Running a Shop Finance Sales+Marketing Parts Pricing Accounting+Taxes

Fuel Surcharges

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The past few months I have sometimes been getting invoiced with “fuel surcharges” when parts are delivered. Some insurance carriers are paying this charge while others are not. Why is this becoming another thing the industry is expected to just absorb?

Fuel surcharges are becoming more and more of a challenge to the collision repair industry— definitely a sign of the times. I recently sat in a meeting with an insurance carrier who said his company’s position was that fuel surcharges should be included in the cost of the part, whether it is new or recycled, so they don’t have to micromanage the charges. Unlike the insurer I met, other insurance carriers prefer to add fuel surcharges separately on a case-by-case basis. For example, if a part is $100.00, sales tax is 6% and the fuel surcharge is $2.50, the total owed would be $100.00 + $6.00 sales tax + $2.50 = $108.50. If the fuel surcharge is included in the “part price,” then the cost would be $102.50 + $6.15 sales tax = $108.65. The $.15 difference reflects the increased sales tax amount when the fuel charge is included in overall price. No matter how the fuel surcharge is added, the shop owner should be appropriately reimbursed.

Personally, I like “clean accounting” and think the fuel surcharge should be listed as a separate item. This would save sales tax dollars, allow for proper market fluctuations and keep parts pricing categorized appropriately for the vendors.

Ray Fisher is the president of ASA-Michigan. This article represents his opinion and does not reflect the views of ASA-Michigan.

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