Fixed Ops Profitability: How to Turn Parts Procurement into a Revenue Stream

Walk into any 20 Group meeting or NADA session this year and you'll hear one metric repeated like a mantra: service absorption.

With front-end vehicle margins compressing and 25.1% of dealers operating at a loss in Q4 2024 (per Optimum Info's Dealer Financial Analysis), the mandate is clear — Fixed Operations must carry the store. To hit that elusive 100% absorption rate, dealers ride their service advisors hard. They push for upsells on every repair order, fight for fractions of an hour on labor times, and scrutinize every warranty claim.

But here's what strikes me about the standard absorption-rate conversation: it's entirely focused on the sell side. Sell more labor hours. Upsell the RO. Improve customer-pay capture. These strategies matter, but they're also the same playbook every consultant, OEM program, and DMS vendor has been pushing for decades.

Almost nobody talks about the buy side. Your parts department isn't just a cost-of-goods-sold line. It's transaction volume that could be generating returns — and currently isn't.

What does "zero-return" procurement actually cost?

Dealerships are massive procurement engines. Between OEM parts, tires, bulk fluids, and sublet repairs, a mid-sized dealer group can easily spend $500,000 to $1 million monthly restocking inventory.

How does that money leave the building? For most stores, the AP department prints stacks of paper checks, in some cases sending them off to the main office to be signed. This is dead capital. It costs labor hours to process, postage to mail, and yields absolutely nothing back to the dealership.

The per-check cost varies depending on whose research you trust — industry estimates range from $4 to $20 when you factor in printing, signing, mailing, reconciliation, and exception handling. The AFP has published figures on the high end; payment processors land lower. Either way, it's not zero.

Then there's fraud exposure. The AFP's 2023 Payments Fraud and Control Survey found that 65% of organizations experienced check fraud attempts. Checks remain the most fraud-prone B2B payment method because they expose your full account and routing numbers to anyone who handles them.

The conventional wisdom treats this as an unavoidable cost of doing business. I'm skeptical. The same transaction volume that currently generates nothing could be earning rebates monthly if routed differently.

Why would parts suppliers accept card payments?

The natural objection surfaces immediately: "Won't my suppliers refuse cards because of the processing fees?"

Some will. But this is where the standard narrative about supplier resistance doesn't hold up to scrutiny. Parts suppliers — particularly aftermarket distributors, wholesale vendors, and smaller suppliers — are among the most card-friendly categories in B2B payments. The reason comes down to cash flow economics on their side.

When a supplier accepts a virtual card payment, they receive funds in one to two business days. Compare that to Net 30 terms where they're financing your purchase for a month. According to Visa's B2B research, average Days Sales Outstanding often exceeds stated terms — Net 30 invoices frequently get paid at 45 days, Net 60 at 75 days. Card acceptance converts uncertain receivables into immediate cash.

A 2025 Mastercard global study of over 1,000 senior finance decision-makers found that suppliers accepting commercial cards are 14 percentage points more likely to report efficient working capital maximization than non-acceptors. The same study found that 31% of card-accepting suppliers saw increased transaction security.

The tradeoff is real — suppliers pay interchange fees, typically 2-3% on commercial cards. But for suppliers struggling with slow-paying customers or high receivables risk, the certainty and speed of card settlement often outweighs the fee. This is especially true for smaller distributors without the leverage to enforce payment terms.

Parts suppliers from national chains to tire distributors operate on volume and speed. Many prefer instant card settlement over waiting 30 days for a check that might arrive late anyway.

How does the rebate math actually work?

Let's be specific about the numbers, because vague promises of "significant savings" don't help anyone plan.

Virtual card programs typically offer rebates around 1% on spend. That sounds small until you apply it to dealership procurement volumes. The calculation depends on two variables: your total spend from any card-accepting vendor and what percentage routes to card-accepting suppliers.

The 20% adoption figure is intentionally conservative and below what Corpay customers typically see — it assumes only a fifth of your parts payments can be routed to card. Even modest gains from supplier enablement make a difference: at $500,000/month, moving from 25% to 30% card adoption increases annual rebates from $15,000 to $18,000. And at $750,000/month with 30% adoption, you’re looking at $27,000/year in rebates. That’s not a rounding error, that’s a meaningful chunk of a technician’s compensation funded by changing how you pay, not what you buy.

For context, Corpay pays out over $800 million in cash rebates annually across its customer base. That's real money flowing back to companies that shifted payment methods — not theoretical savings in a consultant's PowerPoint.

What else matters beyond the monthly rebate?

Three other factors affect the total financial picture, though they're harder to quantify precisely.

