Essay Sample on Garage Biz Financial Constraint: Underestimating Sundry Costs to Blame

Introduction

The garage business experiences a financial constraint involving the actual price incurred in repairing their clients exceeding the estimated cost. It results from the proprietor or their workers not quoting sundry expenses, miscellaneous or minor fees in the total amount required to repair vehicles. Some of the sundry costs may consist of fuel costs incurred in outsourcing of vehicle spare parts from adjacent shops. More financial setbacks can get traced back to the proprietor and their workers, not including indirect costs charged from utilities like electricity used in the garage.

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The terms agreed on delivering the clients vehicle are exceeded since the garage has inadequate labour. The proprietor is taking more workload than their five mechanics can handle. Some of the garage's equipment's and machines are slow and almost obsolete, and some of the workers are incompetent. Old fashioned machines are slow, inefficient and ineffective in service delivery as compared to their counterpart new and modern machines.

Most of the garage's payments get done through banks but often invoices neither get made nor sent to clients since the proprietor, and their five mechanics lack adequate accounting knowledge or skills. It results in the garage not informing their client of the complete charges associated with repair services offered to them in credit. Invoices prompt clients to pay, late invoices may encourage late payment. Poorly drafted invoices get wrongly interpreted and may result in clients underpaying.

Measures Taken To Curb Problems Facing the Garage

Financial constraints involving the actual price exceeding the estimated cost in repairing vehicles can get mitigated through educating the proprietor and the five mechanics on effectively quoting prices. They can learn how to include indirect charges involved in repairing the client's vehicles. The indirect cost will consist of expenses that do not directly get associated with repairing vehicle; they include personnel, administration or security costs. The garage proprietor should learn on providing for sundry or miscellaneous expenses when making estimate prices. Alternatively, the proprietor can provide for a fair and fixed miscellaneous fee when generating the client's estimated costs.

Problems involving delivery terms to clients getting exceeded can get mitigated through the proprietor investing in modern equipment and machines that are both efficient and effective. It will ensure fast service delivery and save on finances. The proprietor should ensure they only take a manageable workload that their personnel can repair. The garage owners should perform performance appraisals and fire incompetent mechanics, hiring of new competent mechanics should get conducted under due diligence.

Problems involving invoices not getting generated or sent can get solved through computerization of the process or hiring of professional part-time accountants. Hiring accountants ensures the garage's accounting books are properly maintained and kept up to date, thus mitigating on clients not paying or underpaying. It is cost-effective and efficient. Alternatively, the proprietor can engage in basic accounting and management lessons.

Application of a personal computer will get used in basic accounting like digital balancing of accounting books and generating invoices. It will mitigate the garage's loss of funds since the proprietor gets to access the business's progress regarding any receipts and payments (Sharma, 2012). It will increase the efficiency and effectiveness of service delivery since accounting soft wares can get installed to generate payment notifications for customers.

Works Cited

Sharma, V. Importance of computers in business. KlientSolutech Co, June 12, 2012, http://www.klientsolutech.com/importance-of-computer-in-business/. Accessed January 17, 2020.