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Who Pays for What?

  • ‘Who Pays for What?’ Surveys Shed Light on Not-Included Items Auto Body Shops are Charging, Getting Paid For

    ‘Who Pays for What?’ Surveys Shed Light on Not-Included Items Auto Body Shops are Charging, Getting Paid For

    Written by John Yoswick, Autobody News
    Published
    April 6, 2022

    Trainer and consultant Mike Anderson’s idea wasn’t new, but his implementation of it has had some significant impact for the industry.

    In 2015, Anderson, of Collision Advice, wanted to resurrect a type of report he remembered finding helpful years earlier when he still owned a pair of auto body shops in Virginia.

    “For many years when I owned my shops, I looked forward to a report one of the industry publications produced that showed what not-included labor procedures shops were billing for, and which of the largest insurers were paying for those procedures,” Anderson said. “That publication was long gone in 2015, so I decided to take their basic idea and expand on it.”

    Rather a single survey asking about a couple dozen labor procedures, Anderson worked with industry publication CRASH Network to create four different quarterly surveys that in total would ask about billing and payment practices for about 100 not-included procedures and estimate line items.

    “I knew if enough people participated, we could accomplish several things,” Anderson said. “Even just taking the surveys would serve as a reminder to those shops about the not-included items they were doing and could potentially be paid for. And the findings would help reassure shops that despite what they might be told, they aren’t ‘the only one’ charging for those items.”

    Anderson’s first “Who Pays for What?” survey launched in April 2015, and industry interest in the project was immediately clear. More than 980 shops, from all 50 states, participated in that first survey, which focused on not-included refinish labor operations.

    “I’ve talked to a lot of people who have done surveys in this industry over the decades, and no one has had anywhere close to that level of participation,” Anderson said. “We knew we’d tapped into something shops were hungry for.”

    That appetite hasn’t diminished. Each survey since has received response from 500 to more than 1,000 shops, and a total of more than 5,000 shops have taken one or more of the quarterly surveys over the years they’ve been conducted.

    What have been some of the changes the surveys have found---or contributed to---over that time? For many of the procedures asked about in the surveys, a higher percentage of shops say they are seeking payment when the procedure is necessary---and a higher percentage say they are being paid regularly.

    The surveys also have found a steadily rising percentage of repairers are going directly to the automakers' websites to research needed OEM repair information. In 2015, just 32% of repairers responding to the "Who Pays for What?" survey said they used the automakers' websites to obtain repair information. That percentage has since doubled.

    The reports detailing the survey findings include Anderson’s insights into the need for the various procedures, along with links to various resources to help shops understand---and explain to insurers or customers---how the procedures fit into a complete and safe repair.

    “It’s clear from these surveys that whether or not a shop is paid for a particular procedure depends to some degree on whether or not the shop negotiates for it,” Anderson said. “Though this can vary by insurance company, DRP status or region of the country, the surveys show that while none of the procedures asked about are universally paid for by insurers, none are universally rejected either. There are many examples in the surveys where nearly three out of four shops report getting paid all or most of the time for a certain procedure, yet another 20 or 30% of shops say they have never charged for it. That’s something we’re trying to change.”

  • ‘Who Pays’ Survey Finds More Shops Researching Battery Reconnect Procedures

    who-pays-for-what-survey-test-battery-reconnects-OEM
    The survey also found most shops are getting paid by insurers to complete the research.
  • ‘Who Pays’ Survey Finds Shops Increasingly Billing, Being Paid for Seat Belt Inspections

    Who-Pays-for-What-survey-seat-belt-inspections

    ‘Who Pays’ Survey Finds Shops Increasingly Billing, Being Paid for Seat Belt Inspections

    PublishedJuly 7, 2023

    The percentage of shops getting paid for the labor involved in inspecting seat belts and their associated components has more than tripled since the question about it first began to appear annually in the “Who Pays for What?” survey series in 2016.

    This not-included repair operation---for which every OEM has a very specific procedure---is a necessary and required part of a safe collision repair, said Mike Anderson of Collision Advice, adding he will not be satisfied until 100% of shops are performing it.

    “I know I have been saying this for years, but of the 100-plus not-include’ repair procedures we cover in the surveys each year, this is the one that keeps me awake at night,” said Anderson, who conducts the “Who Pays” surveys with CRASH Network. “Anything less than 100% on this question is very concerning because it indicates to me that too few shops are researching OEM repair procedures and are thus not aware of this requirement.”

    The industry does appear to be headed in the right direction on the procedure. In 2016, 63% of shops acknowledged they had never included it on a final invoice---that’s fallen to about 33% today---and of those who had in 2016, more than half (56%) said insurers would never pay for it. Today, one-third still believe insurers won’t pay them for the procedure, even while 44% of the shops that do charge for it say they get paid all or most of the time by the eight largest national insurers, and another 27% are paid at least sometimes.

    “I am glad to see the big improvement, but more is needed,” Anderson said. “As an industry, we must accept responsibility for researching and following the requirements for this on every single vehicle we repair.”

    The latest quarterly “Who Pays for What?” survey is now open through the month of July. It focuses on not-included frame and mechanical labor operations. Shops can take the survey here.

    Survey participants receive a free report with complete survey findings along with analysis and resources to help shops better understand and use the information presented.

    The survey can be completed in less than 15 minutes by anyone familiar with their shop's billing practices and the payment practices of at least some of the largest national insurers. Each shop's individual responses are held in the strictest confidence; only aggregated data is released.

    The results of previous surveys are also available online.

    Source: CRASH Network

  • ‘Who Pays’ Survey: More Shops Billing, Getting Paid for Feather, Prime and Block

    who-pays-for-what-survey-feather-block-prime

    The "Who Pays for What?" survey has been asking about the "not-included" repair operation since its first year in 2015.

  • Anderson shows NORTHEAST Shops How His “Who Pays for What?” Surveys Can Help

    Anderson shows NORTHEAST Shops How His “Who Pays for What?” Surveys Can Help

    Written by John Yoswick, Autobody News
    Published April 08, 2016

    About 37 percent of shop who bill for “masking the vehicle for priming” say they get paid by insurers for this operation “always” or “most of the time” – yet about an equal percentage of shops say they have never asked to be paid for this not-included operation.

    That’s one of the survey findings that Mike Anderson told attendees at the NORTHEAST trade show in New Jersey in March that he was most surprised about as he continues to conduct a series of four different “Who Pays for What?” surveys nationally in conjunction with CRASH Network.

    “Every time you prime, you have to mask, utilizing labor and materials,” Anderson told a packed seminar room at the trade show. “I was very surprised to see so many shops were not even charging for this. Almost 40 percent of shops said, ‘I’ve never even asked for it.’”

    The seminar was one of the first times Anderson has focused an entire presentation on his “Who Pays for What?” seminars, which began last year. Each of the four surveys – one is conducted each quarter – ask shops for their billing practices in terms of about two dozen not-included operations. For each procedure, shops are asked to describe how often they are paid, by each of eight insurers, whether it is "always," "most of the time," "some of the time," or "never." 

    The masking question was included on the refinish-related survey that took place in February this year, but the other surveys focus on body labor operations (that survey took place in April), frame and mechanical operations, and aluminum repair and shop supplies (the latter two surveys will next take place later this year).

    Anderson’s seminar at the trade show highlighted some of the results of past surveys, which are available online. (Anyone who takes one of the surveys automatically receives that survey’s findings for free.) As with masking for priming, for example, Anderson said nearly 40 percent of shops reported being paid always or most of the time to match the original OEM texture of chip/gravel guard.

    “The three estimating systems all clearly say that when you get paid to do gravel guard, that does not include the additional labor required to match the OEM texture,” Anderson said. “So if your painter has to go out and play with it, and get a spray pattern set-up, etc., that can take a long time, right? That’s not included.”

    Anderson said this year’s refinish-related survey specifically asked shops that have never asked to be paid for this process why they haven’t. More than 82 percent said they either were not aware it was a “not-included” operation or just never thought to charge for it.

