A New Approach to Paint Invoicing
Something extraordinary is happening --something that's shaking the foundations of the belief system under which our industry has been laboring for years. Instead of being spoon fed rates, charges and procedures, body shop owners are beginning to stand erect, thinking for themselves--some for the first time in their business lives.
What I'm referring to is the way many are rejecting the notion that they should sell their paint and materials used in the course of a collision repair, using a calculation process based on figures and factors unrelated to actual usage. That is, what bearing do standardized refinish flat rate times have on material costs? Why would factoring those hours by an arbitrary dollar figure have any validity whatsoever in the determination of paint and material costs? The answer--as with so many things we do--is: Because that's the way it was always done.
In the beginning (say, 50 years ago), paint wasn't always a compensable item on body shop estimates. However, the adjusters were paying off body shop estimates more often than not, so paint and material charges weren't as much as an issue as they are today. Shop owners weren't complaining then, there was plenty of work, and they made money in spite of themselves. Today things are very different because, as they say, it's not your father's body shop anymore.
Paint and material costs have gone through the roof in relation to what we paid for a quart of DuLux, which was sometimes thinned with gasoline (sold at 21 cents per gallon). Of course, the materials used today are far superior to anything like the synthetic enamels and nitrocellulose lacquers prevalent at the inception of the hour/dollar refinish material calculation system. It is a vestigial component of the business--totally without relevance in today's market.
If, for example, you find yourself performing a one-hour refinish operation on a small part, and you happen to be in an area in which the hourly material rate is around $14 per refinish hour, you will undoubtedly find yourself upside-down in the cost-to-sale equation. What bundle of paint and related materials used on a job--regardless of its size--could possibly cost you less than $14?
New and Better Solutions
Rocco Avelini, owner of Rocco's Collision Center/ Wreck Check in Hawaiian Gardens, Calif., is a user of PaintEx. He says the California Bureau of Automotive Repair (BAR) recently mandated itemized invoices for what has traditionally been a grab bag of body shop supplies. But in using the program and taking an accurate look at his costs with PaintEx he adjusted his paint and material rate to "a figure substantially more than" (an understatement) what is accepted in the local market. In addition to that, his labor is based on a rate of $66.79 (as per True Labor Cost software).
"It's very defendable," he said.
Mark Pierson, of Princeton Auto Body in Princeton, Ill., related his experience with PaintEx: "We tend to use it primarily on larger repairs because of the few extra minutes it takes to enter the information. When I do use PaintEx, [it is] on those jobs on which insurers have determined materials should not exceed a certain 'threshold.' The shortfall is usually between 60 and 70 percent! The first few times I used the program I manually tracked the actual costs (plus markup) to compare the totals. They were very close.
"One interesting story with PaintEx was when a State Farm insured had us repair a hail-damaged Dodge Dakota for him. State Farm had a shortfall of approximately $78 on their estimate, which I asked them to supplement. They acknowledged the amount and asked for a supplement sheet. But when I invoiced them with a PaintEx sheet, it appeared they were dragging their feet. Apparently, the amount was fine until it they noticed the fact that it was generated by PaintEx! I do think it is a great program, and material costing should become the norm instead of the exception."
Although most repairers are able to get paid by selected companies without baring their teeth, success with the PaintEx program is not universal.
Cheri Morgan, of Mike's Paint and Body in Medark, Fla., reports limited success with both PaintEx and the Mitchell Refinish Materials Guide. She said, "State Farm is flat-out refusing to pay for additional paint and materials based on either PaintEx or the Mitchell Refinish Materials Guide, although they feel Mitchell is the bible when it comes to UltraMate collision estimating. The funny thing about State Farm is that when I bill Team 9 in Tampa directly for the differences in labor rates and the paint materials, I do eventually get my money.
"I have been getting more money for materials from some of the other companies, but not necessarily what PaintEx or Mitchell shows. Even Progressive [Insurance Company] pays us. In our shop the owner must pay any differences. Around here Colonial and Nationwide are not a problem. Nor are ITT and Hartford."
Some PaintEx users have been more successful than others, a point which they attribute to their mindset more than anything else. Tom Sellers, of Sellers Collision in Champaign, Ill., said, "I can not remember any that I did not get paid on. It's child's play."
Sellers, who was one of the early users of the PaintEx program, recently organized a conference of users in Champaign. ABRN's reporter-at-large, Sneed Hearn, filed the following inside story on the event:
Brainfest: Champaign Taste on a Beer Budget
These gatherings would always center on the usual small-talk shop banter: sharing daily workaday experiences, relating difficulties encountered when repairing a newly-introduced, still-unfamiliar vehicle model line, who was slow, who was busy, what area jobber had the best deals on a product line, how the fish were biting up at the lake, the usual rumors and gossip.
It was rare indeed that the topic of insurers would pop up, or the related venues of DRPs, consolidators, diminished-value computer programs and attendant philosophies. If anything, a casual, flippant remark would be tossed out, such as "Hey, Fred ... have you guys had any run-ins with that new insurance adjuster? He hacked an estimate sheet I wrote something fierce!"
This is how it was. Nothing really earth-shattering. If anything, these meetings were just a harmless excuse for the boys to step out for the evening.
