Snow Strategy: How to bill for the big snowstorm

Photo: rusm/E+/Getty Images

The winter of 2020-21 brought big storms to many major cities throughout the U.S. As challenging as they may be, big storms provide several great benefits for our industry. They remind our clients of the extreme unpredictability of winter weather and why it’s so important to hire qualified service providers.

However, big storms also bring problems. Big storms often wreak havoc on normal billing processes, resulting in a domino effect of delayed billing, cash flow issues, late payments to service partners and an abundance of frustration.

Even though big storms may not occur every year, they occur often enough for us, as professionals, to be smart enough to plan for them. They may be proactively addressed in your estimating, client contracts, service partner contracts and billing procedures.

The trouble with unlimited seasonal contracts

Many service providers this winter were unable to bill extra for the big one because of unlimited seasonal contracts that gave them no option to do so. If your portfolio consisted of only unlimited seasonal contracts, billing was simple. The only billing issue you may have encountered is with paying service partners.

Service providers considering unlimited seasonal contracts with no exclusions should make every attempt to change the unlimited nature of the contract to allow for exclusions like big storms. A discussion of weather history, probabilities and the risk-reward trade-offs of various contract options with a reasonable client may allow the contract to be changed to exclude big storms.

If you are stuck considering an unlimited seasonal contract with no exclusions, build into your estimates the probability of big storms, which may price you out of the ballpark, or knowingly accept the financial risk of not doing so. Many clients with unlimited seasonal contracts with no exclusions expect snow to be hauled, rooftops cleared, parking garages cleared, ice storms handled, giant drifts cleared and more. If you cannot justify accepting the risk of unlimited seasonal contracts with no exclusions, you need to price them accurately and let the chips fall where they may.

There are a number of ways to exclude big storms from seasonal contracts: exclude storms in excess of a certain number of inches, storms with long durations in excess of a certain number of hours and blizzards. Be careful with the use of a traditional blizzard clause, which may be overly restrictive. A storm that drops 2 feet of snow over a 48-hour period may not officially be a blizzard.

Billing extra

For per-occurrence contracts and exclusions from seasonal contracts, the question then becomes how to bill extra for big storms. Billing for time and materials is often used in these situations. The key here is to have a pre-agreed-upon rate schedule included in your contracts with both your clients and your service partners to avoid having to negotiate these rates during or after big storms.

If you have good historical data and are able to accurately estimate big storms, hauling operations, rooftop clearing, etc., you may prefer to price these items in your contracts. This obviously makes billing much easier.

Speed and accuracy are critical. Technology allows for real-time data capture of labor hours, machine hours and material usage. Service providers that have not yet employed such technology seem to be the ones struggling with billing for big storms. Collecting data from service partners is best done through a technology solution. However, strict requirements for reporting are essential.

Quick turnaround

Billing for snow events should be done within 24-48 hours, even for big storms. If your snow billing system doesn’t allow for this, my advice is to process-map your system to identify the broken parts and replace them.
An important piece of the billing puzzle is a billing summary. This is a summary of what occurred during the event, completed by your dispatcher, snow commander or whoever is in charge of the event. If designed properly, a billing summary is all the billing administrator needs to bill.

In my previous life as a service provider, we billed every event on the next day. That was 13 years ago. With today’s technology and business management software, there is no reason for a delay in billing. It starts with your contracts. Start there and work your way through your snow billing system.