There are several situations related to building warranty jobs in Tekmetric, we have broken these into the following sections:
1. At-Fault Warranty Job
If your shop is covering the cost of the warranty, you should build out the job with your true part costs and technician assignment, but charge $0 for retail (see sample below). This correctly calculates the profit margin losses on at-fault warranty work since you will have a cost equal to the part cost and a labor cost equal to the assigned technician's hourly rate * hours on the labor line. If required, you can also create a negative hour labor line, see details in the "Backflagging Warranty" section below.
To track the sales and profit metrics, we suggest creating a Job Category for this situation in Shop Settings and applying that category to any applicable jobs.
NOTE: Part Sales Tax - You will want to double check with your state and local regulations to ensure you are in compliance. Our research on the issue has shown that in situations where you are not charging the sales tax to the customer because you are "giving away" a part, then you would owe the sales tax to your parts wholesaler (who you likely don't usually pay sales tax to). Thus, we recommend including the sales tax paid to your supplier in the "cost" field of that part to properly account for the negative profit margin on that line item.
- Use Discounts - Build the jobs at full cost and fully discount the job 100%. Note that this does not work for already discounted packaged price jobs. If you do this method for package price, you would have to use the fixed dollar method.
- "Other" Payment Methods - Build the job at full cost and use the "Other" payment option with a consistent naming convention in the "Description" field. If you consistently name this, then you can track in the payment details report.
2. Third-Party Warranty
For warranty repairs covered by insurance companies or another vendor, you will build out the job based on agreed pricing schema. The RO should be built in the vehicle owner's name, while the payment can be entered under the third-party's name and paid towards the RO.
Again, to track the lack of normal profit margins, we suggest creating a Job Category for this situation in Shop Settings and applying that category to any applicable jobs.
For handling Parts Warranty
You will need to navigate to the original repair order, reopen the RO, and mark the part for return. When you mark the part for return you will need to adjust the pricing by either adding the price of the part elsewhere or as a fee. If you want record that the part was returned, just add under the job note the Part Name, Vendor, Part Number. Then navigate to the warranty RO and add a new part. If the vendor is still charging you (but refunding the original part), then make sure you add the part cost, and make the retail price $0. You can then add a job note here stating it is a warranty part for RO# XX (the original RO).
Then in the return orders section, follow the return process to receive credit for the warranty part that was returned.
3. Tracking Warranty Jobs
Tekmetric offers the ability to create custom Job Categories in Shop Settings that act as pseudo profit centers and provide flexibility in separating out sales and profit metrics.
To use job categories, you will first need to create your custom list of categories (including warranty categories) you want to track at the job level. Go to Shop Settings, select the RO Settings tab, and choose the "Job Categories" menu option. Here you can create your list and re-order how these job categories appear in the drop-down on each job.
Once you have your warranty job category created in Shop Settings, you can now apply it to jobs. Navigate to the Estimate section of the RO. Within the job card, right next to Technician assignment area, you can select the job category to apply to the job. This will allow you to track sales metrics specifically for warranty jobs via the "Job Categories" report.
4. Back-flagging Warranty Hours for Techs
We suggest using negative labor hours in the warranty RO assigned to the technician you want to back-flag. In the event that someone else is performing the correction from who should be back-flagged, you would have two jobs on the RO: one with back-flagged/negative hours to the original tech and a second job for the new tech with positive hours.
5. Sample of a full warranty process
Step 1: Here we have the original job billed out for 2 hours and posted to a day in the past. The technician assigned here is set up at a $50/hr rate.
Overall we have $200 retail - $100 cost = $100 profit dollars (50% profit margin).
Step 2: Let's say the customer comes back in later for warranty work. You will create a second RO for the "warranty" job. In this case, we have negative 2 hours being taken away from the technician who gets paid $50/hr...So we're recouping $100 of cost from the prior RO. If I'm charging the customer $0, then I am still getting $100 of labor cost reduction (i.e. net increase of $100 in gross profit from the prior RO).
Additionally, you can unpost and return the old parts from the old RO if needed.
Step 3: When you view the Profit Details report and EOD report for those two ROs, you will see that they correctly net out to show $200 in sales, $0 in cost, thus $200 in profit. Note that this situation only entails labor, but the inclusion of part losses would be correctly netted as well.
Step 4: The two ROs correctly netted out in the tech hours report. So, even if a warranty job is in a different period from the original job, you can still deduct the hours from that tech.
Step 5: All of this can be tracked in the Job Categories Report to show metrics around the warranty jobs. In this case, we are showing the effects of just the original and the warranty job side by side.