    “Ladies and gentlemen, I’m not saying that insurance companies are always going to pay you for every single thing,” Anderson said. “But at the end of the day, if you want to get paid more, you have to first ask. It’s a Biblical principle: ‘You have not because you ask not.’”

    The surveys compare the payment practices among the largest eight auto insurers nationally, and also show how responses vary by region. The survey have continued to draw responses from an average of more 700 shops each time, Anderson said.

    “It’s one survey response per shop, so that’s 700-plus shops each time, not like some other surveys that might include responses from 10 people from one shop,” Anderson said.

    He said the surveys ask shops to also report what direct repair program affiliations they have, and the findings have fairly consistently shown that direct repair shops are paid, overall, more frequently for "not-included" estimate items than are non-DRP shops.

    “I’m not pro-DRP, I’m not anti-DRP,” Anderson said, noting that he’s faced some skepticism from those who are surprised that DRP shops appear more likely to be paid for not-included operations. “I’m all about doing a safe and proper repair. Whatever your business model is irrelevant to me. But what I can tell you is DRP shops clearly are getting paid for more procedures than non-DRP shops.”

    He said the aluminum survey asked shops not only about their labor rates for aluminum work but also how much they invested in training, equipment and other costs to become OEM-certified for aluminum. He said some survey respondents said that adding up those numbers made them realize their labor rates were inadequate.

    “What we realized is that when some people were setting their rates, they were just grabbing some number out of the air without ever having done a financial analysis on it,” Anderson said.

    He said his overall goal with the surveys is to raise awareness of operations shops may be doing but aren’t charging for. He said he hopes over time have the surveys find that the percentage of shops billing and being paid for the procedures increase.

    But he acknowledged that awareness is only part of the issue; the second-half of his presentation at the NORTHEAST show focused on how shops can successfully negotiate for whatever procedures from the surveys they are regularly doing.

    “I mean this in love. I’m not here to make any enemies. I want you to be successful. But honestly, the majority of body shops use the insurance companies as an excuse for their ignorance and lack of knowledge,” Anderson said. ‘They say, ‘The insurance company won’t pay for it,’ when the reality is they didn’t even know they could charge for it.”

    Anderson recommended that shops start with one or two of the items at a time, focusing on including them on estimates on jobs when the procedure is being done, and being prepared to support why they should be paid for it. He said shops should have documentation from the automakers or paint companies showing the procedure is needed; documentation from the estimating systems showing the procedure is not-included and whether there is a formula for calculating the labor time for it; and an understanding of what the procedure is worth.

    “You have to figure out what your labor is going to be and any materials you’re going to use,” Anderson said. “I can’t tell you what to charge. But the time you charge should reflect how long it takes the average technician to gather up their tools, equipment and supplies and perform the task in a safe and proper manner, and then return their tools and equipment.”

    He said shops rarely do the research to gather the documentation they need to confidently make their justification for the charge. Anderson said each of the survey reports includes suggested resources shops can use in this process.

    "The only thing that matters if you want to get paid for something is what you can prove, substantiate and justify,” Anderson said. “That’s all that matters. Your opinion means absolutely nothing.”

    Shops interested in being notified about upcoming surveys, or in getting results from previous surveys, can visit: https://www.collisionadvice.com/survey

    As is generally the case, Anderson’s presentation at the NORTHEAST trade show won him new fans in the industry.

    “I’ve been attending these seminars for over 50 years, and this is the single-most compelling session I’ve ever attended,” Mike Porcelli of Central Avenue Collision in Glendale, N.Y., told Anderson during the question-and-answer session.

    John Yoswick, a freelance writer based in Portland, Ore., who has been writing about the automotive industry since 1988, is also the editor of the weekly CRASH Network (for a free 4-week trial subscription, visit www.CrashNetwork.com ). He can be contacted by email at jyoswick@SpiritOne.com.

  • Collision Repair Work on Commercial Vans Offers Lucrative Opportunity

    Collision Repair Work on Commercial Vans Offers Lucrative Opportunity

    Written by John Yoswick, Autobody News
    Published August 11, 2021

    Almost two in five auto body shops---38%---say they routinely work on commercial vans such as the Mercedes-Benz Sprinter, Ford Transit and Ram ProMaster, according to a recent industry survey.

    And while more than half of shops say those vehicles take a little longer to repair than typical passenger vehicles, the higher average labor rates shops are getting to repair them make an attractive business proposition.

    About a quarter of 470 collision repair shops surveyed earlier this year said they charge different labor rates depending on what brand of van they are repairing, but most (74%) say they charge the same rate no matter the brand of van. Those rates are notably higher than the rates reported for regular passenger vehicles.

    On average, shops reported billing $66 per hour for body work on commercial vans compared to a national average regular body rate around $55, and although the national average regular frame rate is about $68, shops that work on the commercial vans say they are billing an average of $79 for the work.

    Refinish rates are $64 compared to $52 per hour, and even mechanical rates, which are much higher on passenger vehicles---averaging $85 in 2020---are even more so for commercial van work, averaging $101 per hour for mechanical labor.

    The data comes from a “Who Pays for What?” survey conducted in April. Shop trainer Mike Anderson of Collision Advice, who conducts the surveys with CRASH Network, said he is always on the lookout for ideas that can bring shops new or more lucrative sources of additional revenue.

    “I like to think that our survey topics give our participants additional ideas on how they can expand their business, and this is just another one of those,” Anderson said of commercial van repair. “With Amazon's growth and the introduction of the Rivian van, we expect to see this segment of the industry growing in the future.”

    Tim Yocum is among those seeing commercial van repair as a lucrative addition to his shop’s work mix. Yocum, manager of the Tom Masano Collision Center in Reading, PA, said the shop has capacity for as many as 12 Roadmaster small trucks and eight medium box trucks at a time for companies like Amazon and FedEx, charging $95 per labor hour for body and paint. As a dealership, the company can provide maintenance work on the commercial vehicles as well.

    “We are loaded up with Amazon vehicles and have more coming,” Yocum said. “We are now sending our own transportation company to pick up these vehicles in a tri-state area.”

    The shop has 23 employees and annual sales of about $4.6 million.

    “But we had another new record for sales last month, a little over $450,000,” Yocum said in early August. “Gotta love this business. It’s great to see my team striving to hit higher monthly goals.”

  • From the Desk of Mike Anderson: Auto Body Shops Can Take Control of Credit Card Processing Fees

    From the Desk of Mike Anderson: Auto Body Shops Can Take Control of Credit Card Processing Fees

    Written by Mike Anderson, Autobody News
    Published October 1, 2021

    It came as no surprise to me our “Who Pays for What?” surveys have found the vast majority (95%) of collision repair businesses accept payment from customers by credit card.

    All of us as consumers have become accustomed to the convenience of using credit cards, and enjoying the rewards---cash back, travel points, etc.---we can receive by paying our bills with them.

    But have you stopped to look recently at what it’s costing your business to offer that convenience to your customers? Have you looked into what your options are for reducing or eliminating those costs?

    Now you might think I’m talking about shopping around among the hundreds of merchant processing options out there, most of which are all too eager to assure you they will meet or beat your current processing fees. That is one option.

    But let’s look at some ways you might be able to trim your card processing costs without switching vendors.

    It’s a project one of my Collision Advice teammates, Mark Head, spearheaded this year. He’s a true financial specialist, working with our Collision Advice clients to dig into their profit-and-loss statements and really make sure they understand how to maximize their profitability and where they need to focus their attention.

    Mark first contacted our clients who are members of our “20 groups” to find out what the true cost was of their card processing, meaning the fees they were incurring monthly.

    As you’re probably aware, card processing fees can vary significantly. Some are based on a flat percentage. Some include a percentage plus a per-transaction fee. Some vary based on the type of card (Visa, MasterCard, Amex, etc.). Some differ based on whether the card was present at the time of the transaction versus a remote transaction. Did you know that? I sure didn’t!

