 | |  | |  | |  | |  | |  | |  | |  | |  | |  | |  | |  |
Billing
Office Procedures
You've invested everything you have in
order to build a portable restroom rental
company that will lead the pack. It's all
coming together, the equipment, customers
and employees. Now-what about getting
paid?
order to build a portable restroom rental
company that will lead the pack. It's all
coming together, the equipment, customers
and employees. Now-what about getting
paid?
When it comes to billing clients for portable sanitation services rendered, Harry Murphy, owner of Portable Rental
Systems, a small company of 500 units in Fort Collins, Colorado, sums it up neatly when he says:
“It’s like anything else - you go to a restaurant to get served and the restaurant expects payment upon time of service.
That’s what our expectations are,” he says.
But how to do the billing and what to do when customers don’t pay are issues portable sanitation companies wrestle with
all of the time.
Portable Rental Systems does billing on a 28-day cycle.
The company mails bills for construction and commercial clients, but for special events, Murphy expects pre-payment to
hold the units. The balance is paid in cash or check upon delivery.
“We’re not trying to be hard-nosed, but we’ve had to chase so many people for $100 bucks,” says Murphy, who has
learned many lessons throughout the 15 years he‘s been in business. “It gets to the point where you draw a line in the
sand.”
Portable Rental Systems has a policy whereby the company requests a full billing cycle in payment, but if a unit is pulled a
few days into the cycle, the company will prorate the bill a little bit.
“I don’t want to come off like some greedy guy, but I’ve got to pay my guys,” he says. “They also have an obligation to
pay for the services. We try to be flexible.”
Brian Young’s company, Relief Rentals, in Blue Bell, Pennsylvania, bills 28 days in advance.
At Jefferson State Pumping in Merrill, Oregon, where Michelle Lyon is the office manager and handles the accounts, billing
is done in arrears.
“We bill on the 28th of each month; because we’re such a small company, the 28-day billing wouldn’t work for us,” she
says.
The company never bills in advance for anything, but sometimes will on accounts that Lyons identifies as “iffy”.
“We give them the benefit of the doubt by billing them in advance,” she notes.
Companies handle late payments in a variety of ways.
Portable Rental Systems will cut off a customer’s service after 60 days “unless they’re giving me an excuse I’m going to
accept,” says Murphy. “We’re on the 28-day billing cycle and we bill in 13 cycles. Sometimes that‘s confusing to people
and I know when they do their draws with a bank on a construction loan that sometimes it will kick it over. We take that into
consideration when we’re working with people.
“We generally know whose those people are, but if they’re not current and if they’ve never made a payment and are 60
days out, we make a courtesy call to ask them if there’s a problem. After a couple of weeks, if we don’t hear something from
somebody, we’ll pull the unit.”
Young’s medium-sized company has also come to know the history of customers “and we know who we have to hound and
who is going to pay on time,” he says.
“We normally start calling between 45 and 50 days from the date of the invoice, and at 60 days - depending on the situation
- we send them a fax indicating their service has been suspended, because we tried to get a hold of them and we hadn’t had
any positive results,” he says. “We don’t credit anybody for missed service or rent due to credit holds. We charge interest
charges. You get their attention if you stop servicing their unit.”
Murphy learned to write up service agreements after being stiffed for $500.
“We’ve got about 98 percent of our customers on service agreements; my goal is to have 100 percent,” he says. “I started
to draw the line in the sand two years ago. We’d send them out and wouldn’t get them back. I can’t watch everything in the
business, so I’d go ahead and schedule the service. Well, this guy owes us $100 or whatever and I’d find out there was no
service agreement because he didn’t send it back.”
So Murphy created a policy: no service agreement, no portable sanitation.
“Somebody’s either there to sign it for us or fax it to us,” he says.
Another point Murphy makes in favor of service agreements is “with all of the federal regulations, there is a lot of legal
stuff that people aren’t aware of and we’ve got to know who we are dealing with. It also protects them. They know what
their obligations are and I know mine.”
Murphy believes that service agreements are pivotal in settling billing disputes.
“If you don’t have a service agreement, you’re not going to get my service,” he says. “If there‘s equipment that’s damaged
or they don’t pay, you have no proof that you were even on their site.”
Murphy modifies his service agreements on an annual basis, with input from an attorney.
As for how bills are paid, most companies don’t care to get their drivers involved in the process.
“They have enough to worry about,” says Young. “Customers can mail it or we take credit cards. I don’t like the drivers
handling checks.”
