Business owners who don’t routinely examine their waste expenses typically pay 10-30% more than those who don’t.
You have better ways to allocate resources.
Today, we’re tackling the top three commercial problems that contribute to this overspending. If you can fix these three things, you may actually save on your waste disposal expenses.
These three problems are:
Not capping rate increases
Getting too many pick-ups
Not eliminating waste fees
These are issues we’ve fixed for many of our clients in the past 19 years, so we know that fixing these key issues will affect your bottom line positively.
Problem #1: No caps on rate increases on your waste hauler contract
Your waste hauler contract will include specifications about what you will be charged for services. Most hauler contracts will include this information on the first page of the contract.
Typical hauler contracts will not include language that caps price increases. Why? Because this is a key way that haulers make their profit. It’s not in their best interest to include this language.
Haulers will raise their prices 1-4 times a year at a 10-15% increase each time. This represents a significant threat to your bottom line.
Solution: When you contract is up for renewal (or when you get a different contract with a new vendor,) you will need to make sure that the “Notes” section on your contract includes price caps.
Below is a Waste Management contract, with the notes section highlighted. This contract does not have specifications about rate caps, but if it did this is where it would appear.
Different haulers will allow different rate caps. It depends on your region of the country and it often depends on how many competitors are in the area.
Problem # 2: Receiving Too Many Pick Ups from Your Waste Hauler.
70% of companies are getting too much service from their haulers. Why? Because haulers are compensated based on quantity of pick-ups. The more times they visit your locations, the more money they make.
Many haulers aren’t intentionally being dishonest when they set up your service for too many pick-ups. They simply don’t have the financial incentive to ensure the services you receive are truly efficient. They may estimate what they think you need based on typical service schedules for locations your size. But estimates are, by definition, not exact.
The hauler is unlike to do a thorough waste review to access your true needs. They aren’t going to look through your invoice history. They aren’t going to see if your current equipment is what you actually need. They’re simply going to give you a contract based on what your past needs have been, or based on their best estimate.
Solution: Have your waste services reviewed and reduce the number of pickups as necessary. Most companies here in the US have never had their waste needs evaluated by an independent professional. As a result, they are paying for too many pick-ups and they are robbing themselves of potential savings.
Problem #3: Allowing ancillary fees on contracts.
Waste fees are fees like “administrative fees” or “waste cost recovery fees” that appear on your invoices. Most typical waste fees don’t have to be included on your contract.
We find that when companies allow fees like these on their contracts, haulers tend to indiscriminately raise their charge rates. One month a company may be charged 5% for a fee, the next month they may be charged 6%. If your contract doesn’t cap these increases, the company can charge whatever they want for each category of fees.
And we find that most waste hauling companies do exactly that.
5 or 6% may not sound like much, but it can translate to thousands of dollars when you have multiple locations with years-long contracts.
Solution: We include all fees and waste charges in one flat rate that is capped at a certain percentage growth. In other words, we allow the haulers we select for our clients to increase the flat rate at specific intervals in the contract term. That way, the hauler can only raise his fees up to that percentage.
This solution is fair to the haulers, and it’s fair to our clients. The haulers are prevented from charging unfair rates and the clients don’t receive unplanned hikes.
This also allows the client to be able to budget accurately for the fiscal year. If they know when and by how much their rate will increase, they will know how much to allot for waste expenses with certainty.
Solutions for Your Top Three Waste Problems
90% of companies have these waste problems at their locations - regardless of industry. These simply aren’t problems that most people are aware of.
But if you do the following, you will save yourself 10-30% on your waste expense every year:
Cap price increases
Reduce the number of pick-ups
Eliminate ancillary fees
Doing these three simple things will help protect your bottom line and prevent future overspending.
Have you ever tried one of these solutions for your waste management?