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Billing and payment systems are the means by which communities receive revenues under their pay-as-you-throw programs. Communities implementing pay-as-you-throw will need to plan how they will handle the billing and payment requirements of the new program.

Making decisions about billing is an important part of the pay-as-you-throw (PAYT) program design process. A choice about which type of billing system to use is closely linked with other rate structure design, container, and pricing choices. For example, if a community's solid waste planners decide to use a variable-rate, can-based program, in most cases they will opt to bill residents based either on household subscription levels or on a count of actual set-outs (or both).

Communities often pay particular attention to billing and payment arrangements: accurate, timely billing will help to convince residents that the municipality has properly designed and implemented the new program. There are three main types of billing and payment systems used with PAYT programs. These include direct payment, subscription, and set-out counting systems. As with other program design choices, each system has its own advantages and disadvantages.

Direct payment systems

Under these systems, residents pay for solid waste collection services through the purchase of bags, tags, or stickers directly from local retail outlets or municipal offices. The solid waste agency recovers the cost of collecting and disposing of waste through the price of the bags or tags. In most cases, direct payment programs are used with proportional pricing systems. With proportional systems, each bag or tag costs the same amount. Direct payment also may be used with multi-tiered systems, under which residents are billed a flat rate for the fixed portion of waste collection costs and pay a per-container fee for trash set-outs.

The advantage of a direct payment system is its low administrative costs. Since the bags or tags are sold directly to residents, there is no need to bill separately for solid waste services (unless the bags or tags are used in combination with a multi-tiered pricing system). Planners will need to keep records on bag or tag inventory and track revenues. In addition, because some residents may buy many bags or tags at once and then none for several weeks, direct payment systems may result in increased revenue uncertainty.

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Subscription systems

[Photo of Rubber Stamp]Communities using subscription systems typically ask residents to select a subscription level indicating the number and size of containers they anticipate setting out for each collection cycle. Based on this choice, the solid waste agency then bills each household to recover the cost of providing waste collection services. To increase the efficiency of their billing, some communities consolidate charges for waste collection with bills for water or other municipal utilities. Communities usually mail out bills at regular intervals, either annually, semi-annually, quarterly, or monthly.

This system offers fewer fluctuations in revenues. But the incentive to reduce waste may be lower, because residents must request a change in their subscription level to reduce their waste collection bill. Also, some communities have found that allowing residents to change their subscription levels too frequently can be costly in terms of staff and administrative time. To address this, planners can charge a fee for subscription level changes that will cover this cost.

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Set-out counting systems

Under these systems, collection crews count the number of containers residents place at the curb. (In communities with weight-based programs, the crews record at the curb the weight of the trash.) This information is then recorded and residents are sent a bill for waste collection services based on their actual set-outs.

This approach requires that accurate data be recorded at each collection stop. Some communities invest in computer equipment that can record information and directly feed it into the solid waste agency's billing system. While this approach gives residents the opportunity to save money immediately for waste reductions, it can entail more collection time per household to record waste information. More administrative time also may be required to receive data from collection personnel and send bills to residents based on this information.

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Implementing a billing system

Whichever billing and payment system is used, communities will need to plan for possible changes in how they will take in revenues once they implement PAYT. If a community has some sort of billing process in place prior to implementation of the new program, the administrative changes may not need to be extensive. Simply training some additional staff members for the new program and adapting the accounting system might be sufficient.

If there are significant changes required, or if the solid waste agency will be implementing a billing system for the first time, planners may need to develop new procedures. For example, communities may offer assistance to low-income residents through discounts on the bills sent to these households. In addition, customer service representatives are often assigned or hired to help answer inquiries about billing and payment. Some communities enlist accounting assistance for a short time to help establish a system capable of processing the additional information. To ensure that a new system is properly designed and implemented, communities sometimes schedule these and other steps to be taken well in advance of the date of PAYT program implementation.

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Additional resources

For answers to questions about billing and payment systems under PAYT, visit billing in the Frequent Questions section of this Web site.

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