The Trade-off

Insurance costs. NSPs require a specific level of insurance, and if the sweeping contractor's insurance doesn't meet the requirement, it might cost them more money to make the NSP an "additional insured."

"They don't like it but more often than not it's the customer's requirement, not ours, that the contractors carry a certain amount of insurance," Dent says. "Frequently the contractor is able to do the work because Dentco's policy does meet the customer's requirement — where the contractor might not be able to afford to insure himself to the customer's required level."

Contact and communication. Some contractors say because there is less contact with a local property manager, additional work (work not in the original contract) is done less efficiently under an NSP. When working for the local property manager the contract sweeper can handle the work quickly. But often when working for an NSP the contract sweeper reports possible new work to the NSP, who contacts the customer with a bid. The NSP then waits for a response from the customer and eventually passes it along to the contractor.

One method NSPs are using to avoid this type of problem is including a "Not To Exceed" (NTE) clause in its contracts.

"On some accounts sweeping contractors are allowed to perform certain services at NTEs," Steinhagen says. "They are fairly small dollar NTEs so we don't have to go through six hoops to approve a $20 job. You need those six hoops on a $20,000 job, but not on the little stuff that you know the client is going to want taken care of."

Documentation. Cartledge says Springwood Nurseries must fax in a form every Monday indicating which days it provided sweeping service for accounts, and paperwork is a concern among contract sweepers.

"It's not even really a trust factor as far as making sure the work is being done. It relates more to liability protection than anything else," Dent says. "Contractors need to be aware that even if they are working directly with the customer they will have these same requirements. It's right in many of the customer agreements and many customers have their own paperwork forms that we have to use, so it's not just Dentco or other management companies."

Wynen says Genesis representatives contact the local property manager after each sweeping event. Other NSPs have a representative visit each property monthly

"It not only keeps us in touch with the customer but it helps identify contractors who aren't doing good work, who aren't blowing the corners, or who aren't going through drive throughs, things like that. We knew because we talked with the property manager the next day and that allows us to weed out contractors or alert them to drivers who aren't doing the best."

Receivables. NSPs say that for the most part they pay their bills in about 30 days.

"If the contractor doesn't comply with the paperwork requirements and we have to send it back or wait for additional information, then there is a good chance they will be paid late," Wynen says.

The reason is that because the NSPs are dealing with contractors throughout the country they have established a system in which they bill customers and pay contractor invoices from groups of states on specific days, then move on to a different group.

"We can only bill within one window and the contractors know when that billing is scheduled," Wynen says. "If they miss that schedule even by a day their invoice is going to sit until the next scheduled time for that state to bill."

Cartledge says he does not consider Dentco a slow-paying customer because like most of his other commercial accounts, Dentco pays in 30 days-plus.

"Of course, if you don't have the proper documentation or if you don't turn it in on time that will slow things down. But that's no different than any other client," Cartledge says.

Wynen says contractors are made aware of the billing schedule and need to adjust their invoicing to accommodate it.

"It's really just a learning process that contractors have to go through in some cases," Wynen says. "Once they get the hang of it and understand the process it's really not a problem."

If NSPs are in your future...