Float extension. When you pay by physical commercial card, cash leaves your account when the statement is due — not when the invoice arrives. Depending on billing cycles, this extends your effective payment terms by 15-30 days compared to immediate ACH or check. That's working capital you retain longer.

Reduced processing costs. The staff time and per-check costs don't disappear entirely, but they shrink. Fewer checks to print, sign, and mail. Fewer reconciliation headaches at month-end.

Fraud protection. Virtual cards generate unique numbers for each transaction with preset limits. If a number is compromised, exposure is capped at that single transaction. Compare that to checks exposing your full banking credentials.

Does this actually disrupt parts department operations?

The biggest objection Fixed Ops directors raise is workflow disruption. "Don't mess up my relationship with the parts guy" is a common refrain — and it's a legitimate concern. Operational complexity kills adoption.

Here's how it typically works when implemented correctly: The parts manager orders inventory through the DMS exactly as they do today. Nothing changes in CDK Drive, Reynolds and Reynolds, or Tekion. The payment file that would normally trigger checks or ACH gets routed through a payment automation platform instead. That platform identifies which suppliers accept card, generates virtual card numbers for those payments, and processes the rest via ACH or check as before.

The parts manager doesn't see a different workflow. The supplier receives payment — often faster than before, which they appreciate. The rebate accrues to the dealership monthly.

Corpay integrates with CDK Drive, which matters because CDK dominates the franchised dealership DMS market. Implementation timelines run weeks rather than months. IT involvement is minimal — usually a few hours for file configuration. The heavier lift is vendor enrollment, which is why managed services that handle supplier outreach tend to outperform DIY approaches.

I'm generally skeptical of "seamless integration" claims from software vendors, but the DMS integration question has a concrete answer: either your system supports virtual card payment files or it doesn't. 

How does this fit the broader absorption-rate picture?

The dealerships achieving 80-100% absorption aren't choosing between better service sales and smarter procurement… they're pursuing both.

According to McKinsey, even a 1% increase in fixed-cost absorption rate could yield $20–40 million in additional gross profit annually for public dealer groups. Rebates from parts procurement won't single-handedly move absorption by a full percentage point, but they contribute — and they do so without requiring customers to spend more.

The framing matters here. Most Fixed Ops improvement initiatives ask: "How do we get customers to pay more?" Procurement optimization asks: "How do we get paid on money we're already spending?" The second question has a different risk profile. It doesn't depend on customer traffic, competitive pricing, or service advisor performance. It depends on routing payments differently.

According to NADA's 2024 Data Report, service departments now contribute up to 49% of total dealership gross profit. Service and parts sales exceeded $81 billion industry-wide. The scale of transaction volume flowing through Fixed Ops is enormous — and the vast majority of procurement spend currently generates zero return.

What questions should you actually be asking?

If you're evaluating whether this applies to your operation, skip the vendor pitch and start with these questions:

What percent of our AP spend currently goes to check vs. ACH vs. card? Most dealerships don't actually know. The answer determines how much room exists to shift payment methods.

Which parts suppliers in our vendor mix already accept card? You might be surprised. Many suppliers accept card but don't advertise it because they'd rather receive ACH. Asking directly — or having a payment partner ask — reveals the real acceptance landscape.

What would a 1% rebate on our current parts spend represent annually? Run the math on your actual numbers. Even conservative assumptions often yield five-figure annual returns.

Does our DMS support virtual card integration? CDK Drive does. Reynolds and Reynolds does. Corpay offers 11 integrations — if yours doesn't, that's a constraint worth understanding before going further.

The dealers who've already optimized procurement aren't doing anything exotic. They asked these questions, liked the math, and changed how they pay.

As you walk the floor at NADA or plan your strategy for the next quarter, consider this: you're pushing service advisors to upsell every RO to boost absorption. Are you getting paid for the parts you buy before you even sell them?

Ready to Turn Fixed Ops into a Fintech Revenue Stream? You’ve seen the math. You know that 100% service absorption requires more than just upselling ROs — it requires smarter procurement.

The gap between your DMS and your bank account is costing you money every single day. Corpay AP and card solutions for dealerships bridges that gap. We handle the "last mile" of the financial process that your DMS ignores: executing the payment.

• No Disruption: Your parts manager orders in the DMS as usual.

• No Manual Entry: We sync payment data directly from your system.

• Just Revenue: We identify card-accepting vendors and route payments to maximize your rebates.

Don't let another month of "dead capital" leave your dealership.

Brittany Newcomer

VP of Automotive Sales

Brittany is the VP of Automotive Sales for Corpay, leading the U.S. team in payment solutions. With 17+ years in sales and customer success, she excels at launching products, solving challenges, and building strong foundations.

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