack, check with your accountant which item posts where, so the monthly management accounts show the split you want without anyone re-sorting a single sales account.
From an accepted quotation to a draft invoice
Larger workshop jobs and many vehicle-related services start with a quotation. In the Industry CRM, a customer accepts a quotation on a link by typing their name and ticking a box, and that acceptance drafts the invoice in receivables.
Several safeguards come with it:
- a quotation, once sent, is frozen and changed only by a revision, so the customer accepts exactly what they were shown;
- the customer's IP address and browser are kept with the acceptance; and
- the invoice is created as a draft for review; issuing it straight away on acceptance needs an administrator's recorded authority.
Invoice lines that carry their own account
With the pack, every invoice line names the revenue account and the product it sells. Revenue posts to the account each line names, and cost of sales is posted in the same journal.
A service invoice in words
A customer's vehicle comes in for a scheduled service and a warning light. The invoice has four lines: the scheduled service, a diagnostic, the labour to replace a sensor, and the sensor itself. The service, the diagnostic and the labour lines post to the revenue accounts their items name. The sensor line names the part sold, so its revenue posts as that line specifies, and the cost of the sensor goes to cost of sales in the same journal. When the dealer principal looks at the month's figures, workshop labour, diagnostic income and parts margin can each be seen for what they are. Investopedia explains gross margin, the share of sales revenue a business keeps after the direct costs of what it sells, and how to calculate it.
Commission works the same way on a different invoice: when the dealership bills a bank or a plan provider for commission earned, the line names the commission item and posts to the account that item names, not to whatever account the last workshop job used.
Prices are yours to set
None of the starter items carries a price. Before the first invoice, decide:
- Your labour rate, and whether it differs for diagnostics, electrical work or specialist repairs.
- Scheduled service prices, fixed per model and interval, or built up from labour and parts each time.
- Pre-delivery preparation: whether it is charged to the buyer as a line on the vehicle invoice or absorbed as a cost of the sale.
- How commissions are billed, per deal or in a monthly statement to each bank or provider, and who checks them against what was sold.
- The VAT treatment of each item, confirmed with your accountant for your country.
Before you activate the pack
Ask your accountant to confirm that the two account codes are free and how the new accounts should appear in your management pack. Price the starter items, and agree who reviews draft invoices created by quote acceptance before they are issued. Counter payments for those invoices, by card or by transfer, are covered in recording card payments from the bank terminal and bank transfers at the service counter, and the parts themselves are set up as described in parts stock at the counter.
General guidance only, not advice on your own circumstances. Tax and payroll rules change: check the current position with the authority or your adviser.