    So Mark had our clients tell us which processing service they use---there were almost two dozen different vendors---and had them all use the same basis to determine their processing costs: divide the total fees paid in a given month, by the total sales dollars paid via credit card for that month.

    The bottom line on processing fees?

    “It ranged from a low of just above 1.5%---1.64%, to be exact---to more than 4%---4.2%, in fact,” Mark told me. “This is often an ‘unknown cost’ for a lot of shops. They know they pay something, but have never really taken a close look at what it’s costing them to offer their customers that convenience. That’s what I wanted to point out to them: is it worth giving up 3 or 4% of the bill to allow customers to pay with a credit card versus cash or a check.”

    Remember this percentage erodes your bottom line!

    So what can auto body shops do about this cost?

    First, they may want to place a limit on the dollar amount a customer can pay using a credit card. Say a customer’s vehicle is in for a $3,500 repair, including their $1,000 deductible. Do you allow the customer to put the insurance payment into their own account and pay the whole $3,500 on their credit card? If so, you just paid $105 (if you pay a 3% processing fee) for that transaction.

    But what if you placed a cap of $1,000 on the amount the customer can pay by credit card? They still get the convenience of paying their deductible by credit card, but you paid only $30 in credit card processing fees because the insurance portion of the bill wasn’t included in the credit card transaction. In this example, the shop saved $75; multiply that by the number of credit card transactions you have per month, and it adds up to real money.

    There’s some indication a growing number of collision repair shops are placing such limits. One of our “Who Pays for What?” surveys in 2020 found 76% of shops had no such limit. This year, the survey found that had fallen to 61%. Limits of either $1,000 or $2,500 were the most common.

    But you might also consider under what circumstances you accept payment by credit card. Some insurance companies have pressed their direct repair shops to accept payment from the insurer by credit card. Shops that recognized what that 2% or 4% off the bottom line could mean for their business often found they were successful in requesting other forms of payment from the insurer.

    Some of those shops also said the insurance company allowed them to add the credit card fees to the amount they were being paid. I’ll discuss this later in this column, but I want to note here that is not something we confirmed ourselves, and neither Mark nor I are offering any legal advice here.

    But here’s another scenario Mark and I have been hearing about: tow companies who want to pay the bill at the shop by credit card when picking up a total loss vehicle. I just have to scratch my head thinking about any shop agreeing to that, particularly when our “Who Pays for What?” surveys consistently show more than half of shops are not marking up tow bills---that’s a topic for another column.

    When that tow truck driver pays that bill with a credit card and you’re not marking up the sublet tow charge, you’re not only not making any money on that tow, you’re actually losing money---the 2% or 3% or 4% you’re paying in credit card processing for that transaction. That just makes no sense.

    So those are some ways---aside from shopping for lower processing fees---to limit or reduce how much accepting some payments by credit card is costing your business.

    But Mark also did some more digging into some other cost-saving possibilities for shops.

    “We found some processors allow a shop to offer what’s called a cash-discount program,” Mark said. “It implements a service fee on all customers, while giving a discount to the customer who pays in cash or check.”

    There’s an important caveat, Mark said such a surcharge is not legal in 10 states, including California, Colorado, Connecticut, Florida, Kansas, Maine, Massachusetts, Oklahoma, Texas and New York, though we heard recently that may change in New York. But here’s how it can work in the other 40 states.

    “First, you have to post signage in your office or lobby or customer area explaining that all final bills include a 4% surcharge, for example, on top of the total bill,” Mark said. “The surcharge should be whatever percentage you actually pay in fees. And you need to tell the customer up front. That’s very important.”

    It’s easy for a customer to avoid paying that surcharge: they just need to pay their bill with cash or a check. Basically, the credit card fee shows up on the customer’s end, not the shop’s; therefore the shop isn’t paying a fee.

    Mark’s presentation on this was a real eye-opener for a lot of our auto body shop clients who really hadn’t realized, first, how much credit card fees were eroding their bottom line, and second, that they had options.

    I’m so grateful to him for doing this research and being able to point our clients to some of the processors offering the cash-discount program if they are eligible to use it in their state.

    “As shop owners, you always want to grow sales, but you need to keep an eye on costs as well,” Mark told them.

    He’s the kind of “numbers guy” I’m thankful to have on my team.

  • From the Desk of Mike Anderson: Collision Repair Shops Play Vital Role in Helping Reduce Vehicle-Related Deaths

    From the Desk of Mike Anderson: Collision Repair Shops Play Vital Role in Helping Reduce Vehicle-Related Deaths

    Written by Mike Anderson, Autobody News
    PublishedJul. 05, 2022

     

    I read a sobering article in The Washington Post recently that I think offers some insights into where vehicle technology is likely headed.

    The article featured an interview with Jeffrey Michael, who spent three decades at the National Highway Traffic Safety Administration (NHTSA), and is now at the Johns Hopkins Center for Injury Research and Policy.

    He’s a car guy. The article said when he’s home, he likes to tinker on the 1987 Porsche 911 he bought as a fixer-upper. While he was with NHTSA, he worked on issues related to seat belts, child restraints, drunken driving and emergency medical services.

    But the article also said this:

    “Michael saw the ability of federal programs to influence safety and cites a gradual reduction in road deaths over 50 years. But in an interview with The Washington Post---days after new NHTSA figures showed fatalities hitting a 16-year high---Michael pointed to the nation’s failure and potential fixes.”

    Make sure you read that again. Roadway fatalities have reached a 16-year high.

    You have to believe NHTSA and other regulators are going to place an even greater emphasis on vehicle and roadway safety. You have to believe the automakers are going to be pushing forward on getting more and better ADAS and telematics features into vehicles. That’s going to impact the vehicles we have coming into shops.

    Michael also noted in the interview, “To improve things, we’re going to need to individually make concessions about convenience, about driving a little slower, about taking a little more care, about personal responsibility, of using our seat belts, of driving at or below the speed limit, of driving responsibly, certainly driving without impairment, without fatigue, without distraction.”

    The “using our seat belts” portion of that quote caught my eye. Our industry has a vital obligation to make sure those seat belts have been inspected after a vehicle has been in an accident. Every automaker has very specific requirements about this.

    Even when General Motors revamped its post-collision vehicle inspection requirements, for example, its stance on seat belts did not change. GM wants “every seat belt of every [GM] vehicle inspected every time” a vehicle is in for repairs, “regardless of the [crash] severity level or what’s being done” to the vehicle, said John Eck, collision manager for GM.

    We’ve been asking about seat belt inspections in our “Who Pays for What?” surveys dating back to 2016. On the surface, the news is good. Back in 2016, close to two-thirds of shops said they’d never billed for the labor involved in inspecting seat belts, and among those who had, fewer than one in four said they were paid for that work by the eight largest national insurers “always” or “most of the time.”

     

     

    In the seven years since, the percentage of shops not billing for the work has fallen, and the percentage being paid regularly has grown.

    But looking at the numbers still keeps me awake at night. As of this year’s survey, there were still 28% of shops---more than one in four---that acknowledged never having billed for seat belt inspections. I have to believe many of those shops aren’t doing this critical work, perhaps because they’re not researching and following the OEM procedures.

    And in the seven years we’ve asked, never have more than two in five shops billing for this work said the insurers regularly pay for it. How can the insurance industry deny payment for this needed step? And though shops are morally---if not otherwise---obligated to do it even if they’re not paid for it, are insurer payment practices contributing to it not being done on every single vehicle?

    Ladies and gentlemen, it often doesn’t require any more than looking at the vehicle owner’s manual to document the seat belt inspection requirement. In the resources section of the “Who Pays” body labor report, we point to an excellent list of links to vehicle owner's manuals, put together by the Database Enhancement Gateway (DEG).

    You can take the current “Who Pays for What” survey during July here.

    In some cases, in addition to a visual inspection, the OEM procedure may require the use of a diagnostic scan tool to check the pre-tensioners. On some Honda and Acura vehicles, for example, a deployed pre-tensioner does not trigger a diagnostic trouble code, so other “live data” from the scan must be checked. In these cases, it’s important to know I’ve read of instances where shops have found their aftermarket scan tool didn’t catch blown pre-tensioners an OEM scan did.

