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New cost calculator to determine the real costs of motor body repair businesses

30 January 2018, the Motor Trades Association of Australia (MTAA) Limited and its affiliated organisation, the Australian Motor Body Repairers Association (AMBRA), launched a new cost calculator tool that will assist motor body repair businesses transparently identify their costs and a charge out hourly rate for their business.

The cost calculator can be accessed through the business assistance section on the Australian Motor Body Repairers Association (AMBRA) website.

The tool, which has been independently analysed by national business advisory and accountancy firm BDO, and examined by the Australian Tax Office (ATO), enables all motor body repair business owners / management to capture all of the costs associated in running their businesses. The tool also includes helpful worksheets for Profit and Loss, Tradespersons costs, and has the added potential of highlighting areas of business operations where further efficiencies can be made and / or improvements to productivity.

AMBRA Chairman, Jeff Williams, said the cost calculator would help motor body repair businesses not only identify their actual costs of doing business, but assist in determining a fair, reasonable and transparent ‘shop’ or business charge out hourly rate that was verifiable, defendable and in accordance with sound business and accounting practice.

‘Too many motor body repair businesses, who have heavily invested in training, equipment, tooling, and in meeting the demands of a rapidly changing automotive industry, are being forced to accept rates and charges demanded by work providers that simply do not reflect the costs of their business and placing them at a significant disadvantage or even jeopardizing their future’ Mr Williams said.

‘Most work providers to the motor body repair industry have their own calculators or processes that are required to be applied in order to secure work. These tools or processes rarely capture the complete picture and contain elements or parameters designed to produce a pre-determined charge rate outcome. This leads to different motor body repair businesses, with different capabilities or services, differing levels of staff and costs, being subjected to a rate for their services which are not reflective of their actual costs – even though they may have already made significant improvements, generated efficiencies and productivity enhancements to be competitive,’ Mr Williams said

MTAA CEO, Richard Dudley, said the development and provision of the cost calculator tool was an essential element in providing transparent competition in the motor body repair sector and had involved all State and Territory Member Associations and their body repair membership as well as trusted partners and business associates.

Mr Dudley also highlighted the importance of Federal Government initiatives, particular the ATO and ACCC programs, designed to improve the business acumen of particularly small business.

‘The development of this tool highlights the value of relationships and collaboration by the MTAA and Members with these Departments and Agencies to improve the sustainability and profitability of its business constituents. In particular, the MTAA is grateful for the work of the small business team in the ATO for providing essential feedback and suggestions for improvements to the tool,’ Mr Dudley said.

MTAA also notes the ATO acknowledged ‘The challenge faced by the Smash Repair Industry to influence and control profit margins in a competitive economic environment largely controlled by insurance companies is clear.  Accurate calculation of direct and indirect costs places smash repair businesses in a more powerful and informed position to negotiate contracts, prepare quotes and ultimately operate successful businesses.