Is your Waste Management Provider in Trouble? (How to spot the issues…)
It can happen to any business. A once reliable service provider gradually, or in some cases rapidly, starts to become unreliable. In the waste management world, it’s incredibly important to continually evaluate your service provider relationships because falling standards can affect your business operations in a number of ways, from unwanted invoice increases to less reliable pickups that could put you at risk for compliance violations and fines.
Learn to Read the Signs…
Increased Service Costs
Have you noticed a spike in your waste management bill? Have extra fees started to appear? Increased service costs can be a sign that your service provider is feeling the pressure of the competition in the industry and is trying to make up lost revenue. With commodity markets down, many waste carriers are seeking alternative fee opportunities to make up for their decreased revenues.
Drop in Quality of Service
As waste management service providers start to struggle you will start to notice a decrease in the quality of service your company receives, like failure to meet the contracted service frequencies, causing a build up of waste at your locations.
This can be due to a loss in revenue causing layoffs, or because the service provider tries to take on more work than they can handle to recoup their losses.
Asset heavy companies may also overextend their assets or reduce their maintenance schedules, resulting in increased breakdowns which in turn lead to further missed pickups.
Decreased Service Options
Changes in commodity prices can make it difficult for waste management providers to continue to make profit from services they previously provided. Services like recycling could be cut if the company can no longer make any profit from that service.
New regulations can also have an effect. For example, many states now require that e- waste be recycled according to specific guidelines, which may drive up the costs for the service provider to the point that there is no longer any profit in managing the waste stream.
While some companies will cease to offer the service, others may try to get around the problem by handling the waste illegally. Global Environmental Services (GES), once an e- Stewards certified recycler, was caught dumping old electronic devices. These illegal practices are not only bad for the environment, but can result in heavy non-compliance fines for your business.
It pays to have an understanding of your waste management service provider’s financial history. Key criteria to look for include:
- Any outstanding debt they have.
- Are they looking to expand in the future.
- What are their vendor payment terms?
- What is the company’s history and reputation in the industry?
- Who their clients are and how diversified their portfolio is. Companies that have heavily weighted portfolios in ‘at risk’ markets, should be warning signs.
You should also always ask for references that are similar to your business to see how well they serviced those companies.
By the time Bankruptcy occurs, it’s already affecting your business as the vendor may suddenly cease to service your sites. Your service provider does not have to notify you that their budget was cut or sales have plummeted, so it’s a good idea to keep an eye on your service provider’s quarterly earnings and monitor their presence in the media. Infusions of large cash amounts by equity companies or other investors aren’t always a good thing.
While private companies can be harder to track, they have the advantage of not having to meet Wall Street expectations. In these cases, bank references and cash on hand statements are very effective.
Lawsuits, while common in this contract business, need to be reviewed as they indicate a company’s service and compliance track record. Because the potential for large judgments exists in this industry, this is an important indicator of future health. Large judgments can force companies into bankruptcy and even bankruptcy reorganization could have an effect on your business. Does your provider’s contract limit liability?
Benefits of Working with a Management Company…
To take away the stress of looking for these problem signs yourself, it can be a great advantage to partner with a financially secure waste service management company. They will pro-actively look into all possible warning signs with service partners on your behalf and resolve any interruptions to save your company time and hassle. Not only will management companies help protect you from these risks, they’ll also give you the flexibility to switch vendors as market conditions change.
At National Waste Associates we take out all the stress of finding a reliable partnership. National Waste Associates, LLC is a privately owned, agile company built on 4 generations of waste management experience. Established in 1997, we are one of the original waste management companies in the United States. NWA is proud of our conservative business practice and traditional business philosophy, both of which have made us a debt free company. We specialize in managing the waste streams of organizations ranging from 100 to 5,000 locations in size.
Start a conversation with us today to evaluate the efficiency of your current waste operations and to learn how we can help your business. Call our sales team at 1-888-692-5005 x 6 or email us at email@example.com.
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