Going Electronic #9

Repair Costs

How do you deal with the cost of rotable repairs? Do you inventory the value and charge it to the next aircraft? Many companies do, usually because it's too complicated to try to expense them properly - to the aircraft that required the repair. Sometimes it takes months to actually get a repair invoice, especially if there is any disagreement with the vendor regarding the charges, then you need to figure out what aircraft to expense it to. A good deal of aviation inventory software doesn't even try to deal with repairs properly - if at all. In WinAir, there is a special kind of PO just for tracking repairs.

From an accounting point of view, repair costs are expenses and usually should not be inventoried. WinAir makes it easy to ensure that these expenses go to the right aircraft. When you send a rotable out on a repair order, WinAir requires that you enter a work order and task to bill the final repair cost to. Thanks to the unique way in which invoicing and cost reports are handled, it doesn't matter if it takes months for the vendor invoice to be processed. The cost of the repair will show up on the next invoice/cost report for that aircraft, even if the part has been issued to another aircraft by then.

Often the original cost of spares (or the current market value) is confused with the value of inventory. In WinAir, the inventory value report tells you how much money you have tied up in inventory from an accounting perspective. It is not the market value of all the parts you have on hand. Repaired rotables will have no inventory value because they are assets and the repair costs will already have been expensed. When they are issued to an aircraft, there will be no associated cost. That doesn't mean they have no market value, or no asset value. Market value is whatever someone else would pay for the item, and asset value is what your accounting department has it ?on the books? at - which is whatever you paid for it minus accrued depreciation. But these have little to do with repair cost or sell price.

If you do third party maintenance, this works well. If there are component repairs to deal with on a customer's aircraft, invoicing is easier if you make sure you get repair invoices from your vendors quickly. But even if final repair charges are not yet available when you want to invoice, they will show up later. You can either let the customer know that there will be another invoice coming, or you can estimate the charge and add it to the invoice as an Additional Expense. If you are not going to mark up the repair charges, it may be easier to simply get your vendor to bill your customer direct.

If you wish, you can configure WinAir at installation to add the cost of repairs to the inventory value of rotables. This may be the best option for third party maintenance shops or parts distributors that really do want to inventory the cost of repairs to their rotables, and then sell or exchange them at market value. Obviously, they will not be in business long if they sell parts for less than they cost to buy and repair. For these companies, sell price usually has to be determined manually and repair costs will be taken into consideration.

In all editions of WinAir, sell price defaults at issue to the sell price you have specified for the part number in your master parts file, but you can over-ride this and enter any sell price you wish. In the ProSQL Edition, you can set the sell price for each S/N rotable in advance of actually issuing or selling it. This makes it easy to adjust the cost and sell price of your rotable stock so that selling and accurate cost reporting is simple and automatic. WinAir ProSQL also offers extensive asset management and reporting. Every rotable can be treated either as an asset, or as inventory. Assets can have an origin, cost, and date, and one of several market values based on condition.