Waste disposal isn’t likely a prioritized focus for most businesses. The tendency, instead, is to find a provider, sign the contract and, as long as the waste gets removed, forget about it. That, however, could lead to increasingly higher rates, additional service fees and auto-renewal conditions that leave companies stuck with unfriendly terms.
Smart Business spoke with Marc Schwalb, Strategic-Partner at Schooley Mitchell, about what can be negotiated in waste disposal contracts to keep costs low and avoid overlooked fees.
What contract terms can drive up waste disposal costs?
One common issue is not having proper contract terms in place. For instance, many business leaders don’t know that inflation caps can be built into waste disposal contracts that establish no price increases for, let’s say, the first year, and then in subsequent years price increases are capped at 3 percent. Without that language in place, businesses could get multiple cost increases in a single year, or a 10 percent year-over-year price increase. That could lead to prices doubling over the course of the contract.
These contracts also often have difficult parameters companies need to meet to avoid an auto-renewal. For instance, contract terms might specify that the waste disposal company needs to be notified 60 to 90 days before the contract ends to cancel the auto-renewal, which many companies miss. That could mean a three-year contract gets auto-renewed for another three years. What many don’t realize is that the auto-renewal terms are negotiable.
Further, there are many fees that can be waived in waste contracts. For instance, fees for fuel surcharges and environmental fees can sometimes be waived. While those might be more difficult to negotiate in some economic climates, it’s worth having the discussion to see where a service provider has flexibility.
How might companies inadvertently add costs to their waste disposal?
Waste disposal costs can be driven higher when companies don’t have the right frequency of pickups or the appropriate container size. Large containers can save money because fewer pickups are necessary. Understanding the weight of the waste a company produces is also important because larger containers often have fees based on tonnage, which can also be negotiated.
Most services include either regular pickup or on-call pick up, the latter meaning the waste is only collected when the business requests it. With on-call pick up, businesses can be charged an inactivity fee — for instance, if no call for waste pickup is made within 30 days.
Waste disposal companies have fees for overages when there’s too much waste to fit in the container, and contamination fees when something is put in recycling that can’t be recycled, so it’s important to watch what is being thrown away.
In all of these cases, it’s possible to avoid fees by knowing what triggers them. In addition, knowledge of how to submit claims to get charges reversed can add back to your bottom line. These strategies are only possible if companies keep on top of the service and are educated.
Which companies tend to have high waste disposal costs?
Manufacturing companies tend to have higher waste disposal costs than most businesses. Sometimes these businesses are dealing with hazardous waste and larger roll-off containers, the latter of which have haul and tonnage costs. Tonnage rates can vary greatly and can be reduced when businesses scrutinize them, but only if they know what a more appropriate cost should be.
Non-manufacturing businesses with multiple locations can have higher-than-necessary costs as well. Garbage and recycling picked up once per week could cost $150 at one location and $1,100 at another location with no difference in service. When dealing with multiple locations, businesses should seek a regional or national representative that can offer better rates based on total volume.
Waste disposal is something businesses often overlook. Fortunately, there are service providers who will not only negotiate contracts on a company’s behalf, but they can help companies know what to watch for so they’re not paying more than is necessary. ●
INSIGHTS Business Services is brought to you by Schooley Mitchell