    I encourage you to check the NHTSA website for some sobering statistics about highway deaths, and some tools you can use to help educate your customers.

    But we also all need to make sure we’re not contributing to the problem, by repairing every vehicle fully and correctly, including the seat belt and other OEM safety inspections.

  • From the Desk of Mike Anderson: Destructive Weld Testing a Crucial Step You Should Be Paid to Perform

    From the Desk of Mike Anderson: Destructive Weld Testing a Crucial Step You Should Be Paid to Perform

    Written by Mike Anderson, Autobody News
    Published Mar. 08, 2022

     

    One of the few discouraging statistics for me from the “Who Pays for What?” surveys we’ve been conducting since 2015 involves destructive testing of welds.

    Last year, more than 40% of collision repair shops acknowledgedthey had never sought to be paid for the labor to create test welds and perform destructive testing on them prior to welding on a vehicle to ensure the welder was set-up properly.

    Let me be clear: I’m less concerned with whether shops are being paid for this work, though I believe they should be, and I hope this article will help you negotiate to get paid for it.

    What I’m really discouraged and concerned about is that I believe many technicians and shops are skipping this absolutely essential step in the repair process.

    Ladies and gentlemen, unless you perform destructive testing of welds prior to any welding on a vehicle, you cannot know whether the welds you are doing on the vehicle are proper and will perform as necessary. It would be like an automaker not doing vehicle crash testing before selling a new model of vehicle.

    It’s a serious liability for your business. If you don’t do this---every time---you run the risk of someone who is in another accident in a vehicle you repaired being seriously injured or even killed because of a faulty weld.

    I cannot emphasize this enough: We have a moral and ethical responsibility to make sure our technicians are doing this. It’s not about whether you get paid for it. It’s the right thing to do. If we don’t do it, somebody could get hurt.

    A real-world example of the importance of destructive weld testing came up during an online meeting. At Collision Advice, we facilitate 20 Groups called The Spartans, which includes virtual estimating training sessions once a month.

    During one of these recent discussions, member Dean Massimini of Autotech Collision Service---one of the most committed shops that I know of in terms of following OEM repair procedures---shared with our members that they make sure their technicians are performing and documenting weld testing every time it is needed. He told us they recently were performing a destructive test weld that failed.

    “We had a malfunction on our welder that we would not have found if we weren’t doing destructive tests,” Massimini said.

    This is what every shop should be doing.

    Another recent cautionary example: I was onsite at another shop in South Carolina, and one of the technicians told me how they had been having issues with a welder, and another industry consultant told them to use a different wire. Fortunately, I knew someone at the manufacturer of the vehicle involved. His first question: Has the shop had the software update done on their welder? Sure enough, the welder had not had the most recent update.

    My friends, performing destructive test welds is not a once-in-a-while labor operation. It must be done on every single vehicle.

    Recently I had the opportunity to speak with some OEMs considering providing weld coupons with replacement panels. That would be huge. But again, shops must know how to perform this destructive test, and the OEM procedures spell it out for us. I only know of two OEMs that don’t have this in their procedures, and they defer to I-CAR, which provides information on how to perform this test.

    Roughly 30% of shops across the industry tell us in our “Who Pays” surveys that they are being paid all or most of the time for destructive weld testing when it is necessary and they are doing it.

    In my next column, I’ll discuss how you, once you ensure your technicians are doing this important step, can join those getting paid for it.

  • From the Desk of Mike Anderson: Making the Most of the ‘Parts’ Portion of Your Business

    From the Desk of Mike Anderson: Making the Most of the ‘Parts’ Portion of Your Business

    Written by Mike Anderson, Autobody News
    Published July 8, 2020

    Parts consistently make up 40% of total repair order dollars, so it’s well worth it for shop owners to pay careful attention to the role parts play within their business.

    This month, I wanted to share the first of two columns outlaying some best practices related to parts I think could improve your shop’s operations and bottom line.

    Best Practice: Make sure you’re accurately tracking your parts profitability.

    As almost anyone who has attended one of my classes knows, I’m a big proponent of the value of detailed and dead-on accurate accounting practices and profit and loss statements. That’s where good P&L account and sub-account categories are needed.

    You shouldn’t just track labor income, for example. “Labor” is one account; the sub-accounts include “body labor,” “paint labor,” “frame labor,” “mechanical labor,” etc.

    When it comes to your parts account, I believe you need sub-accounts for OEM parts, aftermarket or non-OEM parts---which may also include accessories---and salvage or recycled parts. Some people break out remanufactured parts.

    But one often missed sub-account is “stock parts.” Stock parts include things like seam sealer, double-sided tape, weld-through primer and cavity wax. These are not paint materials. They are parts you put on the vehicle.

    The old adage of “junk in, junk out” applies in terms of entering parts on estimates and in your shop management and accounting systems. You might list seam sealer as an aftermarket part on your estimate because there’s not a “stock part” option in that system. But when you transfer that estimate into your management and accounting systems, you need to make sure the systems are mapped properly to reclassify that item into the proper sub-account.

    One of the other common accounting mistakes I see centers around parts price-matching, when you choose to use an OEM part in place of an aftermarket part, for example. When that happens, it’s important that whoever inputs your parts invoices understands how to properly change that to an OEM part within your management and accounting systems.

    If that doesn’t happen, the accounting system will presume you sold an aftermarket part, but the cost for that part goes into the OEM sub-account. That results in an overstatement of your profit on aftermarket parts, and understates your profit on OEM parts.

    Best Practice: Know your gross profit margins on different types of parts.

    Using your sub-accounts properly will help ensure you have accurate information on your parts profits by type. Most shops I see are making between 20% and 32% gross profit on OEM parts, for example.

    But keep in mind lots of factors can influence that. Your buying power can result in higher or lower discounts compared to other shops. Your mix of work can play a role; parts profits may be higher or lower depending on whether your repair a lot of domestic vehicles, or a lot of Asian or European import vehicles. Even what part of the country your shop is in can affect discounts and profits.

    Most shops are making between 30% to 45% gross profit on aftermarket parts. Again, buying power and discounts vary.

    Given that there aren’t list prices for recycled or salvage parts, most shops are marking up the cost of those parts. Don’t confuse mark-up with gross profit. When a shop marks up a part 20%, it is making a 17% gross profit; when it marks them up 25%, it is making a 20% gross profit.

    Most shops find their margins on stock parts are similar to their margins on paint materials.

    Best Practice: Don’t make parts decisions based solely on gross profit margins.

    I’m not going to argue here about the merits of using OEM or aftermarket parts. But I will say you should take into consideration factors beyond just gross profit percentages.

    In some cases, for example, it may take a technician added time to install an aftermarket part. Given the average collision technician generates $100 in gross profits per hour, an added 30 minutes installing a part costs you $50, even aside from any impact on efficiency and cycle time.

    Can you get remunerated for that added labor? Perhaps. A “Who Pays for What?” survey last year found 29% of shops said they bill the insurer for this labor at the shop’s retail rate, and another 10% said they bill the parts vendor. But 21% said they only billed for this at a discounted labor rate, and another 22% said they most commonly didn’t bill for the labor in such situations.

    On the other hand, some could argue the higher profit margin on a less expensive alternative part makes sense if an older vehicle has discontinued parts or is close to being an economic total loss.

    As you read through some of my other parts best practices, you’ll see other factors---such as the availability of the part, vendor performance and parts ordering efficiency---can play a role in making the best parts decision. Price or discount should not be the only considerations.

    Best Practice: Consider all the costs associated with ordering of parts.

    Those of you who have studied and worked to implement “lean principles” within your business know lean is all about eliminating waste. Waste includes the time we spend on things we do for free. I don’t know any shop including a line item on estimates or invoices for “order parts.” That’s work shops do “for free.”

    So if you’re not getting paid to order parts, would you rather do that two or three or even four times per job---or just once?

