Motor trades
Accountants for Motor Factors and Parts Suppliers
Motor Trade Accounting helps motor factors and parts suppliers across the UK find accounting and tax support built for stock-heavy trading. Get clarity on margins, stock and the money tied up in trade accounts.
Where margins are made line by line
A motor factor lives on thousands of small transactions. Parts go out to garages several times a day, returns and faulty parts come back, exchange units move in both directions and suppliers offer rebates that depend on volume targets. Each of these touches the accounts, and small errors repeated across many lines can hide a lot of lost margin.
Stock is usually the biggest asset on the balance sheet and the hardest to keep accurate. Slow-moving lines, superseded part numbers and damaged returns all need valuing properly. At the same time, most customers buy on account, so cash is tied up in debtors while suppliers expect payment on their own terms.
Specialist support helps you see the business clearly: what stock is really worth, which customers are profitable once discounts and delivery are counted, and how much cash the business needs to keep shelves stocked and vans on the road.
What specialist support covers
Support is focused on stock, credit and the systems that tie them together.
- Stock valuationYear-end stock valued at the lower of cost and net realisable value, with sensible provisions for slow-moving and obsolete lines.
- Stocktakes and reconciliationsHelp planning stocktakes and reconciling physical counts to your parts system.
- Trade accounts and credit controlAged debtor reports, credit limits and a routine for chasing overdue accounts.
- Supplier rebates and discountsRetrospective rebates and settlement discounts accounted for in the right period, so margins are not overstated or understated.
- Exchange units and surchargesSurcharges on exchange parts and returned cores recorded correctly, including their VAT treatment.
- Delivery fleet and driversVan costs, capital allowances and driver payroll handled as part of the overall picture.
- Accounts, tax and VATYear-end accounts, corporation tax and VAT returns under Making Tax Digital, including bad debt relief where it applies.
What to plan for
These decisions have a big effect on cash and profit.
How much stock to carry
More stock means more sales won on availability but more cash tied up. Reviewing stock turn by product group helps strike the balance.
Credit terms you offer
Set clear terms and limits for each trade account before problems arise, and agree what happens when they are exceeded.
Your parts system
Make sure your EPOS or parts system can produce the reports your accountant needs, including stock valuations and aged debts.
Online and marketplace sales
Selling online brings marketplace fees, returns and sometimes overseas customers. Plan the VAT and accounting treatment before you scale up.
Good to know
Stock affects profit directly
Overvalued stock flatters profit and increases the tax bill. Writing down obsolete lines gives a truer figure.
VAT bad debt relief
If a customer never pays, you may be able to reclaim the VAT you paid on the sale, once the debt is more than six months overdue and has been written off in your records.
Rebates need careful timing
Volume rebates earned over a year should be recognised as they are earned, not only when the credit note arrives.
Cash flow follows the debtor book
Even a profitable motor factor can run short of cash if trade customers pay slowly. Debtor days are worth tracking every month.
How it works
- 1
Get in touch
Use the enquiry form to tell us about your branches, systems and the support you need.
- 2
Initial conversation
A specialist accountant discusses stock, trade accounts and any concerns about your current figures.
- 3
Agree a scope
You receive a clear outline covering year-end work, any monthly support and the reports involved.
- 4
Ongoing support
Stock, debtors and margins are reviewed regularly so decisions are based on current numbers.
Questions motor factors ask
How should I value obsolete stock?
Stock should be valued at the lower of cost and what it can realistically be sold for. Lines that will never sell may need writing down or off.
How do I account for supplier rebates?
Rebates should be recognised in the period they are earned, based on a reasonable estimate if the final figure is not yet known.
What VAT applies to exchange surcharges?
Surcharges on exchange units are normally part of the price of the part and subject to VAT. Your accountant can check how your system records refunds when the old unit is returned.
How can I reduce bad debts?
Credit checks before opening accounts, clear limits, prompt statements and a consistent chasing routine all help.
Can I claim VAT back on unpaid invoices?
Yes, through bad debt relief, once the conditions are met. The debt must be more than six months overdue and written off in your accounts.
Who will I be working with?
A qualified accountant who works with motor trade businesses, including parts distribution.
Know what your stock and debtors are really worth
Send an enquiry and we'll arrange a conversation with an accountant who understands parts distribution.