The holiday season is upon us, which means everyone’s schedules will start getting a little wacky. You’ll be focusing on hitting deadlines for your customers before the holiday rush. Additionally, you’ll work with your vendors to have them adjust to your schedule over the next few weeks. When it comes to your uniform rental supplier, you’re aware that they will run off-days and may even service you twice in one week to ensure coverage. It’s not easy for your supplier to adjust, so we commend them when they succeed in adjusting their deliveries. However, we do want to give you a heads up about a holiday tradition some uniform rental suppliers love to celebrate – the price increase. There are several price increase tactics out there to be aware of.
As you know, decision makers like you tend to take time off around the holidays. This gives your supplier an opportunity to make adjustments to your invoice. It’s no secret that holiday season generally coincides with price increases. You see, it’s likely that your supplier’s agreement allows them to raise prices on the invoice without prior notification. Moreover, if anyone signs an invoice with a price increase, the agreement probably stipulates that means you’ve accepted the increase. See where this is going?
PRICE INCREASE TACTICS COME IN MANY HOLIDAY COLORS
It’s not coincidental that invoice increases happen in conjunction with holiday delivery schedules. It’s intentional service design. The provider probably knows that there is a good chance that the invoice with new rates will be signed by someone who normally doesn’t sign. That person will not know what changes have happened on the invoice. Is this sneaky on the part of the provider? You make that call – we’re in the business of pointing out the facts and working toward fixing an industry with atrocious service design.
It’s not only about unit rate increases. There are five key levers that can get pulled to make your invoice go up. First, there’s non-garment inventory – shop towels, napkins, etc. Be on the lookout for even the slightest increase. If your provider tells you that your usage is up, ask for the data. Ask for anything that supports their claim that you’re suddenly using more inventory. If you have inventory maintenance in place for an item, this leads to our second lever. When the inventory goes up, then the quantity billed lost on maintenance will go up. If you see this, ask yourself one simple question – are you suddenly losing more product? See what we’re getting at?
IF YOU CATCH ONE INCREASE, DON’T ASSUME IT’S THE ONLY ONE
The third lever is also part of inventory maintenance, but it’s the ratio of loss that they bill you. Some providers don’t even reveal the ratio on the invoice – they simply bill a loss quantity. Whatever your ratio is, if it gets increased, you probably won’t even see it on the invoice, as it’s a calculated quantity. Ok, we’re sliding down the rabbit hole, so let’s use a simple example.
Say you have 100 shop towels on inventory and you have a 4% maintenance ratio. This means that you are billed for 4 lost shop towels every week. Your provider could leave your inventory at 100 but increase the maintenance ratio to 5%, so now you’ll pay for 5 lost towels per week. Does that make sense? Are you really losing more? And if you think an increase of 1 is minimal, consider the rate of increase in the given example – 25%. A 25% increase!?!
THE SUM IS GREATER THAN THE PARTS
The fourth lever is the most difficult to detect, because you may not even know the increase has occurred until weeks later. This type of increase happens on your item’s replacement rate – the unit rate you pay when an item is lost or damaged. If it happens on a non-garment item that has inventory maintenance, then you should be able to see it as soon as the increase occurs. However, as mentioned above, it may not be obvious. It could be masked by other components of the increase or the rate may not be printed on the invoice. In other words – bad service design complicates it.
If the replacement rate is for non-maintenance items, you won’t know what the new rate is until you get billed for that activity. You could go weeks until you lose a garment, and when that charge appears, you’ll simply see the new rate, which is often 10-35% higher. Your provider is probably counting on you not knowing what your last loss charge was from many weeks ago, or even months ago.
AN INVALID INCREASE EQUALS AN INVALID INVOICE
The final one is the rate on a garment, prep or emblem maintenance line. This is a single line that gets billed every week to cover either garment ruin, or prep and emblem charges. For example, you might have some type of Uniform Benefit or Easy Wear line to cover all garment ruin. The line is generally at the bottom of the invoice, and may or may not show the unit rate. In any case, even a one cent increase on this rate could equate to a 10-30% increase in your ruin cost. Does that make sense?
There are other methods to increase your invoice amount, but these are the main ones. Keep in mind that all of them are very likely in compliance with your agreement. Yeah, that’s frustrating. But they’re only in compliance to the extent that your provider can do them. This does not mean that you have to accept them. Let’s rephrase that – your provider legally adjusting your invoice for a price increase does not mean that it’s actually in compliance with the agreement. We’re not splitting hairs here – there is cloudy service design here working against you. But don’t get frustrated. Instead, keep your eyes open and fend off these price increase tactics. While you’re away on holiday, don’t let the mice steal your cheddar.