Jan 18, 2022

That Rainy Day Fund: Why Your Shop Needs One & 7 Ways to Contribute

That Rainy Day Fund: Why Your Shop Needs One & 7 Ways to Contribute

You’ve undoubtedly heard of a rainy day fund.

Maybe you’ve heard it called a different name. “Shop savings” is a good one. So is “emergency fund.” Whatever you call it, the meaning remains the same. It’s a sort of financial reserve for your shop to dip into on those (hopefully) rare occasions when you need fast cash.

Over the years, we’ve heard lots of reasons why shops might need some quick money. Let’s say an important piece of equipment goes on the fritz, requiring you to shell out for expensive repairs or an entirely new piece of gear. Or maybe your shop is facing a natural disaster like an earthquake or blizzard that a) forces you to stop all work, and b) leaves you with significant damage to repair.

In the end, it doesn’t matter why you need some savings squirreled away. The point is, you need them. You probably know it. But for some shops, especially those on lower budgets and with minimal manpower, figuring out how to start saving can be a project unto itself.

But have no fear, Fullbay is here! We once again called on the great Robby Gilbert, Fullbay’s Director of Finance and all-around numbers whiz, to help us put together some tips to guide shops in creating this important fund.


Robby hemmed and hawed on this one, before suggesting shop owners aim to build a reserve fund that can last for six months.

Hold up, hold up. We know not everyone is going to be able to do that. We also know it’s not going to happen right away. Six months is something to aim for, but if you can only build toward one month, then build toward one month. This is your emergency fund. It may be the thing that keeps the lights on if something bad happens.

It will also give you the peace of mind to make important decisions without the threat of looming financial disaster perched on your shoulder, Robby points out.

“You never make a decision in desperation if you have six months’ worth of cash sitting there.”


Before going any further, let’s make sure we understand the forces at work here, and how they can throw a wrench into your efforts to build up a healthy cash fund.

Robby identifies two pressures of cash flow that fight against business owners: the first is your vendors, who want to get paid ASAP. You owe them money, and they want that money. Your customers, however, want to pay you as late as they can. When you send an invoice, they want to hold onto their cash.

Much like the Dark and Light side of the Force, these two sides come into conflict.

Here’s a simple example. You buy an engine for a customer. The engine’s manufacturer gives you a 10-day credit. You put in the engine, you pay that $8,000 bill to the vendor. Your customer still has 30 days to pay you…which leaves you with 20 days without that $8,000.

That is how a heck of a lot of shops usually operate, and over time, that doesn’t leave a lot of room to build up any savings. What money you do get after a customer pays up usually goes straight to your vendors.

Your job, then, is to try to get around these pressures (or even better: reverse them!).


We’ve got all kinds of free content centered on building a budget and managing your cash flow, so we won’t get too far into it here. But you won’t be able to save much of anything if you can’t accurately track (and trim) your expenses, so get that budget going if you haven’t already.

Once you have your finances planned out, you can see areas where you can trim. Have you reviewed your insurance lately, for example? You may be able to get a better deal elsewhere.

If you’re still on pen and paper accounting, you’re giving your customers more time to pay you and putting an additional drain on your accounts. Robby figures that once you get an invoice to your actual accounting department, it’ll be a good seven days after service that the bill is sent out. Figure up to two or three days in transit. That’s 40 days post-service before your customer will even think about paying.

Switching to software-based invoicing (like Fullbay) allows you to invoice your customers right away, giving them the opportunity to pay up…you got it…sooner rather than later.


Always, always, always look at your customers’ invoicing history before getting started on any service. You might be surprised to find out they owe you some money already.

Often, Robby says, a shop will jump right into work when a regular customer brings their vehicle in. After all, they’re bound to pay up eventually, right?

They probably will, particularly if they’re a steady customer. But now is the time to remind them that they need to get the ball rolling.

If a customer is $10,000 past due, and they bring in another truck for another $10,000, let them know that they need to pay up on the prior invoice before you get started on the next one.


Some shops have extended credit to repeat customers with great success. But Robby encourages us to be extra-careful with these offerings, particularly when you’re trying to build up some savings. Think about it: Would you be OK giving this person or company $30,000 worth of work that will likely not be paid up anytime soon?

Want more info? We’ve got a great article featuring our partners at Interstate Billing Service that highlights extending credit and asking people to pay up.


We talk about this a lot, but it bears repeating: make sure you’re marking up your shop supplies and every part you sell.

“Those paper towels add up pretty quick,” Robby observes, and so do those glow plugs. When you start charging for parts correctly (with Fullbay’s help, of course), you may wind up with thousands of dollars you were previously just giving away.


To increase your revenue, give your techs the opportunity to be more efficient. Working with labor guides like FleetCross by MOTOR lets you put a time on how long maintenance or repairs will take. If a job in one of the FleetCross labor guides will take two hours, but your tech gets it done in one, you still get to bill those two hours while assigning the tech to another job.

You know what they say about slow and steady winning the race? Slow and steady also helps build the savings account.


We’ve talked about trimming expenses and being more efficient, but Robby had one big flashing neon DO NOT DO THIS sign that he wanted to wave around: Don’t cut any costs that drive revenue!

In layman’s terms, don’t go around firing people just to save a buck. Getting rid of a tech that costs you $70,000 a year is also going to cut the $130-$170,000 of revenue the tech brings in. Sure, it might be a momentary financial relief, but it’s going to hurt later.

Find other ways, folks. Find other ways.


Instead of sacking people to save money, give your employees the tools they need to increase the revenue they drive. We mentioned using labor guides already. But did you know your service managers can help drive revenue? Your technicians can, too.

You don’t have to stop there, though. Can you offer additional service by subletting? What about offering emergency repair, if you don’t already?

There are many, many ways you, a shop owner or manager, can increase your revenue without putting your employees on the chopping block. Just remember to start slow and work your way toward it. You won’t build up six months of savings overnight, but you will start socking away some cash, and having some money in your back pocket can really save your operation if things go south.

Or, you know, if it starts to rain.

Suz Baldwin