If you run a garage or MOT centre, you already know this feeling.
The diary is full.
The ramps are busy.
The phone doesn’t stop ringing.
Staff are flat out.
Yet somehow…
the bank balance feels tight.
VAT is looming.
Corporation Tax is a worry.
And January feels closer every day.
You look at your accounts and think:
“How can we be profitable but still short on cash?”
This is one of the most common frustrations we hear from garage and MOT centre directors — especially those running limited companies.
And no, it doesn’t mean you’re bad at business.
It means cashflow and profit are not the same thing — and garages sit right in the danger zone where the difference really matters.
Profit vs Cash: The Difference That Catches Out Garage Owners
Let’s clear this up first.
Profit
Profit is what’s left on paper after:
- Sales
- Minus expenses
- Minus costs
It’s an accounting figure.
Cash
Cash is what’s actually in your bank account right now.
You can be profitable and still:
- Miss tax payments
- Struggle with wages
- Rely on overdrafts
- Delay replacing equipment
And garages experience this more than most industries.
Why Garages & MOT Centres Are Prone to Cashflow Problems
Garage businesses have unique cashflow pressures that don’t show up clearly in year-end accounts.
1. VAT Is Quietly Draining Your Cash
VAT is one of the biggest culprits.
- You collect VAT from customers
- It sits in your bank account
- It feels like available money
- Then HMRC want it — quarterly, in one hit
Many garage owners:
- Spend VAT without realising
- Don’t ringfence it
- Underestimate how much is owed
By the time the VAT return is due, the cash is already gone.
2. Parts Are Paid for Long Before Income Lands
In garages:
- Parts are often purchased upfront
- Suppliers want paying quickly
- Customers may pay later (or dispute bills)
This creates a timing gap:
- Cash out now
- Cash in later
Your accounts may show profit, but your bank account feels the strain today.
3. Big, Lumpy Costs Hit Without Warning
Garages don’t have smooth cost patterns.
You deal with:
- MOT bay upgrades
- New equipment
- Unexpected repairs
- Staff overtime
- Tool replacements
These don’t politely spread themselves across the year.
If cashflow isn’t planned, one large bill can wipe out weeks of “profit”.
4. Director Drawings Without a Plan
This is a big one.
Many garage directors:
- Take money when it’s there
- Assume “we’re busy, so it’s fine”
- Don’t separate business cash from personal needs
This often leads to:
- Overdrawn director loan accounts
- Cash shortages
- Personal tax surprises
The business funds the lifestyle — until it can’t.
The Illusion of Being Busy
One of the most dangerous assumptions in a garage business is:
“We’re busy, so we must be doing well.”
Busy doesn’t equal cash-rich.
You can be:
- Underpricing jobs
- Absorbing rising costs
- Losing money on certain services
- Carrying inefficiencies you don’t see
Without proper visibility, volume hides problems.
Why Year-End Accounts Don’t Save You
Many directors rely entirely on annual accounts.
The problem?
By the time you see them:
- The year is over
- The cash is already spent
- The tax bill is already locked in
Year-end accounts are historic.
Cashflow problems need live visibility — not hindsight.
The Tax Double Whammy
Garage directors often get hit twice.
1. VAT
Quarterly and unavoidable.
2. Corporation Tax
Due months after year end — when the cash has usually been spent.
This creates a dangerous cycle:
- Profit made
- Cash spent
- Tax bill arrives
- Panic begins
Without planning, tax feels like a punishment rather than a predictable cost.
Why “We’ll Catch Up Later” Rarely Works
We hear this all the time:
“Once this busy period settles down, we’ll sort the numbers.”
But garages rarely slow down neatly.
There’s always:
- Another busy MOT season
- Another staffing issue
- Another supplier increase
Delaying financial clarity doesn’t remove the problem — it magnifies it.
What Good Cashflow Control Actually Looks Like
Strong garages don’t rely on luck.
They have:
- Clear visibility of cash
- Separation of VAT
- Planned director drawings
- Regular reviews (not daily stress)
They don’t guess — they know.
Simple Cashflow Improvements That Make a Big Difference
You don’t need complex spreadsheets to improve cashflow.
You need:
- Regular bookkeeping
- Clear separation of tax money
- Monthly or quarterly reviews
- Someone asking the awkward questions
Small improvements compound quickly.
Why This Isn’t About Cutting Corners
Cashflow control isn’t about:
- Skipping tax
- Delaying HMRC
- Cutting quality
It’s about:
- Timing
- Visibility
- Control
Good garages don’t just fix cars well — they manage money well.
The Emotional Cost of Poor Cashflow
Let’s be honest.
Cash stress doesn’t stay at work.
It affects:
- Sleep
- Confidence
- Decision-making
- Family life
Most directors don’t start a garage to lie awake worrying about VAT.
They start it for independence and pride in their work.
What a Good Accountant Does Differently
A good accountant for a garage or MOT centre:
- Talks about cash, not just profit
- Flags issues early
- Helps plan for tax
- Challenges risky behaviour
- Keeps you informed, not surprised
They don’t just “do the accounts”.
Final Thought: Cashflow Is the Fuel of Your Garage
Profit keeps score.
Cash keeps the doors open.
The garages that last longest aren’t always the busiest — they’re the ones with control.
How Accounting Matters Helps Garage Directors
We help garage and MOT centre limited companies:
- Understand where their cash actually goes
- Plan for VAT and Corporation Tax
- Structure director drawings safely
- Remove financial stress from the business
If you’re profitable but still feel cash-tight, it’s time to look deeper.