Jefferson State Pumping also accepts credit cards. Portable Rental Systems does not.
“They can cancel payment,” Murphy says. “There’s also a small fee that credit card companies have, but that means I’m
losing three percent of my profit and I can’t add that on to my bill. The main thing is if there’s a conflict with somebody,
they’ll cancel it and then you have to chase them for the money.”
These days, software is essential for an efficiently-run billing procedure.
Relief Rentals uses Quick Books 2004 for the billing procedure.
“Its financial reporting is fabulous,” Young says. “They have a collections report which is a really great report to make
phone calls off of.”
Jefferson State Pumping finds Quick Books 2006 helpful for billing procedures, although Lyon says the company intended
to upgrade in an effort to address problems encountered with that version.
Otherwise, Lyon finds Quick Books to be a helpful program for a small business operation – she finds it to be self-
explanatory with a good help program.
Murphy had RAMS Pro software custom-built for his company’s billing procedures by Alpine Technology Corporation.
“We paid about $7,000 for it,” Murphy says. “There are certain things our billing manager needs. Whenever we need an
update, they’ll come to our office or download changes over the Internet. It’s a pretty complicated program, but it’s very
stable and I’ve yet to have a problem with it. It’s solid as a rock.”
Murphy says it’s important to back up data and create a redundancy at the end of each work day.
“I’ve had my computer crash and if I didn’t have backups, it would put me out of business,” he says.
His company does two back-ups, including on an exterior hard drive that can be taken from the office to an outside location
in the event the building sustains damage.
Infrequently, a portable sanitation operation will not only have to deal with accounts that are overdue, but those that are so
seriously in arrears that they require the intervention of a collection agency.
Jefferson State Pumping does use a collection agency for accounts that are seriously in arrears.
“I send the customer a letter that if we don’t hear from them, then next time, the unit is picked up and they are sent for
collection,” Lyon says.
Jefferson State Pumping will cut off customers for not paying their bills after 90 days.
Murphy has used collection agencies but cautions that if the agency is not asking for enough documentation to pursue the
case, “they’re not worth your time.”
Young uses Quick Books’ collections report as a springboard for making collections calls. He prints the report weekly and
makes notes on it when he leaves a message.
One customer had indicated she cut a check and a week later, Relief Rentals hadn’t received it. In that case, Young cuts off
the service until the money is received.
“I don’t appreciate being lied to,” Young says. “If they get upset when I cut them off, I’ll tell them about how I called their
accounts payable department three times and not once did anybody have the courage to call me back.”
Young finds collection agencies to be “very ineffective”.
“I don’t let anybody get out that far and a collection agency can’t do anything to anybody except bug them,” he says. “If
you get somebody who doesn’t want to pay, they’re not going to pay you because of a collection agency. The only way a
collection agency could even be effective if it’s a bigger amount and they’re willing to turn it over to their attorneys. Most
of them won’t do that for $500 or $1,000.
“We normally get a judgment against them. Sometimes they’ll pay, sometimes they won’t and then you can try to get the
judgment executed, but each one of those steps is going to cost you money and you may or may not get that money back.
“If it’s a big amount, I’m going to sue somebody. The biggest one I have right now is a Chapter 11 and there’s nothing I
can do. They’re going to end up going to Chapter 7 and I’m guessing we’re going to have to eat the whole amount.”
While customers can create aggravation by not paying bills on time, sometimes a billing dispute is a company’s fault.
To monitor for billing errors, Murphy conducts random audits on a weekly basis.
“I’ll pull up the accounts and check them to see if there’s an error on them,” he says.
Young laughs that his customers monitor his company’s billing errors quite effectively.
But his company tries to avoid them by keeping a paper trail.
“For everything that gets dispatched, we’ll write an order up for a customer - whether it’s a pick-up or a delivery - and a
copy goes to the driver and we keep a copy in the office until we get the copy back from the driver,” he says.
“When we get the copy back from the driver, we make sure everything’s dated and we put one copy into a three-ring binder
and keep another copy for billing. Once I do my billing, the billing copy gets thrown out, because I don’t need to keep two.”
Young makes sure his drivers turn in their paperwork on time.
“I try to stay on top of billing by doing it at least once a week,” says Young. “I’m not saying we don’t make a mistake, but
usually if we are billing them for two units and they only have one, they’re going to call us right away.”
Young keeps the dispatch orders for several months. He maintains a binder for each quarter and keeps them in alphabetical
order.
