The manner in which a Service Provider is paid is a very big issue. It should go without saying that your subcontractors are the lifeblood of your business, and you need them to survive. They should be paid on-time and in-full, every time. Stretching out a subcontractor only leads to bad publicity over the CB airwaves and in the donut shops. These guys know who’s paying on time and who isn’t. The word gets around. Good and bad. Some companies have service providers waiting in line to come work for them, simply because they pay the subs on-time and in-full. It is a VERY BIG deal to the subcontractors.
Subs should be paid for the equipment they have available for your use. When paying such service providers “by the hour” consider a ‘differential system’ depending upon what type of equipment they have. Start with a “base rate” that is fair. Then pay more money for a larger or more efficient plow (i.e.: the ‘V’ blade, snow wings, or capture blade). More money for their second and/or third year with your company. More money for having a truck with an automatic transmission instead of a manual transmission (no matter how much they plead with you – they CANNOT back up as fast with a standard transmission as they can with an automatic transmission).
Keep track of what they do, pay them appropriately, and loyalty can easily be counted on at time goes on.