British collision repair group National Body Repair Association announced on Tuesday he would meet with the Office of Small Business on contracts between workshops and insurers.
The impartial UK agency is an interesting resource. It is headed by a Small Business Commissioner whose job it is to receive complaints from businesses with less than 50 employees “regarding payment problems they are having” with large businesses, defined as more than 50 employees.
The commissioner can make non-binding recommendations on how to resolve the problem. He can also provide advice on dispute resolution, contract language and invoices.
The UK government appointed earlier this year business lawyer and former journalist Liz Barclay commissioner. Her future office (she takes over on June 23) has focused on late payments, calling it a “key priority”.
The agency said more than $ 33.22 billion remained unpaid to businesses nationwide. “Some companies wait several months before paying their suppliers, which seriously affects the bottom line of many small businesses,” Barclay’s office wrote in a press release.
The commissioner’s office said the UK was considering granting the commissioner “the power to order payments, impose fines and initiate investigations based on third-party information”.
This could be useful for repairers across the Atlantic. The NBRA said it met with the agency in 2018 “to try to rectify the culture of late payments which is inhibiting the UK economy and threatening the survival of thousands of body shops every year”.
However, the NBRA on Monday highlighted a separate concern about the terms of contracts between stores and insurers in the country and the length of those agreements.
NBRA Director Chris Weeks said “the cost of doing business has continued to climb for members, including inflationary costs in areas such as technician training and machine maintenance”, but demand for collision repair had fallen due to the response to the COVID-19 pandemic.
“In other sectors of the economy, contracted companies may increase their fees to cover these costs in order to remain profitable,†Weeks said in a statement. “However, smaller bodybuilders feel that they cannot negotiate these changes with their insurance partners, due to their weaker negotiating position and fear of straining a business relationship.
“Bodybuilders now run the risk of experiencing a gradual squeeze in their bottom line due to older contractual terms that fail to keep up with the cost of doing business. We believe bodybuilders deserve a reasonable annual review of their contracts. “
The pain of inflation amid falling demand might be familiar to some US repairers participating in direct repair programs. The consumer price index here jumped 4.2% between April 2020 and last month – the highest inflation from one year to the next for more than a decade. In March, prices were 2.6 percent higher than the previous year, according to the Bureau of Labor Statistics.
As for the impact of late payments, here are a few examples.
Fundbox in 2016 – the year the British Office of the Small Business Commissioner was established – estimated in an Entrepreneur column that American small businesses had around $ 825 billion in unpaid invoices, or $ 84,000 per business.
Atradius in July 2020 reported a survey found that 43 percent of the total value of bills in the United States, Mexico and Canada were not paid by the due date, “a big increase” from 25 percent.
The amount overdue for more than 90 days in the three regions has doubled.
“Companies across the United States have reported a 72% year-over-year increase in defaults,†Atradius wrote.
More information:
National Collision Repair Association, May 25, 2021
Office of the Small Business Commissioner, March 16, 2021
Pictures:
British pounds are displayed. (MarioGuti / iStock)
The logo of the National Body Repair Association. (Provided by the National Body Repair Association)
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