“I can go through those books and find out exactly what we did. Normally, you can nip those problems in the bud right
there,” he says. “I really like the hand-written orders because I have the information exactly as they told us on the phone:
lot number, the superintendent’s name, phone number, because we normally don’t put that information on the bill.”
Relief Rentals has a ‘statute of limitations’ on customer complaints.
“If somebody calls me up for a bill that’s three months out and say they didn’t get service one month, I’ll ask why they
didn’t make the call at that time,” Young says.
Young’s advice to others in starting a new billing procedure is to bill 28 days in advance, add a fuel surcharge and draw up
a damage waiver [*examples can be downloaded at www.sanitationjournal.com].
“The accounting information is the most important information: profit and loss, balance sheet, asset tracking and all of that.
If you buy software, make sure you can export data to Quick Books from whatever software you have to make the two work
together,” he says.
Young says the amount of late payments seems to be increasing these days.
“We have a certain percentage of clients who don’t pay any bills unless they get a phone call,” he says. “We know who
those people are, so we start calling them right at 45 to 50 days. We have other clients who have recently changed their
pattern for the worst. They are also clients we keep an eye on.”
On the other hand, there are clients who pay in less than 30 days, Young notes, adding the majority tend to pay between 30
and 45 days.
He attributes the problem to a downturn in the construction industry.
“The builders have no cash,” he says. “That’s really not my problem. We have a lot of costs in our business. I have to pay
my fuel bill within two weeks, or they cut us off. Obviously, payroll is a big expense and we have to make it every single
week.
“We’re tightening up. We’re not cutting prices - we’re just trying to figure out how to weather the storm. I have a
philosophy: I want all of my vendors to be happy with me and even with all the problems we have on the receivables end,
we keep our prices up so I don’t have any single vendors right now with a past due invoice.”
Young recently spoke with another portable sanitation operator and both companies have customers who have filed for
bankruptcy.
“I’m not willing to extend lots of credit to anybody right now because I don’t know who’s healthy and who’s not, so we’re
cutting them off,” Young says.
Murphy calls billing “an unknown science.
“You’ve got to be right with it,” he says. “The majority of the people we deal with are great customers. But this is like any
other business: you’ve got to get what you can. It’s not the end of the world if you don’t get paid for a couple hundred
dollars – it’s more of an aggravation than anything.
“Every now and then, someone doesn’t pay in full or plays some game with you. If there’s a problem with our billing, if
people would just call us rather than ignore it, it certainly would save a lot of work on both sides.”
Systems, a small company of 500 units in Fort Collins, Colorado, sums it up neatly when he says:
“It’s like anything else - you go to a restaurant to get served and the restaurant expects payment upon time of service.
That’s what our expectations are,” he says.
But how to do the billing and what to do when customers don’t pay are issues portable sanitation companies wrestle with
all of the time.
Portable Rental Systems does billing on a 28-day cycle.
The company mails bills for construction and commercial clients, but for special events, Murphy expects pre-payment to
hold the units. The balance is paid in cash or check upon delivery.
“We’re not trying to be hard-nosed, but we’ve had to chase so many people for $100 bucks,” says Murphy, who has
learned many lessons throughout the 15 years he‘s been in business. “It gets to the point where you draw a line in the
sand.”
Portable Rental Systems has a policy whereby the company requests a full billing cycle in payment, but if a unit is pulled a
few days into the cycle, the company will prorate the bill a little bit.
“I don’t want to come off like some greedy guy, but I’ve got to pay my guys,” he says. “They also have an obligation to
pay for the services. We try to be flexible.”
Brian Young’s company, Relief Rentals, in Blue Bell, Pennsylvania, bills 28 days in advance.
At Jefferson State Pumping in Merrill, Oregon, where Michelle Lyon is the office manager and handles the accounts, billing
is done in arrears.
“We bill on the 28th of each month; because we’re such a small company, the 28-day billing wouldn’t work for us,” she
says.
The company never bills in advance for anything, but sometimes will on accounts that Lyons identifies as “iffy”.
“We give them the benefit of the doubt by billing them in advance,” she notes.
Companies handle late payments in a variety of ways.
Portable Rental Systems will cut off a customer’s service after 60 days “unless they’re giving me an excuse I’m going to
accept,” says Murphy. “We’re on the 28-day billing cycle and we bill in 13 cycles. Sometimes that‘s confusing to people
and I know when they do their draws with a bank on a construction loan that sometimes it will kick it over. We take that into
consideration when we’re working with people.