    Making that a reality starts with 100% disassembly of the vehicle to identify every broken, damaged or one-time-use part needed for that job. (I’ll discuss one-time-use parts more in next month’s column.)

    I also believe shops need to be using an electronic parts ordering solution. It saves time---no one should be waiting on-hold to place a parts order---and improves parts ordering accuracy. It ensures the parts vendor has the VIN, vehicle production date and other information to help them validate the parts ordered match the vehicle being repaired. Some electronic parts ordering systems automatically do this scrub of the parts order and tell you if a part doesn’t match the VIN. That’s a great feature for shops.

    Next month’s column will offer more best practices related to parts. 

  • From the Desk of Mike Anderson: More Best Practices to Make the Most of the ‘Parts’ Portion of Your Business

    From the Desk of Mike Anderson: More Best Practices to Make the Most of the ‘Parts’ Portion of Your Business

    Written by Mike Anderson, Autobody News
    Published August 3, 2020

    In a previous column, I shared some best practices shops can use to improve their parts-related processes and profits. Here a few more.

    Best Practice: Check the OEM information.

    You might presume that checking OEM collision repair information for each repair is something related to just procedures. But it also plays a role in streamlining your parts processes as well.

    One way in particular: Identifying any non-reusable or one-time-use parts that need to be on your estimate and parts order. We’re not just talking about clips and fasteners. On some vehicles, there are interior or exterior trim pieces that are one-time-use, as well as some suspension or supplemental restraint system parts.

    It’s important to know that while the estimating systems are doing a better job of identifying all one-time-use parts, those systems---nor even the OEM electronic parts catalogs---identify all of them. The only way to make sure you are aware of all of them is to read the OEM repair information.

    Not all of the automakers identify one-time-use parts in the same way. Toyota/Lexus, for example, uses a black dot to indicate something is a non-reusable part. Nissan/Infiniti uses a black dot with a white X; sometimes these parts are color-coded in the automaker’s documentation. Mazda uses a white “R,” Subaru uses a star and Ford uses a symbol of a trash can to signal something is a one-time-use part.

    There are other automakers, such as BMW, General Motors and Porsche, that currently don’t have a symbol, but instead use wording within the procedures to identify one-time-use parts. It might say, “Remove and replace,” for example, or “Remove and discard,” or “This is a non-reusable part.”

    So you can’t just glance at the OEM repair procedures. Take the time to read them thoroughly. And when you list one-time-use parts on your estimate, include a line note indicating that the OEM has designated it as such.

    The OEM repair procedures can also alert you about which parts can be repaired and which cannot. Many automakers, for example, say that components of certain strengths of steel should not be repaired, only replaced.

    The procedures also can designate “if this, then that” statements related to parts. One example might be “If an airbag deploys,” then certain other parts on the vehicle must be replaced, even if they don’t appear damaged.

    The time to have all this information is up front, so you don’t get into a job and only then discover you didn’t order all the parts the OEM procedures require.

    Best Practice: Improve the parts information in the estimating systems---for yourself and the rest of the industry.

    If you determine a part needed as part of a repair wasn’t shown in the estimating system, or if you find some other information gap, like a one-time-use part not being identified in the estimating system, don’t just order the part and move on. Contribute to the solution!

    It’s easy: Visit the Database Enhancement Gateway and submit an inquiry. It’s a quick process, particularly after you’ve done it a few times. The DEG will reach out to the estimating system provider, which in turn will research whether information was indeed missing or inaccurate, and if so, correct it. That may well help you in the future, as well as help all the other shops working on that make and model of vehicle.

    If we all work together on this, we can help make the estimating databases more complete. Some may argue you shouldn’t have to do that, given what shops spend on the estimating system. But at the end of the day, complaining does not solve the problem. By taking the time to submit inquires to the DEG, you help control your own destiny.

    As Mike Jones of Discover Leadership says, “You can be the wind or the flag. The wind dictates which way the flag blows. The flag is subject to the wind. Always be the wind.”

    Best Practice: Maximize efficiency through better parts receiving.

    Receiving parts might seem the most passive process in your shop: The delivery driver brings in the parts and drops them off. But the best-run shops use some very specific steps related to parts receiving.

    They are mirror-matching all parts, for example. Take the new part out of the box or packaging, and compare it to the old one to make sure at that point in the process the parts for the job are accurate. Given the average body technician generates $100 in gross profit per hour, you don’t want that technician stopping work and spending time to come find you to tell you a part is incorrect or missing.

    In my previous column, I talked about the value in using an electronic parts ordering system. Some of those systems can help with parts receiving processes as well. Some allow the parts vendor, when fulfilling the order, to electronically push the parts invoice back to your management system to automatically post the invoice for you.

    We did a survey of more than 400 body shop parts managers, and they said they spend at least 40% or 50% of their time just manually rekeying parts invoices. So if your electronic parts system can streamline that, you’ve greatly reduced time spent on a process for which your shop can’t bill.

    I can’t write about parts without mentioning one of the mistakes I see some dealership management make. At some dealerships, the body shop isn’t given financial credit for parts sales. I think this a bad idea for several reasons.

    I think it reduces the likelihood that someone within that shop is responsible for following up on parts credits, for example. It also could lead to less than ideal repair-vs.-replace decisions; if those making parts decisions are paid on commission, and the shop gets no credit for a part sale, they may choose to repair a part when replacing would be the better decision for the repair.

    Do you have questions related to parts? Want more ideas and best practices? Reach out to me, and check out our parts-related videos when you subscribe to our free YouTube channel.

  • From the Desk of Mike Anderson: Use Tech to Kick ‘Timesuckers’ Out of Your Collision Repair Shop

    From the Desk of Mike Anderson: Use Tech to Kick ‘Timesuckers’ Out of Your Collision Repair Shop

    Written by Mike Anderson, Autobody News
    Published June 29, 2021

    I was writing an email to one of my collision repair clients recently, and used Google to try to find a different term for “waste of time.”

    One of the results that popped up was “timesucker,” defined as “an activity to which one devotes a lot of time that might be better or more productively spent doing other things.” Spending time on something that doesn’t create value for you.

    There’s actually a noun for that. Timesucker. Who'da thunk?

    That got me thinking about some of the things in the collision repair industry that are timesuckers, taking up a lot of time for auto body shops.

    I was emailing the client because I’d been looking at some changes I’ve found in what the average collision repair business is spending on “SGA wages.” SGA stands for sales and general administration. Those are all the folks in your business who aren’t actually working on cars.

    Their wages are sometimes referred to as “non-productive employees,” not because they aren’t doing important work, but to separate it from the wages of technicians and those actually producing repairs.

    I knew from working with my 20 groups and private clients that several years ago, an average collision repair facility’s SGA wages were hovering around 10% of total gross sales, on average. From what I’m seeing now, that average has increased to between 13% and 14%.

    For example, a shop with $3 million in annual sales had been spending $300,000 in administrative wages, not including benefits; today, that number is closer to $390,000. That is a huge increase.

    I will admit the sample size I’m using to extract this data isn’t large. But regardless of the actual numbers, it’s no secret administrative costs in the collision repair industry have risen.

    You’re probably as aware of the reasons for that as I am. Some of it could be because insurance companies have shifted more and more of their administrative tasks over to shops, both DRP and non-DRP. Another reason: It requires more administrative time just to research OEM repair procedures. And there are more administrative tasks involved in delivering an exceptional customer service experience. And increases in labor rates generally haven’t kept up, so SGA wages continue to rise as a percentage of gross sales.

    So what should a shop owner do? Try to reduce SGA staff? It’s very difficult to try to get employees to do more with less. It just leads to stress and burnout for everybody.

    So what you really need to figure out is where the timesuckers are in your shop. What are things that require time that could be better spent on things that add more value? What is your team doing manually now that could be automated, that could be made easier using technology?

    A good place to start---I challenge the auto body shops I work with to take a new look at their management system. According to our “Who Pays for What?” surveys, more than 90% of shops are using a management system. But when was the last time you contacted the supplier of your management system and said, “Can I get some update training on this? Can you help me discover how to automate more of the things we do?”

