Document repairs thoroughly at the beginning to enhance profitability
Keeping your collision center profitable requires attention in all areas and supplements often are overlooked. When you're working off of an insurance estimate a few steps are required to create a profitable supplement. It requires you to take complete control of the repair and create a repair plan.
The key to profit in any repair is to document the repair thoroughly at the beginning. This requires complete disassembly, performing R&I of all the identified items, removing all the clips and fasteners from the parts being replaced, inspecting all parts being reinstalled, validating the repair with the technician, and consulting with the refinish team to verify blends and other paint processes.
Now that I have given you a quick repair planning lesson I will explain why that process is so important to your supplement profitability. Supplements are generally scrutinized at several levels once they are submitted. The adjuster validates them and then a supervisor performs an audit to authorize payment. Multiple supplements challenge your credibility with the adjuster and the supervisor causing every line item on your supplement to get closer inspection. This is where they double-check everything and begin cutting into your profits.
Your supplement should tell the story of the changes needed to the original repair appraisal. Most of the people looking at your supplement will not physically see the vehicle; they will rely on your documentation. Start by keying the original appraisal into your estimating system including all the administrative information. Inputting all the administrative information will help the insurance adjuster quickly identify the claim, saving time and give you a brownie point or two. Copy the original appraisal line-by-line so you arrive at the same total as the original appraisal. Once all the numbers match you should lock the appraisal to create a supplement and begin reviewing the original estimate.
Reviewing the original estimate is one of the most important steps, check for things like "blend within panel," paint caps and labor adjustments. Correct all those items in your supplement first and then begin creating your repair plan. Throughout the repair plan process you should be making notes to explain why you are adding a supplement line, especially if you are changing the method of repair.
Your line notes and photos should "illustrate" how you will accomplish the added line and why it's necessary. This might seem to be a stretch, but remember, the people receiving the supplement may not physically see the vehicle. Most adjusters will look at the pictures, if they justify the line, they will move on to the next item. Use paint pens to clearly identify the damage, the more of the story you can tell in the picture the better your chances of approval.
Having all the damaged parts removed and inspecting all the parts thoroughly will allow you to identify all the items needed to complete the repair at one time. This is where you can make money on supplements. You can identify all the broken clips, the broken headlamp adjuster and make the determination which emblem can really be reused and which ones need to be replaced. It's much better to find you need an emblem or clip at the beginning of the repair process rather than the end. Clips and emblems don't seem like much on their own but they add up when multiplied by the number of repairs you do a month.
Simple math will show you that a $32 emblem will eat into your net profit quickly. The average net profit on a repair is 10 percent, to recoup that $32 you will have to create a new sale of $320. Multiply that number by your average monthly repairs and see how many extra repairs you will need to pay for the last-minute items. Using repair planning and creating effective supplements will increase your net profit by allowing you to be paid for what you do, and it will improve your cycle-time.
