To eliminate late payments and other inconsistencies within the waste broker portion of its business, Waste Management Inc. (WMI), Houston, has implemented a comprehensive waste broker policy, requiring brokers nationwide to sign a standardized agreement, pay bills on time and pay WMI's fuel surcharge.
Additionally, the company has appointed five “credit and collection managers,” and five “pricing managers” to work directly with brokers to answer questions, ensure timely payment and set prices.
Often hired by large retail chains, waste brokers obtain waste management services for the chains, handle billing and act as advocates on issues such as price increases and missed pickups.
“We're sort of a general contractor in the waste and recycling collections business,” says James Fitzgerald, president of Envirotron USA, New York. “We look out for [our clients'] interests when they don't have time to do it themselves.”
Because some retail chains have many locations nationwide, these chains may receive hundreds of waste collection bills per month, Fitzgerald says. The broker's job is to consolidate and simplify the bills, and remit payment to hauling companies such as WMI.
But some brokers weren't paying, says Dave Aardsma, WMI's vice president of sales. “[Some of] our brokers were slow payers, and some were not paying us at all.”
Some brokers also were not paying the fuel surcharge that WMI established when fuel prices began to rise last year. Adjusted monthly to reflect market changes, the surcharge is “the most fair surcharge implemented anywhere,” Aardsma says.
Additionally, some brokers were compromising waste collection services in order to save their clients money, he adds.
“In some cases, the broker might try to save the customer money by picking up only three times per week when the customer needs four pickups,” and this hurts WMI's reputation, Aardsma says. “When people drive by [and notice a mess], all they see is the Waste Management logo.”
To resolve these issues, WMI initiated negotiations in Oct. 2000 with its top 14 brokers. “We've been working with them and putting together a contract that makes sense,” Aardsma says.
Although he is optimistic most of the brokers will sign the new contract, Aardsma says WMI will take the necessary steps to ensure a smooth transition for customers whose brokers choose not to work with the company. “We want to make sure that [non-signing brokers'] customers have plenty of time to ensure that they are taken care of,” he says.
Aardsma insists the new broker policy will help all parties involved, but Refuse Environmental, Agawam, Mass., a management company with waste broker responsibilities, has adopted a “wait and see” attitude.
“Waste Management's policy clearly has created an exception in terms of all the hauling companies that we deal with,” says Steven Fass, vice president of Refuse Environmental. Whereas most hauling companies bill at the end of each month, WMI now is requiring that customers pay for roll-off service at the beginning of each month, he says.
Refuse Environmental has signed WMI's new broker contract, but the decision of whether to work with WMI is up to the customers, Fass adds. “It's going to be interesting to see how our clients react to the new terms,” he says. “They could direct us to other companies that might be offering other terms.”
However, Fass says that WMI's new national collections and pricing staff will be helpful to brokers who need answers quickly.
Before these staff members were available, brokers had to contact WMI's many regional offices to gather pricing and billing information, Aardsma explains. But now a broker only has to make one call to a centralized office.