Thanks to our partners Promotive, WickedFile, Maverick Shop Owners, and Overdryve
Are you accidentally paying taxes on money you're never actually going to collect? Could the way you're deleting a bad ticket in your shop management software be costing you more than the deadbeat customer ever did?
This week's episode started as a text message. Hunt Demarest, CPA with Paar Melis & Associates, answers a question from fellow podcaster Chris Cotton of AutoFix Shop Coaching and The Weekly Blitz: how should shops actually handle bad debt? Hunt breaks it down from the ground up, what bad debt is, how cash versus accrual accounting changes the math, and why deleting or discounting a ticket instead of writing it off properly can quietly inflate your tax bill and hide real problems in your production numbers. He walks through the exact steps for building a "bad debt" payment type into your shop management software, how to automate the accounting through Back Office and Accounting Link (or handle it manually with a journal entry), and where chargebacks, bartering, and shop vehicles fit into the picture.
Whether you've never had a customer stiff you or you're staring down an invoice right now that you know you'll never collect, this episode is a practical field guide to keeping your books, and your tax bill, accurate.
What You'll Learn…
(00:00) Intro: Chris Cotton's bad debt question kicks off the episode
(00:46) Housekeeping: the book, the sponsors, and how to ask Hunt anything
(03:11) The four part question: where it goes, how it's recorded, and chargebacks
(05:28) What actually is bad debt: cash basis versus accrual, explained
(07:58) The tax trap: why ignoring bad debt means overpaying the IRS
(08:50) PSA: your AR is only as accurate as your shop management software
(12:21) The correct way to book a loss: sales, cost, and the bad debt line
(13:51) Why deleting the ticket hides your real production story
(16:54) The nuts and bolts: creating a bad debt payment type
(19:03) Automate it: Back Office, Accounting Link, and manual journal entries
(21:03) Chargebacks, bartering, and shop vehicles: same rules or different?
(23:10) Closing thoughts and how to reach Hunt
Thanks to our partner, Promotive
Promotive has over 40 years of recruiting and automotive experience. If you need qualified technicians and service advisors and want to offload the heavy lifting, visit https://gopromotive.com/
Thanks to our partner, WickedFile
Turn chaos into clarity with WickedFile, the AI for auto repair shops. Transform invoices into insights, protect cash flow, and stop losing parts, cores, or credits to maximize your bottom line. visit https://info.wickedfile.com/
Thanks to our partner, Maverick Shop Owners
You're working on growing a more profitable shop - that's critical. That's exactly what the 24-video Blueprint course by Maverick Shop Owners addresses - customers, sales, profit, people, systems, and freedom. Get free access for our listeners only at https://maverickshopowners.com/blueprint
Thanks to our partner, Overdryve
Overdryve is your AI-powered marketing operating system. It predicts slow weeks before they happen, automatically launches revenue-driving campaigns, tracks ROI down to the dollar, and optimizes performance in real time. Visit https://overdryvemarketing.com/
Paar Melis and Associates – Accountants Specializing in Automotive Repair
Visit us Online: www.paarmelis.com
Email Hunt: [email protected]
Get the FREE 2026 Auto Shop Benchmark Report: https://hubs.ly/Q04j-grh0
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The Automotive Repair Podcast Network: https://automotiverepairpodcastnetwork.com/
Download the ARPN APP for your smartphone and listen to all our network shows: arpn.app
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