Factoring sector concerned

News

Since the implementation of the GST, insurance companies across the board have slowed invoice payments to panel shops says a factoring company executive. The executive said before GST, general payment periods ranged from 15 to 30 days, now they are in the range of 30 to 45 days.
He cited AAMI as the only insurer that has not increased its payment period, which has remained unchanged at 30 days. He said GIO is one of the worst offenders, with one invoice from his company on hold for a total of 129 days, compared to an average 15 to 20 days pre-GST. NRMA Insurance used to pay the majority of claims within 15 to 25 days said the executive, now through its controlled payments system, the process is supposed to take 21 days but in actuality, is taking on average 34 days, with many over 50 days old. HIH is also said to have extended payment periods by between 15 and 20 days. The executive states his company's average invoice wait is now 46 days.
Some insurers claim the increased complications resulting from the GST have been responsible for slowing things down, and lack of staff is another reason touted by some.
The factoring executive suggested however, that the real reason behind the delayed payments could be due to insurers wanting to hang on to capital in order to make money on the short-term money markets. In essence, he claims that the insurers have used the GST as an excuse to slow payments and "make more on the money markets".
Allan Tattersall, general manager, claims -- personal insurances for AMP said his company has not initiated a policy to slow payments after the GST was implemented however. "In New South Wales we had a staff shortage and so in early January we took on 15 new claims officers," he said. AMP has two claims managers working in their motor claims operation, one on normal operations and the other heading up a taskforce tackling the claims backlog and dealing with any complaints. Tattersall said the company was also suffering from "telephony issues" as its phone system struggled under the increased demands put on it by recent adverse weather conditions. Line capacity has been increased by 50 per cent to ease the burden.
AMP has actually targeted rapid payments as a key issue in its drive to build strong relationships with repairers, said Tattersall. Towards this end, the company is looking to invest in an Electronic Funds Transfer system to eliminate 'double handling' of payments and speed up the claims process. "This initiative therefore runs contrary to the claim that we are holding up payments to make gains on the money markets," Tattersall said.
A spokesperson for NRMA Insurance said the company had a policy of paying invoices on 30-day terms and that this policy had not changed since the implementation of the GST.
Meanwhile, a major factoring company is planning to undertake random audits of bodyshops after complaining that an increasing number of accounts factored with it contain claims for vehicles where repairs have not been completed or in some instances have not even commenced.
Cap: Slow payments are deliberate, allege factoring companies.

Chequered flag for shop owner
Lord Corporation, manufacturer of Fusor adhesives, and Australian Warehouse Distributors conducted a competition for users of Fusor products. First prize was a four-day syndicated corporate pass for two to the 2001 Qantas Australian Formula 1 Grand Prix, plus three nights accommodation and $500 spending money. The lucky winner was John Miller of Kangaroo Flat Panel Works, Bendigo, Victoria.
Miller has been in business for over 10 years and is the VACC Body Repair Council regional director.
Lord Corporation and AWD would like to congratulate all the other successful consolation prize winners.