How to track reconditioning costs car by car.

Recon is what you spend to get a car ready to sell after you buy it. Agree on the list with whoever buys the cars and whoever pays the bills, so two people do not file the same expense differently.

• Parts: tires, brakes, belts, bulbs, glass, fluids and anything else that goes on the car.
• Labor: your own technician's time. Pick a way to count it, such as an hourly shop rate, and use it on every car.
• Sublet: work done by someone else, such as paint and body, glass, wheel repair or a transmission shop.
• Detail: cleaning, polish and any detailer you pay, whether it is a vendor or a person on your payroll.
• Transport: getting the car to you from an auction or a seller, and moving it to a shop and back.

Auction fees, title fees and similar costs of acquiring the car are a separate decision. Ask your accountant how they want those handled, then keep the choice consistent.

A monthly total tells you what you spent. It does not tell you which car cost too much. If the month shows a large recon bill, you cannot tell whether one car needed an engine repair or every car needed a little more than you expected.

Recording each expense on the car also stops costs from going missing. A part bought on a Tuesday, a sublet invoice that arrives two weeks later and a detail paid in cash are easy to lose in a monthly pile. Tied to a stock number, each one has somewhere to go.

Write down the date, the vendor or the person who did the work, what was done and the amount. A stock number and a short description are enough to start. You can do this on a spreadsheet with one row per expense and a column for the stock number.

The real cost of a car is what you paid for it plus everything you spent getting it ready. Your gross on the deal is the sale price minus that real cost. If you leave recon out, the gross looks bigger than it is.

This matters most on the cars that feel profitable. A car you bought cheaply and then repaired heavily can end up with a smaller gross than a clean car you paid more for. Per-car records show you which one it was.

Recon spent after the car is listed still counts. If a buyer asks you to fix something before delivery, add it to that car like any other job.

Decide how much recon you expect to spend before you commit to a price. Look over the car, list what it needs and put a number next to each item. Then work backward: what you can pay depends on what it costs to get it ready and what you expect to sell it for.

Write the budget down on the car's record at the time you buy it. When the recon is finished, compare the total with the budget. A car that goes over tells you something about that vendor, that make or the way you inspect at auction.

Keep a small cushion for the surprise you did not see. If you regularly use all of it, make your estimates larger rather than hoping the next car is cleaner.

These round numbers are made up to show the arithmetic. They are not a target for your lot, and your costs will be different.

Example only. Round numbers made up for illustration.

Bought the car                $9,000
Recon budget set before buying  $1,000

Parts                           $350
Labor (our own tech)            $400
Sublet (paint repair)           $250
Detail                          $150
Transport                       $100
Recon total                   $1,250

Real cost of the car         $10,250
Asking price                 $12,500
Gross at asking price         $2,250

The recon total came to $250 more than the budget. Without per-car records, that $250 would have disappeared into a monthly total. With them, you can see which line went over and decide whether the paint repair was worth sending out.

Every expense should have a piece of paper or a file behind it. File it under the stock number the day you get it: the parts invoice, the sublet bill, the detailer's receipt and the transport charge.

Photograph a paper receipt before it fades or goes into a pocket. Put the file name and the stock number somewhere you can find them, and keep the originals as long as your accountant tells you to.

When the car sells, the receipts are already in one place. If a buyer comes back with a question about work you did, you can answer from the record.

In Motorvar, each recon task sits on the car, and owners and managers can record the vendor, the estimate and what the job cost. The car's record shows its recon spend alongside its holding cost.

• When to move an aging car off your lot
• Moving your lot off spreadsheets