Maintenance Costs and Billing

[Kristen Williams]

I own a successful property management company, and have been building clientele for some time. We did lose some last year when so many were selling off at the big returns, so it put us in rebuild mode in some areas.  For some time, I offered the use of our vendors at our rates and discounts for maintenance, and in our management agreements, requested small reserves for maintenance escrow, to handle costs. The world of maintenance has changed quickly to stop the practice of 30-day billing. They want a credit card upon completion of each job, in many cases; from plumbing to housekeeping. For quite awhile, I would use my company card to cover the costs and then reimburse my company on the monthly Profit and Loss statements, attributing it as a maintenance cost, and reducing their yield. However, it essentially has benefitted my owners, but made me the bank, helping their cash flow and hurting mine. It has also caused billing issues or discrepancies, costing me extra work to keep in good standing with our providers. This past year, I began requested a master credit card to keep on file, with a signed consent form to authorize the credit card use, by permission. 

I would email the work order I knew would be more costly, requesting the authority to use the card within reason, with backup of an invoice to support the expense. Almost all of my owners have complied, and it has improved the maintenance request area and vendor relationships consistently. However, I have some that refuse it. I respect that. Except it seems the one who refuses it, also doesn't pay the bill. Our agreement has us sending the invoice directly to the owners if the cost is over a certain amount. 

However, what has happened, is that the provider contacts us for services set up by us, and billed to the owner, and the owner didn't pay. I had one excellent provider that I have had for a very long time, who is prominent and we are close friends due to a marriage in our families later on.. that I just discovered won't bill us any more, because of that owner not paying the bill for 5 months, and putting them off. 

I have shared this with him, and he flippantly tells me to just take the costs out of the yields.. however, when I ask for the maintenance service, they instantly want a card, without us knowing how much that bill will be. So if the activity happens on the 10th, per se, I won't see rent from that tenant until the 1st or later, so essentially I lose cash for 3 -4 weeks to benefit the owner. Or I'm forced to find another provider who is willing to bill him. 

I'm debating from a business and financial perspective, whether to sever the contract with him, regardless of the income. What is your current practice? And by the way, I never mark up the invoices. We only charge a fee for project management, where a true procurement job is required, such as putting in a roof, or sidewalk, etc. 

What is the best practice to keep the tenant cared for, profits good for owner, and in good standing with my vendors? What do you do?

Warm regards and Thank you in advance for your feedback!