You just received a bill for $500, $1,000 even $2,000 for something your elevator maintenance provider did. How do you know if you should pay the elevator invoice?
You probably have a full maintenance contract. Well, these aren’t as “full” as they used to be. In the past, the only time properties would receive an extra elevator invoice would be when they called for overtime service or had water damage. Well those days are no longer. As maintenance contract prices have decreased, elevator companies needed a way to make up the lost profit, besides decreasing the amount of elevator maintenance. So they lowered the scope of their contracts and made sure to aggressively bill. Some elevator companies even have a separate line item to track their billings of these services.
What should my elevator budget be?
Now you should budget and expect to pay for the following services “outside the scope” of your contract:
- All fire alarm and smoke testing
- Any overtime visit (unless your contract covers all overtime costs)
- Generator tests (these are typically done with annual inspections but elevator companies can still charge you for this)
- Providing access to the hoist way for another contractor
- Keys in the elevator pit
These may not seem like a lot but they add up over the course of the year. Most elevator companies hourly rates are at least in the $200’s if not $300’s for normal business hours. So let’s do a little math.
Say you have one hydraulic elevator and pay $200/month or $2400/year. Now you have to test your fire alarms, but don’t want to do that during normal business hours because you will disturb your tenant. That is 2 hours (don’t forget you have to pay for driving time) at an overtime rate of 1.7 so at best your paying around $700 for one visit! Now, one of your tenants drops his or her keys in the pit. That is another $200 at least. So now you have increased your annual spending from $2400 to $3300, or an increase of 30%!
Those numbers are estimations and low in my opinion. But now you can see how these extra invoices can really add up!
How to limit the “extra” elevator invoice
I am going to let you in on a little secret. Do you know what happens if you never pay that $500 invoice to your elevator company? Do they come after you? Highly unlikely! Like most large corporations after 90-180 days elevator companies will begin to write off bad debt on their books. That means after a certain amount of time they have already lost the money you may owe them. This makes them much more likely to negotiate a 50% discount of the invoice or more, because to them financially it is now receiving money to their bottom line they had expected not to get! Typically, you will have to have thousands of dollars of unpaid invoices for an elevator company to send you to a collections agency. Is this the best way to do it? I tend not to think so as I believe honoring agreements is the best way to do business. But if you feel you should not have to pay for a service, refuse to pay with a written explanation.
My recommendation would be to work directly with your account manager when you receive invoices you believe are excessive. These account managers have limited time and patience so they want to take the shortest route to make you happy by negotiating with you.
During your next contract renewal period make sure to adjust the contract to cover these extra services and have your elevator company put their official rates in your contract and clarify these rates will remain the same during the contract period. Unfortunately, most elevator companies are not equipped to have lots of customers with special rates so expect some errors. Don’t pay the elevator invoice until the invoice is fixed which will help your building with cash flow!