“We generally know whose those people are, but if they’re not current and if they’ve never made a payment and are 60
days out, we make a courtesy call to ask them if there’s a problem. After a couple of weeks, if we don’t hear something from
somebody, we’ll pull the unit.”
Young’s medium-sized company has also come to know the history of customers “and we know who we have to hound and
who is going to pay on time,” he says.
“We normally start calling between 45 and 50 days from the date of the invoice, and at 60 days - depending on the situation
- we send them a fax indicating their service has been suspended, because we tried to get a hold of them and we hadn’t had
any positive results,” he says. “We don’t credit anybody for missed service or rent due to credit holds. We charge interest
charges. You get their attention if you stop servicing their unit.”
Murphy learned to write up service agreements after being stiffed for $500.
“We’ve got about 98 percent of our customers on service agreements; my goal is to have 100 percent,” he says. “I started
to draw the line in the sand two years ago. We’d send them out and wouldn’t get them back. I can’t watch everything in the
business, so I’d go ahead and schedule the service. Well, this guy owes us $100 or whatever and I’d find out there was no
service agreement because he didn’t send it back.”
So Murphy created a policy: no service agreement, no portable sanitation.
“Somebody’s either there to sign it for us or fax it to us,” he says.
Another point Murphy makes in favor of service agreements is “with all of the federal regulations, there is a lot of legal
stuff that people aren’t aware of and we’ve got to know who we are dealing with. It also protects them. They know what
their obligations are and I know mine.”
Murphy believes that service agreements are pivotal in settling billing disputes.
“If you don’t have a service agreement, you’re not going to get my service,” he says. “If there‘s equipment that’s damaged
or they don’t pay, you have no proof that you were even on their site.”
Murphy modifies his service agreements on an annual basis, with input from an attorney.
As for how bills are paid, most companies don’t care to get their drivers involved in the process.
“They have enough to worry about,” says Young. “Customers can mail it or we take credit cards. I don’t like the drivers
handling checks.”
Jefferson State Pumping also accepts credit cards. Portable Rental Systems does not.
“They can cancel payment,” Murphy says. “There’s also a small fee that credit card companies have, but that means I’m
losing three percent of my profit and I can’t add that on to my bill. The main thing is if there’s a conflict with somebody,
they’ll cancel it and then you have to chase them for the money.”
These days, software is essential for an efficiently-run billing procedure.
Relief Rentals uses Quick Books 2004 for the billing procedure.
“Its financial reporting is fabulous,” Young says. “They have a collections report which is a really great report to make
phone calls off of.”
Jefferson State Pumping finds Quick Books 2006 helpful for billing procedures, although Lyon says the company intended
to upgrade in an effort to address problems encountered with that version.
Otherwise, Lyon finds Quick Books to be a helpful program for a small business operation – she finds it to be self-
explanatory with a good help program.
Murphy had RAMS Pro software custom-built for his company’s billing procedures by Alpine Technology Corporation.
“We paid about $7,000 for it,” Murphy says. “There are certain things our billing manager needs. Whenever we need an
update, they’ll come to our office or download changes over the Internet. It’s a pretty complicated program, but it’s very
stable and I’ve yet to have a problem with it. It’s solid as a rock.”
Murphy says it’s important to back up data and create a redundancy at the end of each work day.
“I’ve had my computer crash and if I didn’t have backups, it would put me out of business,” he says.
His company does two back-ups, including on an exterior hard drive that can be taken from the office to an outside location
in the event the building sustains damage.
Infrequently, a portable sanitation operation will not only have to deal with accounts that are overdue, but those that are so
seriously in arrears that they require the intervention of a collection agency.
Jefferson State Pumping does use a collection agency for accounts that are seriously in arrears.
“I send the customer a letter that if we don’t hear from them, then next time, the unit is picked up and they are sent for
collection,” Lyon says.
Jefferson State Pumping will cut off customers for not paying their bills after 90 days.
Murphy has used collection agencies but cautions that if the agency is not asking for enough documentation to pursue the
case, “they’re not worth your time.”
Young uses Quick Books’ collections report as a springboard for making collections calls. He prints the report weekly and
makes notes on it when he leaves a message.
One customer had indicated she cut a check and a week later, Relief Rentals hadn’t received it. In that case, Young cuts off
the service until the money is received.
“I don’t appreciate being lied to,” Young says. “If they get upset when I cut them off, I’ll tell them about how I called their
accounts payable department three times and not once did anybody have the courage to call me back.”
Young finds collection agencies to be “very ineffective”.