Today, if a bodyshop person attends one of these meetings, they will almost immediately find that the relaxed, easy-going, "How's-your-golf-game?" nature of conversational topics has all but disappeared, to be replaced with concerns about insurance company operating tactics, and the local influx of invading consolidators on a widespread basis. Much hand-wringing is observed, the fear of losing control is heard in voices. Arguments break out.
And the underlying discord of paranoia is felt throughout the proceedings. My recent visits as a sit-in guest at a few Indiana ASPI chapter meetings has led me to these conclusions.
But being the curious chap that I've always been, I happened to notice--through the body shop print-media and perusing collision repair Internet web sites--that the state of Illinois always seemed to be a hotbed of body shop political activity. These folks were marching to the beat of their own drummer, and kicking out all the jambs along the way. Since I tended to admire these unabashed free-thinkers, I always wondered what it would be like to talk with them, to see what inspired these good people to do what they do ... to discover and affirm just what it was that made 'em'tick. If only I had the chance to do so ...
On August 7, I received that chance, by way of a delightful invitation from shop owners Mark and Pam Pierson of Princeton, Ill., to attend an informal gathering held at a local Holiday Inn in Champaign, Ill.
Now, for anyone who follows national body shop politics, most would recognize the names of these two folks, and realize that Mark and Pam are usually in the middle of the controversy vortex.
How could I not attend? These are my kind of people!
Tom and Kelly Sellers, of Champaign, hosted the event. Word of the forthcoming meeting was posted on Autobody Online, and spread by word of mouth. Several unofficial names were loosely given to this "Gathering of Thinkers and Doers": "Loufest," "Brainfest" and "Cornfield Meet" spring readily to mind.
Granted, it was a hastily arranged get-together, but considering the short-notice lead-in, it was a rousing success. Like-minded troops from far and wide traveled to this one spot on the map to meet, share ... and listen.
Highlighted guest speakers were Bob Klem--founder of KLM, former vice-president of Mitchell and originator of PaintEx--who provided the crowd with a most interesting inside-view dissertation on the workings of the info-provider industry, and gave a demonstration of his latest computer software product.
Lou Russo, of Reno, Nevada, was also one of our spotlighted guests.
To anyone not familiar with Ms. Russo, how does one go about describing her? Intelligent and personable, armed with the facts pertinent to the issues at hand, and knows how to use 'em. Her sweet persona and rapier wit are matched only by her marvelous tenacity. Many are those who have taken the opposing side in debating collision-oriented issues with Lou, and walked away with a newfound sense of awe ... and respect.
The underlying theme of the Champaign Illinois event was control--as in nurturing positive consumer relations, and exploring different ways of approaching and handling insurance matters.
Tom and Lou took center stage in a lighthearted, role-playing tour de force, taking opposite sides as an insurance field adjuster and a business owner. A common scenario that we all deal with on an everyday basis was presented in an entertaining fashion, spotlighting many mistakes that are made by unaware shop owners. Successful, non-threatening strategies were then given as alternatives for shop owners to use in gaining and holding on to what is rightfully theirs.
Afterwards, Bob Klem had the attendees pair off for role-playing sessions. Different possible scenarios were assigned, and each group was given some quiet time to come up with plausible ways to handle a particular situation. Bob and Lou would follow along with the role-players, and occasionally step in to offer tactful suggestions and tactic refinements for the listeners.
Here's how Mark Pierson summed up the learning experience:
"The Champaign meeting was a refreshing change from others in that Bob kept it more like an informal discussion among friends (which in fact all of us were). I have always hated these role-playing games, but I actually enjoyed the little exercise Bob had us do because it involved situations which we face every day. Also evident was the fact that Bob and Lou were not there to sell us a product. They answered questions and flew through a quick presentation, but did not make PaintEx the focus of the day. I hope meetings such as this become more frequent and the norm instead of the exception."
Chicago attorney Pat McQuire presented some rousing remarks, and Paul Tatman stopped by to share some of his reflections concerning the current state of affairs of the body shop business.
When the planned festivities had wound down for the day, I came away with a newfound sense of inspiration and positive determination, grateful for the opportunity to meet and talk with wonderful people who also have to face and deal with the same industry problems as you and I.
But what separated this event from all others was the fact that there was none of the crying and bemoaning the fact that we're all doomed to be swallowed up by an uncaring, faceless entity.
There was no fatalistic advice to become comfortable with the fact we are on the brink of becoming handmaidens to the insurance industry.
This group was informed, upbeat, and positive about just how the future for other like-minded folks will unfold. Those who are receptive to new ideas and are intellectually open-minded realize that it doesn't have to be all doom and gloom!
And best of all, it was an honest, grass-roots effort.
Unlike the collision meetings of yore, when you had a group of shop owners conversing on the topic of removing and installing fenders, almost everyone in attendance was conversing on related law and political subject matter--more like sitting in with a group of barristers than a collection of business people.
Make no mistake: These folks are very much aware of their surroundings, what they face, and what tools and information resources they have at their disposal. They are at the top of their game.
The Champaign event was informative, stimulating and, dare I say ... FUN. Thanks, guys!
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