    For example: Maybe you’re still calling customers to remind them of their appointment the next day. Could your system automatically send those customers a text message reminder about it rather than your staff having to call?

    Maybe you’re calling potential customers who don’t schedule a repair right after an estimate. Is there a way to automate a text or email follow-up instead?

    When I work with a collision repair business on SGA wages, I like to start with a big easel pad or white board and ask them to write down everything they do manually so we can start figuring out if there on things on that list their management system will do for them. Ask your system provider: Are there ways I can use your software to do this task? That’s being proactive instead of reactive.

    Think about your parts processes, for example. Does your management system automatically show you the status of all parts, or do you have to chase this down?

    If you have a designated parts person, there’s a chance he or she is spending up to half of their administrative time inputting parts invoices into the system. Does the system allow you to import a parts invoice from a vendor so you don’t have to enter it yourself? Bingo, you just knocked off 15 to 20 timesucker hours a week.

    How about rental car updates? Are you doing this manually, or can your management system update the Enterprise Entegral system automatically, for example?

    It all comes down to working smarter, not harder. In almost every collision repair business, there are timesuckers that could be eliminated using technology.

  • From the Desk of Mike Anderson: What You’re Missing by Not Researching Battery Disconnect and Reconnect Procedures

    vehicle-battery-hooked-up

    From the Desk of Mike Anderson: What You’re Missing by Not Researching Battery Disconnect and Reconnect Procedures

    Written by Mike Anderson, Autobody News
    Published
    Nov. 8, 2022

    During a recent collision industry seminar I was teaching, I asked if there were any technicians in the class, and several people raised their hands.

    I asked them: “If I walked into your shop, and asked you if you research the procedures in the OEM repair manual before you disconnect a battery, what would you say?”

    It’s a question I’d like you to consider right now as you start reading this article.

    In that class, I heard one tech muttering something quietly, and I asked him what he said.

    “I would say if you don’t know how to disconnect a battery, you shouldn’t be working on cars,” he replied.

    That’s a fair statement, I told him. But then I took him---and the rest of the class---through the OEM procedures for a particular vehicle, showing him what that automaker states you need to be aware of before you disconnect a battery. Yet I think most of you, like that tech in my class, would acknowledge that no, you’re not researching the OEM repair procedures before you disconnect a battery.

    battery-OEM-manual
    In a new Collision Advice training course, Mike Anderson shares automaker procedures, such as this information from Ford, related to disconnecting and reconnecting vehicle batteries.

    So let’s talk about this. First, one of the things you need to know before you disconnect a battery is whether the vehicle is connected to telematics. This is only going to become more important moving forward as more vehicles are “connected” to things like General Motors’ OnStar or Toyota/LexusSafety Connect.

    What we’ve found is, in some instances, if the vehicle is connected and you disconnect the battery, it may send an alert through the telematics to the automaker to say something happened to this car’s battery. The OEM may in turn contact the customer via text or email, or sometimes even alert the dealership service department to ask them to reach out to that customer.

    Your failure to research the procedures prior to disconnecting that battery just created a bad customer service experience.

    So before you ever disconnect a battery, determine whether the vehicle is connected, and if so, determine if you need to place it in “service mode” first.

    Another consideration is “wait time.” Every automaker I’ve researched says you have to wait a certain amount of time after you turn the vehicle off before you disconnect the battery. It’s not a one-size-fits-all procedure.

    For one vehicle, the automaker may say you have to wait one minute, while another may say you have to wait six minutes. I’ve seen some OEMs say after you turn the car off, you have to wait 90 minutes before you disconnect the battery.

    There are often other precautions listed in the automaker battery disconnect procedures. For example, you may have to protect certain components. I saw a procedure recently that said you have to have the left front door open when you disconnect the battery. If you don’t, it can trigger some diagnostic trouble codes.

    who-pays-for-what-survey
    A “Who Pays for What?” survey earlier this year found a lot of variation in how regularly body shops are researching OEM information on procedures necessary after reconnecting a battery.

    Okay, so you followed the disconnect procedures, repaired and the vehicle, and you’re ready to reconnect the battery. Are you researching those procedures every time as well?

    I know the answer to that question because it’s something we ask about in our “Who Pays for What?” survey every year. We found less than half of you (46%) say you’re researching those procedures all or most of the time. While I would say even “most of the time” isn’t good enough, I’m even more concerned about the 41% of you who say you do it "some of the time” or “only occasionally.” And the 13% of you who said “never” are just inviting trouble.

    Every vehicle manufacturer I’m aware of has certain procedures that must be done when you reconnect a battery. Some of them may be initializations, like for a one-touch feature on a window or sunroof.

    I can tell you I recently saw reconnect procedures for a Fordthat said the vehicle must be driven for a certain amount of time and distance so the engine can relearn or reprogram itself. I’ve seen other OEMs say when you reconnect the battery you have to do a steering angle sensor procedure.

    At Collision Advice, we recently built a new training course focused just on battery disconnect and reconnect procedures. We found enough content related to this topic to fill more than six hours of classroom instruction to ensure estimators and technicians understand what they need to know.

    So now that you’ve read this article, I’m going to ask you again: If I walked into your shop, and asked you if you research the procedures in the OEM repair manual before you disconnect a battery, what would you say?

    Oh, and another incentive for taking this important step: The “Who Pays for What?” survey found that among the shops performing the OEM battery reconnect procedures, nearly two-thirds (63%) said they are paid for that labor “always” or “most of the time” by the eight largest national insurers.

  • Getting Paid Aluminum Labor Rate May Be Tougher, But Other Vehicle Tech Adding to Estimates

    aluminum-labor-rates-who-pays-for-what-surveys

    A "Who Pays for What?" survey found insurers are pushing back on higher labor rates meant to cover added expenses to repair aluminum.

  • More Auto Body Shops Being Paid for Diagnostic Test Drives Before Repairs

    pre-collision-repair-test-drive

    More Auto Body Shops Being Paid for Diagnostic Test Drives Before Repairs

    Written by John Yoswick, Autobody News
    Published
    Dec. 6, 2022

    While test driving a vehicle after repairs has long been a fairly standard practice---even before some ADAS calibrations made it a requirement---more auto body shops are billing for the time spent on this procedure, and the number of shops recognizing the need to perform a diagnostic test drive some vehicle prior to repairs is also growing.

    Those were among the findings of one of the quarterly “Who Pays for What?” surveys in 2022.

    “We have found some OEMs require you to perform a test drive at certain speeds and braking conditions as part of the inspection and testing of the seat belt,” said industry trainer and consultant Mike Anderson of Collision Advice, who conducts the “Who Pays” surveys in conjunction with CRASH Network. “This should be done in advance of the repair plan to avoid supplements and delays.”

    A pre-repair test drive, Anderson said, can help a shop spot potential suspension or drivability problems; check the function of autonomous braking, adaptive cruise control and other ADAS features; and ensure set conditions on the vehicle are met prior to pre-repair scanning.

    pre-collision-repair-test-drive
    A “Who Pays” survey found almost one in four shops said they are paid “always” or “most of the time” by the largest national insurers when they bill for the labor to perform a pre-repair “test drive for diagnostics.”

    A “Who Pays” survey this past year found about 34% of shops said they are paid “always” or “most of the time” by the eight largest insurers when they bill for the post-repair test drive, a “not-included” labor operation. That’s nearly tripled since 2015, when just 13% of shops said they were regularly paid for the labor time the test drive required.

    Fewer shops---just 22%---who bill for a pre-repair “test drive for diagnostics” procedure currently are paid “always” or “most of the time,” but that’s twice the percentage that said that was true back in 2017.

    Despite that change, and the increasing importance of performing a test drive prior to repairs, about seven in 10 shops acknowledge they have never billed for the procedure, a percentage virtually unchanged from five years ago.

    Administrative Fees for Total Losses More Common

    The survey also found the percentage of shops regularly being paid an administrative fee to process total losses has increased for seven consecutive years.

