Streamlining Financial Data – a Win-Win

Bart Mazurek / Collision Repair, Perspectives /

If you think about it, body shops must keep several balls in the air; along with the day-to-day demands of running a small business, they manage inventory of in-stock parts, order parts for incoming jobs, schedule jobs, attract and retain the right labor to complete quality work, etc., etc.  In addition, they may also be seen as an extension of the insurer’s customer service efforts–central to a positive APD claims experience.  To run efficiently, the shop’s accounts receivable area must function like a well-oiled machine.

A quote from one of my favorite authors, Dave Luehr, clarifies the role financial data plays in the repair shop’s success: “America’s greatest body shop leaders use financial data daily to make business adjustments, which keeps them on track to meet their business goals,” (p.44, The Secrets of America’s Greatest Body Shops by Dave Luehr and Stacey Phillips).

In fact, dealing with financial data is the key to a smooth-running shop, and the more financial systems can be automated, the easier the day-to-day administration of the expected—and the unexpected—business transaction can be.

For example, some shops use a straightforward Final Bill Indicator event, a feature in the CCC ONE® platform that is used by many Direct Repair Programs (DRPs).  This feature allows them to submit one payment request to a carrier for each job completed.  The Final Bill Indicator payment request is typically sequenced to the five repair milestones, vehicle drop off, repair work started, promise date, repair work completed, and vehicle picked up.  This results in the payment request occurring after the vehicle is delivered and full costs for the job are known.  The repair shop can then expect to count on a single check from the carrier for that repair order, though some carriers who use the Final Bill Indicator event also use Electronic Funds Transfer (EFT) to consolidate payments under one transaction to the repair shops in their direct repair programs. Regardless of how payment is issued – by check or EFT – the result is a more streamlined, less complicated process for the policyholder. When this model is used, the shop manager has a solid sense of what their accounts receivables are and can make other business/financial decisions accordingly. This minimizes the amount of hassle and labor associated with each vehicle and defines a true close date for the file for all parties involved.

When the Final Bill Indicator event payment request model is used, it eliminates circumstances in which the unexpected occurs, such as when the shop gets paid before the repairs even begin. There are a host of reasons for this; for example, when the vehicle owner decides to delay the repairs or changes plans, choosing to take the vehicle elsewhere. Or perhaps the repairs are minor, or the parts required are now delayed, causing the vehicle owner to rethink having the repairs completed at all. If the shop is already in receipt of the repair funds, it now faces reconciliation challenges and a cumbersome repayment process, and the policyholder has a less than favorable impression of all involved.  Unfortunately, there are still many insurance companies that use the model of issuing a check upon receipt of each estimate and/or supplement without the receipt of a direction to pay (DTP).  This is a model that, while appearing simple, has costly back-end administrative expenses.

The claims business unit is truly a cost center, and an insurer may face costs of $15-$20 each time it issues a check to a body shop.  From both the insurer’s and the repair shop’s perspective, the costs to track these transactions add up over time.  These costs can be lowered dramatically by using a Final Bill Indicator event, which, when coupled with CCC ONE® UpdatePlus Repair Status technology, is automatically sent to the carrier from the shop when repairs are completed, triggering the insurer to process, pay, and close the claim.  UpdatePlus keeps all stakeholders such as the vehicle owner, carrier, and rental car provider updated on the status of the repair, and the final bill notification allows for a cleaner workflow and a smarter cash flow process for both the repair shop and the insurer.

There’s no doubt that high-performing shops and insurers share similar goals: to streamline the customer experience and to minimize the cycle time and effort around a claim and repair.  That said, the onus for effective management of claims-related financial data and cash flow doesn’t just fall on the insurer; the repair shop also has the responsibility for documenting the cost of repairs in the estimate and repair order, ordering the correct parts, assigning and compensating for labor, and effectively managing their accounts receivable. Why? Because poor processes an ineffective financial management causes errors, stakeholder dissatisfaction, and avoidable pressure on cashflow.

Likewise, automated communications between the insurer, repair shop, rental car provider, and vehicle owner can help manage expectations should there be a change or delay.  And, if the financial data used for invoicing is accurate and complete, it will lead to improved financial forecasts for the repair shop and a more streamlined process when it’s time for the insurer to issue a final (single) payment.

From the vehicle owner’s perspective, the sooner the repair arrangements are made, and the more confident the vehicle owner feels as part of the process, the better.   “Your car is ready, and your carrier already took care of payment” is a wonderful message to deliver to the policyholder. This is especially important at a time when the vehicle owner is inconvenienced, may be somewhat unsure of the process, or is experiencing negative ramifications as a result of their claim.

From the perspective of the insurer and its direct representative (the body shop), financial data management technology, coupled with automated communications, can help turn a potentially negative experience into a more positive one; an opportunity to create customer loyalty and lifetime value.

The CCC logo is a registered trademark, and CCC and CCC ONE are trademarks, of CCC Information Services Inc.