Holding repair orders open

[Old Irish]

Need some input here, guys.

Under what situations do you allow repair orders to be held open and for how long?

A few "for instances"....

A service contract ticket with several jobs, most work completed, one part needs to be ordered. We would collect deductible from customer and have them return next week when the part arrives, holding the RO open. What would you do?

Warranty repair, tech has an hour invested for prelimininary diagnosis, customer needs car. We would have the customer return in XXX number of days, hold the ticket open, and allow the tech to flag some of his time. What would you do?

Your body shop has a big collision job and sends you the car for some heavy suspension repairs. You do the work, return car to them....and they'll need at least another 2-3 weeks to finish their end. We would hold our ticket open and wait for the body shop to finish their work, then close both RO's at once and submit to insurance company. What would you do ?


As you might guess, I am fighting a little battle here. Our GM thinks every RO should be closed into accounting by the time the tail lights disappear down the road. I say that there are some instances where it is perfectly legitimate to hold a repair order open. As it is, about 95% of our tickets are closed virtually immediately.

I'd appreciate any input.

Doug

Also, what standard do you use as an "acceptable" amount of labor-work-in-process? Our sevice department generates $140-160K in labor sales per month and as of 3 hours ago our labor-in-process was $4960.

[robc]

I'll take these in order I guess:

(1) depends on contract (like GMPP contracts it isn't a problem to get the second deduct waived) but generally if you think you might lose a deduct I would hold.

(2) Warranty repairs I generally close, make a copy and attach with the SPO form to account for time expended. No time flagged or paid until job is completed. Again, depends a little on the circumstance.

(3) I used to bill body shop on an internal that they would in turn bill like a sublet shop. My view was they couldn't take the car to the garage next door and expect not to be billed right away.

My goal for WIP is always one day's labor. So just divide typical sales by 21 and you've got my WIP limit ... $150k / 21 = $7,142. Dollars are important, but RO count is too ... so if you run through 1,500 tickets a month, I'd expect the open ro count to be about 70.



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** Rob, Editor Dealersedge/WD&S **
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robc@dealersedge.com

[tom_davis]

What Rob has outlined is a very good rule of thumb. Most of the open RO's will center around warranty repairs.

Take note that some manufacturers keep track of the number of RO"s written during a specific period of time. If they find (in their eyes) an excessive number, you may be in line for a warranty audit.

For example, you write an RO today for 2 separate warranty items. One you complete and one requires a special order part. It may be in your best interest to keep the order open until the SOP arrives and is installed.

I realize that some customers take their good old time to come back. You may need to keep that order open 61 days to prevent the appearance of "excessive" warranty claims.