    When the “Who Pays” surveys began in 2015, only 46% of shops said they were paid “always” or “most of the time” when they billed insurers a fee for processing total loss vehicles, and nearly one in three (30%) never negotiated with an insurer for such a fee. In 2022, the survey found 74% of shops that negotiate for administrative fees say they are regularly reimbursed by the eight largest insurers. Only 14% have still never attempted to charge a fee.

    “The steps involved in processing a total loss are more involved today than they were years ago,” Anderson said. “We now see shops itemizing for procedures such as a thorough tear-down, OEM research time, parts cart storage and other expenses that are absolutely something shops should be reimbursed for, unless they negotiated to perform these services for free as part of a direct repair agreement.”

    collision-repair-invoicing-system-revenue
    More than three in five shops use some type of invoicing system for such items as clips and fasteners, and more than half of those said it accounts for an average of $50 or more in revenue per repair.

    The difference in reimbursement frequency among the top eight insurers is not major. State Farm, now the most frequent payer, is regularly reimbursing 78% of the shops that negotiate to be paid for it---up from 37% in 2015---while 69% of shops say GEICO, the least likely to pay the administrative fee, does so, up from just 49% in 2015.

    “Charging an ‘administrative fee’ is not legal in every state, so there has been some industry discussion regarding the best way to be reimbursed for these expenses from a legal perspective,” Anderson said.

    He also said insurers are increasingly determining if a vehicle is likely a total loss at the first notice of loss, meaning fewer of those vehicles even make it into a shop.


    More Auto Body Shops Being Paid for Diagnostic Test Drives Before Repairs (article continued)

    Use of Invoicing Systems

    The “Who Pays” surveys ask about more than just labor procedures. Nearly two-thirds of shops (64%), for example, now say they use some kind of invoicing system to track and bill for shop supplies used during a repair, such as clips and fasteners, seam-sealer, weld-through primer or other items. That’s up from 41% in 2017.

    More than half of those shops (53%) said the invoicing system adds at least $50 of additional revenue per repair, and more than one in five (22%) said their invoice is boosted by $100 or more thanks to accurately tracking and billing for shop supplies with these systems.

    Shops can visit www.crashnetwork.com/whopays to take the January “Who Pays” survey, which focuses on not-included refinish labor procedures, or to download results of prior surveys.

  • More Shops Being Paid For Clearing A Driver’s Personal Data From A Total Loss Vehicle; Latest ‘Who Pays’ Survey Now Open Through October

    More Shops Being Paid For Clearing A Driver’s Personal Data From A Total Loss Vehicle; Latest ‘Who Pays’ Survey Now Open Through October

    Written by John Yoswick, Autobody News
    Published
    Oct. 04, 2022

     

    Phone synching with a vehicle results in it becoming almost the equivalent of a cell phone on wheels – so shops are increasingly offering to erase all that personal data for a customer whose vehicle has been declared a total loss.

    A “Who Pays for What?” survey of U.S. shops this past summer found that more than one-third (35 percent) said they are paid always or most of the time by the eight largest U.S. insurers when they charge for the labor for this procedure. That has more than doubled from the first time the survey asked about the procedure a year earlier. Despite this, more than 4 in 5 shops acknowledge not having sought to be paid for this work – perhaps because many shops aren’t doing it.

    “A vehicle owner today may have their home address stored in their navigation unit of the vehicle, and their contacts get stored when they synch their phone,” industry trainer Mike Anderson of Collision Advice, who conducts the “Who Pays” surveys with CRASH Network, said. “Garage door opener codes might be stored. So we need to be asking the vehicle owner, when the vehicle is a total loss, if they would they like us to erase their personal information.”

    Anderson said the steps necessary to clear this information can generally be found in the vehicle’s owner’s manual.

    The final “Who Pays for What?” survey of 2022 is now open through the month of October. It focuses on labor operations related to scanning, system calibrations, and labor. Shops can take the survey at: https://www.surveymonkey.com/r/RBRG5GY

    Survey participants receive a free report with complete survey findings along with analysis and resources to help shops better understand and use the information presented.

    Anderson said the survey, which will take about 15-20 minutes, can be completed by anyone in a shop familiar with the shop's billing practices and the payment practices of at least some of the largest national insurers. Each shop's individual responses are held in the strictest confidence; only aggregated data is released.

    The results of previous surveys are also available online (https://www.crashnetwork.com/collisionadvice).

  • New Survey Results Show ‘Who Pays for What’ in Terms of Frame/Mechanical Procedures

    New Survey Results Show ‘Who Pays for What’ in Terms of Frame/Mechanical Procedures

    Written by John Yoswick, Autobody News
    Published September 22, 2015

    Just under 61 percent of shops surveyed said they are paid "always" or "most of the time" for removing coatings from pinchwelds prior to mounting the vehicle on a frame machine when it is required for the repair.

    But industry trainer and consultant Mike Anderson said that percentage, from the latest "Who Pays for What?" survey results available now, isn’t high enough.

    "In my opinion, that 61 percent should be 100 percent," said Anderson, president of Collision Advice and creator of the survey.

    Anderson noted that some automakers do not approve mounting or anchoring in the pinchweld area at all, and said shops should always follow manufacturers recommendations. But when mounting using the pinchwelds, he said, removal of the coatings is a must.

    "I have not found any vehicle manufacturer or any frame equipment company that says it’s okay to secure a fixture clamp to pinchwelds without first removing all undercoating and seam sealer,” he said. “If this isn't done, it increases the likelihood that the vehicle can slip when you are pulling it, causing further damage or adversely impacting the accuracy of the measurements. So those coatings need to be removed in order to perform a proper and safe repair."

    The pinchweld information is just one of hundreds of findings revealed in the second quarterly “Who Pays For What?” survey report available here (http://www.collisionadvice.com/survey). This latest survey examines how often shops are charging – and being paid – for 20 different "not-included" repair procedures related to structural/frame and mechanical operations. (The first survey focused on refinish-related “not-included” operations.) Nearly 700 shops responded to the national survey.

    The survey also found that State Farm and USAA appear to understand the need for removing coatings from pinchwelds better than other insurers; more than 80 percent of their DRP shops report being paid "always" or "most of the time" to perform the procedure, compared to less than 55 percent of Progressive and Geico DRP shops.

    "I would encourage anyone who is not being paid for this to research it through the OEMs, I-CAR or any frame equipment companies to ask if it is okay to mount a fixture clamp over a pinchweld covered with undercoating or seam sealer,” Anderson said. “They will find that the answer is a clear, ‘No.’ Shops need to understand that their technicians must be doing this.”

    Anderson said the quarterly surveys help raise awareness of not-included items and operations that shops may be doing but not itemizing on estimates.

    “The surveys will help shops understand what these operations are, and whether other shops seek and receive compensation for them – or if they truly are ‘the only one,’” Anderson said.

    The 51-page report of the second survey findings on frame and mechanical operations is now available by clicking here (http://www.collisionadvice.com/survey). Also available is a 62-page report on the first survey results released earlier this year for refinish-related not-included procedures.

    Shops can also visit that website to sign up to take the next quarterly survey, which opens in October.

    Collision Advice (www.CollisionAdvice.com) is an independent training and consulting firm featuring some of the most respected and experienced experts in the collision repair industry. Mike Anderson and his team offer real-world, cutting edge training and guidance both in the classroom and one-on-one in the shop.

  • Survey Results: Labor Rates, When Shops Get Paid for Supplies

    Survey Results: Labor Rates, When Shops Get Paid for Supplies

    Written by John Yoswick, Autobody News
    Published March 6, 2017

    Automaker repair procedures and position statements have a clear and positive effect for repairers looking to get reimbursed for “not-included” items.

    That was among the findings of a recent “Who Pays for What?” survey, four questionnaires a year conducted by Collision Advice and CRASH Network. Each of the quarterly surveys focuses on a different aspect of collision repair, asking shops about which “not-included” procedures they bill for, and about how frequently each of the largest auto insurers pays for those procedures.

