Business Profitability Explored
Put an end to free body supplies, why are you giving body supplies away for free? Why isn’t it standard practice to charge body supplies and how do we effectively charge for them?
I think it’s fair to say it’s common knowledge that auto body shops consistently give away body supplies for free. My favorite insurance company argument regarding this topic goes something like this:
Adjuster: It’s “standard practice” to pay for paint and supplies because paint leaves with the vehicle.
Estimator: Body filler doesn’t leave with the vehicle? I am pretty sure body filler does leave with the vehicle. Would you like me to show you?
Adjuster: Body filler is just the cost of doing business; it’s the same as your tools and equipment and that is why we don’t pay it.
Estimator: Body filler isn’t the same as a frame machine; it’s needed to complete the repair and leaves with the vehicle. The frame machine, however, stays here.
My second favorite argument typically follows along these lines:
Adjuster: We already pay for body supplies; that’s why it’s called paint and supplies. The supplies part covers for all paint and body supplies needed in the repair
Estimator: Then why is it only calculated off paint hours and not paint and body hours?
I’m sure most of you have had this argument with an insurance company at some point. Charging for shop supplies is standard practice for nearly everyone else in the auto industry, so why isn’t it for auto collision?
You may be saying, “OK, I get it, I need to be charging for body supplies, but how do I effectively do that?” It’s easy to implement this on self pay customers by charging a standard amount for body supplies calculated off the body labor hours sold, just like paint and supplies are calculated off paint labor hours. I’d estimate the average is $5 to $10 per body labor hour.
Insurance repairs are going to take more effort and tracking, but you can get insurance companies to pay for body supplies. The key is to not call them body supplies and charge a standard rate. Instead, itemize the body supplies on the estimate and send in a supplement for them at the end of the repair.
If you have an online supply tracking system that’s linked to your RO, and your techs can mark down supplies as they use them, then you’re already off to a good start. A lot of these supply tracking systems generate invoices for you so you can bill the “list” cost out to the insurance companies.
If you struggle to get your techs to track supplies in your system, or you don’t have an electronic system, you’ll have to find a way to track body supplies for your shop that works for you and your team. I struggle with this and it’s an ongoing battle, and have learned that what’s worked for my small shop is dealing with it in two ways.
I’ve placed a white board next to the area where my supplies are stored. As the techs gather supplies for a vehicle, I have them write the RO number, part number, and quantity on that board. At the end of each day one of our team members enters what’s been written on the board into a parts tracking system that generates our invoices.
I also have a supply sheet that goes with each vehicle, and the techs can mark down supplies there, especially ones they may have already had at their work stations. At the end of the repair that sheet is turned in so we ensure we’re charging for all supplies needed.
If you don’t have a similar computer program you can create template invoices. They’re easy to generate and great to supplement with. I had my jobber create a template invoice with all of their information and mine on it, but left it blank. We then went in and created template invoices for all of the shop supplies we use on a regular basis and purchase in bulk (body filler, clips, seam sealer, grinding disks, sand paper, epoxy, etc.). On each template we imputed the part number, name, and individual cost, and left the quantity and total sections blank to be filled in later. We then named each template (seam sealer template, body filler template, etc.).
At the end of the repair we’d go into the templates and find the ones we needed, and then simply plugged in the quantities we used on the repair and printed out those invoices for the final supplement with the insurance company. It’s a fast and easy way to provide the invoicing the insurance company needs for documentation to justify why they are paying for those body supplies.
Be sure to list each supply item by name and part number and mark it in the section of the repair estimate it was used for. Expect to get kickback for some body supply items, but with time and effort, hopefully one day body supplies will just be another standard practice item insurance companies pay for without giving it a second thought.
Article Credit to Fenderbender.
Do you give away free body supplies or do you charge for them? How would you go about changing the norm and start charging for these body supplies? Let us know in the comments below. Also, if you found our content informative, do like it and share it with your friends.
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