“I don’t let anybody get out that far and a collection agency can’t do anything to anybody except bug them,” he says. “If
you get somebody who doesn’t want to pay, they’re not going to pay you because of a collection agency. The only way a
collection agency could even be effective if it’s a bigger amount and they’re willing to turn it over to their attorneys. Most
of them won’t do that for $500 or $1,000.
“We normally get a judgment against them. Sometimes they’ll pay, sometimes they won’t and then you can try to get the
judgment executed, but each one of those steps is going to cost you money and you may or may not get that money back.
“If it’s a big amount, I’m going to sue somebody. The biggest one I have right now is a Chapter 11 and there’s nothing I
can do. They’re going to end up going to Chapter 7 and I’m guessing we’re going to have to eat the whole amount.”
While customers can create aggravation by not paying bills on time, sometimes a billing dispute is a company’s fault.
To monitor for billing errors, Murphy conducts random audits on a weekly basis.
“I’ll pull up the accounts and check them to see if there’s an error on them,” he says.
Young laughs that his customers monitor his company’s billing errors quite effectively.
But his company tries to avoid them by keeping a paper trail.
“For everything that gets dispatched, we’ll write an order up for a customer - whether it’s a pick-up or a delivery - and a
copy goes to the driver and we keep a copy in the office until we get the copy back from the driver,” he says.
“When we get the copy back from the driver, we make sure everything’s dated and we put one copy into a three-ring binder
and keep another copy for billing. Once I do my billing, the billing copy gets thrown out, because I don’t need to keep two.”
Young makes sure his drivers turn in their paperwork on time.
“I try to stay on top of billing by doing it at least once a week,” says Young. “I’m not saying we don’t make a mistake, but
usually if we are billing them for two units and they only have one, they’re going to call us right away.”
Young keeps the dispatch orders for several months. He maintains a binder for each quarter and keeps them in alphabetical
order.
“I can go through those books and find out exactly what we did. Normally, you can nip those problems in the bud right
there,” he says. “I really like the hand-written orders because I have the information exactly as they told us on the phone:
lot number, the superintendent’s name, phone number, because we normally don’t put that information on the bill.”
Relief Rentals has a ‘statute of limitations’ on customer complaints.
“If somebody calls me up for a bill that’s three months out and say they didn’t get service one month, I’ll ask why they
didn’t make the call at that time,” Young says.
Young’s advice to others in starting a new billing procedure is to bill 28 days in advance, add a fuel surcharge and draw up
a damage waiver [*examples can be downloaded at www.sanitationjournal.com].
“The accounting information is the most important information: profit and loss, balance sheet, asset tracking and all of that.
If you buy software, make sure you can export data to Quick Books from whatever software you have to make the two work
together,” he says.
Young says the amount of late payments seems to be increasing these days.
“We have a certain percentage of clients who don’t pay any bills unless they get a phone call,” he says. “We know who
those people are, so we start calling them right at 45 to 50 days. We have other clients who have recently changed their
pattern for the worst. They are also clients we keep an eye on.”
On the other hand, there are clients who pay in less than 30 days, Young notes, adding the majority tend to pay between 30
and 45 days.
He attributes the problem to a downturn in the construction industry.
“The builders have no cash,” he says. “That’s really not my problem. We have a lot of costs in our business. I have to pay
my fuel bill within two weeks, or they cut us off. Obviously, payroll is a big expense and we have to make it every single
week.
“We’re tightening up. We’re not cutting prices - we’re just trying to figure out how to weather the storm. I have a
philosophy: I want all of my vendors to be happy with me and even with all the problems we have on the receivables end,
we keep our prices up so I don’t have any single vendors right now with a past due invoice.”
Young recently spoke with another portable sanitation operator and both companies have customers who have filed for
bankruptcy.
“I’m not willing to extend lots of credit to anybody right now because I don’t know who’s healthy and who’s not, so we’re
cutting them off,” Young says.
Murphy calls billing “an unknown science.
“You’ve got to be right with it,” he says. “The majority of the people we deal with are great customers. But this is like any
other business: you’ve got to get what you can. It’s not the end of the world if you don’t get paid for a couple hundred
dollars – it’s more of an aggravation than anything.
“Every now and then, someone doesn’t pay in full or plays some game with you. If there’s a problem with our billing, if
people would just call us rather than ignore it, it certainly would save a lot of work on both sides.”
By Carol Brzozowski
 | |  | |  | |  | |  | |  | |  | |  | |  |
September 2007
Serving the American Liquid Waste Industry Since 2002