Why cheap service providers can ultimately spell ‘nasty’

Jo French, Business Development Manager at SecureCash, weighs in on the Victorian Hotel issue and why cheap service providers in the security industry is a massive red flag. 

Today we are going to get nasty. It’s a horrible thing to have to do, but if you are looking for service providers, there are always things you will not be aware of. I am just listing a few pointers here so that I can try to help people make informed decisions about our industry in particular.

I attended a workshop earlier in the year that opened my eyes to industry regulations. Then with the Victorian Hotel debacle, security was placed under a spotlight. This was nothing new to our industry. We are keenly aware that there are companies out there doing less than the bare minimum just so they can grab clients.

These companies are likely:

• not paying award wages

The Victorian Hotel inquiry showed the rest of the world that some security companies are completely negligent when it comes to hiring, training and recruitment purposes. Again, no surprise to the rest of us. There are security companies out there that clearly cannot pay award wages for the prices they offer their customers. And hiring over WhatsApp is a phenomenal disgrace! There followed reports of no training or safety equipment provided for these new employees, and it seemed these types of businesses rely on their lies being accepted and former partnerships asking no questions when applying for contracts.

•  don’t have insurance

Cash in transit insurance isn’t cheap. I can only imagine how much armed services must fork out for gun licenses! But cheaper services either have to pass the costs onto clients in their quoting process, or swallow the costs themselves and take it out of their own profits. When they are charging miniscule rates, even if not paying award rates, we hope paying their staff something, then what is left over has to cover everything else: office staff and wages, office space and utilities, insurances, and licences. So if someone says they can give you cash in transit, fully licensed and insured, paying award wages for $15 = they are SO lying!

Not only during Covid, but even beforehand, we heard about companies suffering financially. They were not able to cope with the losses they were incurring. If they were actually doing business legitimately, and not passing those costs along, they were running at such a loss, they didn’t make it. Once Covid did hit, several smaller companies folded. They weren’t making enough money to offer the cheap services, and debtors will always follow to get their funds.

• lie on their websites

They will post photos of “their offices” that when called out on them, change to another office space that they allegedly own. As we may have actually attended their premises, we will be aware that the stately building on the website is not actually theirs and a Google search will bring you the actual owner’s details.

They will claim to have clients that they may have done a single collection for. As a technicality, if they don’t say anything about the client, but perhaps just post their logo, they hope the reader will assume this is a regular client.

We have been asked ourselves to quote for jobs that we have been sent details for and put through our tender. Then the sub contractor comes to us and asks if we can match their lowball figure. We never mind doing the bare minimum pricing, so our costs are covered, and we make no profit. But to ask us to run at a loss just like them? That’s not going to happen.

Of course, they could just be bad business people. We know that sometimes tenders have been replied to, and companies have undercut everyone else, just to get the job. They can do this off the back of their existing clients. By overcharging the existing customer base, you can afford to take a loss on the new jobs. Obviously this can’t work, and when you lose the existing high-paying customers, you can’t afford to either keep the losses going on the new jobs, or even sometimes keep your company afloat.

So we crunched our numbers, found reliable, insured, licensed service providers, plus pay award wages to every single staff member we have. To try to do all of this for less than what we charge, means there is something missing. There will hopefully not be something amiss in every category. But they will either forego insurance, or perhaps pay under the table, in cash to avoid superannuation payouts, or have no staff to speak of any run around doing all the collections themselves while answering the phones and emails.

I would hate to hire one of those companies to find they could not attend when relied upon, or if they steal/lose my banking, I have no recourse as there is no insurance to claim against. Hopefully all would work out well, but in the event cheap = nasty, I’m sorry. You do get what you pay for.