If your parts margin looks solid but something still feels off in your numbers... it might be time to take a closer look at the parts you're not billing.
This isn’t about pricing or markups. It’s about the parts you’re already using that aren’t showing up on the repair order. And if those parts aren’t making it onto the ticket, they’re not making it to your bottom line either.
Let’s talk about where this profit leak is really happening—and how to stop it.
Before we dig into where things go wrong, let’s talk about what you’re aiming for.
Your parts margin is the difference between what a part costs you and what you sell it for.
🤔Example: You sell a part for $100 that cost you $40 – your gross profit is $60. That’s a 60% parts margin.
Margins like that are what keep your shop profitable. But here’s the catch: if the part doesn’t make it onto the repair order, your margin drops to zero—and you’re also out the cost.
That’s the core issue we’re tackling in this post: parts that get used, but never billed.
🔎Related: Markup and Profit Margin: How Auto Repair Shops Can Price Smarter
You order the parts. Your team installs them. But somewhere between delivery and billing, parts go missing from the repair order. Not physically missing—they just don’t get entered into the system.
Sometimes it’s a $0.50 drain plug gasket. Sometimes it’s a $50 hose. Either way, if it’s not on the RO, you’re eating the cost and losing the markup.
🤔Example: You install a $20 hose but forget to bill it. With a 5x markup, that’s $100 in revenue lost—and you’re $20 in the red.
And this isn’t just a one-off mistake. We’ve seen shops with as much as $5,000 to $50,000 a year in parts that were purchased, installed, and never billed.
Shop Check: Are your techs and service writers clear on who’s responsible for making sure every installed part gets billed?
In most cases, it’s not theft or bad intentions—it’s just a process gap. Parts might be added during a job but never updated on the RO. Techs might skip over small items, like a bulb or fluid top-off. Bulk materials like oil or brake fluid may not get properly tracked. If there’s no system in place to reconcile what’s used with what’s billed, that gap becomes a profit leak.
You don’t need to overhaul your whole system. But you do need a process that compares what you buy to what you bill.
Here are three ways shops are doing it:
1. Use your shop management system better
Most shop management systems, like Tekmetric, let you track inventory and connect parts to ROs. But the system is only as good as the data you feed it. Make sure:
📝Back-of-napkin math: If you miss just $10/day in parts, that’s over $3,600/year lost—before you factor in markup.
Have your office manager or bookkeeper run a report:
The difference is your leak.
If you're already using a shop management system like Tekmetric but want an extra layer of oversight, tools like Wicked File can help. They don’t replace your system—they enhance it by identifying gaps between parts purchased and parts actually billed. Wicked File also tracks core returns and credits to ensure you’re not leaving money on the table.
My advice: "Start simple. Is your inventory count clean?"
Before you bring in new tools or audits, take a close look at how your team is currently handling parts:
This is about dialing in your process—not adding complexity, but reducing waste.
💡Pro tip: Schedule a 10-minute team huddle each week where service writers and techs walk through one or two real repair orders. Look for any missed parts, then discuss how to catch those before the RO is closed.
Why do parts sometimes not get billed?
It's usually not intentional. It often happens when parts are added mid-repair, pulled from bulk supplies, or considered "too small" to bother with. But those small oversights add up quickly.
How often should I audit my parts process?
At least quarterly—but monthly gives you better visibility. A quick check comparing parts purchased to what’s billed can reveal big gaps.
What’s the easiest way to start fixing this?
Start by reviewing your shop’s current process for receiving and billing parts. Look at how parts are logged in your shop management system and how they're carried over to the repair order.
🔎Related: Accounting Tips for Auto Repair Shops
This isn’t a pricing issue. It’s a process issue. And if your process has gaps, your profit will too.
Start closing that gap today—because parts used and not billed is profit you’ll never get back.