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www.fueloilnews.com | FUEL OIL NEWS | JULY 2015 23 BUSINESS OPERATIONS BY COLLIN SULLIVAN, AVATAS PAYMENTS Y ou need to prepare for winter well before the snow and cold hit in order to keep your business thriving, which is why you should start now. In addition to hedging supply and staffing resources, this is a good time to take a look at your cash flow and streamline your tools and process. First, ensure that your payment processor and debt recovery solutions are experienced in the energy and home heating mar- ket. Many organizations can process payments and collect past due receivables, but if they aren't experts in the energy industry, your fee structure and processing costs could be significantly higher than what your competitors pay. If you aren't confident that your payment processor knows the space, research your options. Before asking potential vendors to do a rate review, get a little more information about what types of safeguards they have for customer data and ask if their solu- tion is PCI certified. If the answer is "no," tread carefully. Your customers are going to trust you with their account information and PCI cer- tification is a requirement. Without secure processing tools, you could open yourself to liability that goes well beyond paying a few extra percentage points on your processing. The next step is to convert check-paying customers into recurring billing customers. If your payment processing is set up correctly and has competitive rates, credit cards will be less expensive. With credit cards, you can cut payment times down to 24 hours and see significant reductions in administrative and overhead costs. Now, fast forward a few months: You're set up with the right processor, you're getting the best rates, a majority of customers have a MasterCard (which has much lower rates than Visa) on file and you're making the first fuel delivery of the year. Resist the temptation to pre-authorize that customer's card. While pre- authorization ensures that funds are available, the two actions (the pre-authorization and the authorization) cause the card to downgrade, disqualifying it from the best rates. Instead, run the transaction up front. You can always make an adjustment after- ward and the card still qualifies for the best rates. In cases where a customer doesn't want to pay, you can pro- tect your cash flow and maintain the customer relationship by taking certain steps. Internally, this means maintaining a consistent credit and col- lections policy. Unfortunately, when product demand increases and resources are squeezed, contacting each past due customer becomes more difficult. Missing or inconsistent communica- tion with customers complicates your ability to move accounts through the AR and collection processes. Externally, this means collecting extensive customer informa- tion and getting permission to email and text cell phones at the start of the contract. Having this information on file makes it eas- ier to resolve the situation if an account ever becomes delinquent. Next, stay in touch with your customers. A good practice is to send a statement immediately after delivery, because "the average customer believes their payment 'clock' begins upon receipt of a statement and not on their delivery or service date," according to Milissa Lord, of A.R.M Solutions. You should also follow up with your customers to gauge their satisfaction, confirm the invoice receipt and confirm the due date. If an account is past due, send a friendly reminder and stagger the timing any subsequent communications. If you're still having trouble, change the message to clearly communicate your busi- ness's position. For example: "We would like to remain as your service provider, but…" or "We feel that we have been more than accommodating and…" In the event that you need to partner with a third-party collection service, find one with positive references and is fully licensed. Your payment processor may be able to recommend one. At AVATAS, we suggest our customers speak with A.R.M. Solutions. Also keep in mind that the best providers are the ones who can automatically integrate with your current software and systems. After choosing a provider, look at its fee structure. To reduce costs, use flat fee models for more recently past due accounts and save the contingency collections for older accounts or write offs. ABOUT AVATAS AVATAS Payment Solutions is the leading payment process- ing company for the energy and service industry. Collin can be reached at 866.298.7836 or by email at info@avataspayments. com. Milissa Lord contributed to this report and is the VP of Development with A.R.M. Solutions (the leading 1st and 3rd Party Accounts Receivable Management and Collection Firm for the energy and service industry). She can be reached at 888-772- 6468 or at mlord@armsolutions.com. What Can You Do to Strengthen Your Cash Flow? Summer is just starting, but now is the time to prepare for the next heating season l F O N