    The latest of the 2017 “Who Pays” surveys, focused on body labor operations, is being conducted throughout the month of April; click here for more information or to take the survey. 

    The “Who Pays for What?” survey results released earlier this year found that more shops said “having OEM documentation” was most effective (among other choices presented) when negotiating to be compensated for “not-included” repair procedures and shop supplies used on a job.

    “I think that’s a big message to the OEMs,” said Mike Anderson of Collision Advice. “The fact that OEM documentation was ranked most effective when negotiating with insurers means that the position statements and bulletins published by the OEMs really do help our industry.”

    In fact, having OEM documentation out-ranked presenting an invoice, whether from a dealership or an invoicing system, and even edged out “the ability to select the item in the estimating database” in terms of the most effective negotiating tools.

    More than 1,000 shops across the country responded to that particular “Who Pays” survey, which covered aluminum repair rates, OEM certification programs and vehicle scanning, along with how frequently repairers charge--and get paid for--specific shop supplies.

    Comparing the 2016 findings to those of the same survey a year earlier found that shops are reporting increased success in getting reimbursed for every one of the 17 different “not-included” shop supplies asked. In some cases, the improvements in reimbursement frequency were not significant; quite a few items, however, showed marked improvement in the number of shops getting paid “always” or “most of the time” for these shop supplies when they were necessary for the repair.

    In 2016, for example, more than half of all shops (56 percent) who bill for plastic repair materials are regularly reimbursed for them by the eight largest insurers; that was up 8.4 percentage points over the same survey in 2015.

    Insurers are also reimbursing shops more frequently for items like double-sided tape; more than three-quarters of shops (78 percent) report regular reimbursement for this “not-included” item when it is required for the repair, up 6.8 percentage points from a year earlier.

    “Once again, the survey results show that many shops are being paid for these items on a regular basis, even if your shop isn't billing for them at all,” Anderson said “You can't get reimbursed for something you don't bill for. And as more than 2,500 shops who have taken one or more ‘Who Pays’ surveys can now attest, just participating in the four different quarterly surveys is a great reminder of the items and procedures that you are using or performing every day, but may not be listing on estimates or invoices.”

    Aluminum repair labor rates were another key part of the survey; those rates appear to have increased slightly from 2015 to 2016, though shops are generally charging those rates for a narrower range of repair operations. In 2015, the "Who Pays for What?" survey found that labor rates for non-structural aluminum repairs ranged widely, from $43 per hour to $118 per hour for repairs that were not part of an OEM certified repair program. A year later, the latest survey results show that the range, while just as wide, has increased slightly to $46 at the low end of the scale to $120 at the high end; 50 percent of respondents had a rate of $75 or higher.

    Compared to a year earlier, however, fewer shops (down 5.1 percentage points) said they are charging those higher aluminum repair rates for operations such as R&I of components, or for refinish operations on aluminum (which fell 9.2 percentage points from last year).

    The percentage of shops charging higher rates for structural repair or replacement on aluminum vehicles remained virtually unchanged from a year ago, slightly higher than 91 percent. Structural repair labor rates also saw the same slight increase over last year, from a range of $48 to $123 per hour in 2015 to a range of $50 to $130 per hour in 2016; 50 percent of respondents had a rate of $85 or higher.

    A number of the “Who Pays for What?” surveys have asked shops about their vehicle scanning processes. In the results released earlier this year, when given a choice of eight different possible reasons for not performing a vehicle diagnostic scan, more than half of all shops (51 percent) said that sometimes the level of damage just doesn't warrant a scan. On the other hand, very few (3 to 4 percent) said they skip the scanning process because it takes too long and impacts cycle time.

    Despite the growing number of car manufacturers stressing the importance of scanning every vehicle, the survey indicates that many shops might not be getting the message. American Honda, for example, recently explained that a diagnostic scan is the only way to detect most trouble codes, noting that “only a small fraction of those codes actually turn on a [dash light],” yet a whopping 44 percent of repairers cited the absence of a dash light as a reason they would skip a post-repair scan.

    Some insurers may not be getting the message, either; the third most common reason shops gave is that insurers don't want to pay for a post-repair scan (and even fewer want to pay for a pre-repair scan).

    Anderson said he’s even heard some insurers say that if no trouble codes are identified in a scan, the insurer shouldn’t have to pay for it at all. But as Anderson argued this past fall, “If your child got hurt at the playground, and you went to the hospital and they x-rayed your child’s leg and found it was okay, does the health insurance still cover the x-ray? The answer is yes, because it’s the only way to make sure nothing is wrong.”

    The other three “Who Pays for What?” surveys conducted each year focus on body labor, refinish labor, and frame and mechanical labor.

    Shops can take the current survey (or sign up to be notified about future surveys) here. The surveys each take about 15-20 minutes, and should be completed by the shop owner, manager or estimator who is most familiar with the shop's billing practices and the payment practices of the largest national insurers. Individual responses are not released in any way; only cumulative data is released.

    At the website, shops also can download the results of previous surveys, reports that break the findings down by region, by insurer and by DRP vs. non-DRP. The reports also include analysis and resources to help shops better understand and use the information presented.

    John Yoswick, a freelance writer based in Portland, Oregon, who has been writing about the automotive industry since 1988, is also the editor of the weekly CRASH Network bulletin (www.CrashNetwork.com). He can be contacted by email at john@CrashNetwork.com.

  • Surveys show ‘who pays for what’ in terms of ‘not-included’ procedures

    Surveys show ‘who pays for what’ in terms of ‘not-included’ procedures

    Written by John Yoswick, Autobody News
    Published July 1, 2015

    Fully one-third of collision repair shops nationwide said they have never asked to be paid for “masking the engine compartment” when this “not-included” procedure has been necessary as part of a repair, yet another one-third of shops who do seek to be paid for it say they receive that payment “always” or “most of the time.”

    That finding is just one of hundreds revealed in a survey conducted recently by Collision Advice, which is also launching a new survey this month.

    ChartYos

    “This confirms something I see as I work with shops around the country,” said Mike Anderson of Collision Advice. “On this one procedure alone, for every shop not including this necessary procedure on their estimate, another shop is getting paid for it most if not all of the time.”

    More than 980 shops around the country responded to the survey, which asked them to report how often they are paid for 26 refinish-related procedures by the eight largest auto insurers.

    “With that level of response, I believe is the largest survey ever examining this subject,” Anderson said.

    He said it is clear from the results of this survey that whether or not a repair facility is reimbursed for a particular procedure depends, to some degree, simply on whether or not the shop negotiates for that operation. Though the survey found that reimbursement frequencies do vary by insurance company, DRP status and region of the country, it is clear that none of the procedures are universally rejected by insurers.

    Anderson said the quarterly surveys help raise awareness of not-included items and operations that shops may be doing but not itemizing on estimates.

    “The surveys will help shops understand what these operations are, and whether other shops seek and receive compensation for them – or if they truly are ‘the only one,’” Anderson said.

    The 62-page report of the first survey findings is now available by clicking on the “Who Pays For What?” logo on the Collision Advice website (www.CollisionAdvice.com).

    Shops can also use that link during the month of July to take the latest of the surveys, which covers structural/frame and mechanical-related operations.

    Anderson said each survey, which will take about 15-30 minutes, should be completed by the shop owner, manager or estimator who is most familiar with the shop's billing practices and the payment practices of the largest national insurers. Each individual shop location (whether a stand-alone business or part of a multi-shop operation) may submit one response to the survey.

    Those who complete the survey (and provide optional contact information) receive the survey findings at no charge.

    Each shop's individual responses are held in the strictest confidence and are not released in any way; only cumulative data is released.

    For more information about the surveys and findings, or to take the current survey, click on the “Who Pays For What?” logo on the Collision Advice website (www.CollisionAdvice.com).

    Collision Advice (www.CollisionAdvice.com) is an independent training and consulting firm featuring some of the most respected and experienced experts in the collision repair industry. Mike Anderson and his team offer real-world, cutting edge training and guidance both in the classroom and one-on-one in the shop.

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