34 JUNE 2016 | FUEL OIL NEWS | www.fueloilnews.com www.fueloilnews.com | FUEL OIL NEWS | JUNE 2016 34
BUSINESS OPERATIONS
NEWS
BY COLLIN SULLIVAN, NATIONAL ACCOUNTS MANAGER, AVATAS PAYMENT SOLUTIONS
I
t is no secret that a good percentage of merchants in our
industry still mail out monthly invoices and get paid by check
net 30/45/60. One of the things I try to do when I speak with
these merchants is to help them understand the true costs asso-
ciated with processing a check. This way they can make a better
decision in deciding whether credit card processing, electronic
billing or a different processing solution is right for them.
Do you know how much you pay per check? Consider the
following.
I've put together a basic model that you can use to estimate
how much each check is costing you. To help further, I've also
included what the calculation would be with a generic oil/gas
account. As a note, realize that the model below takes into
account only the hard costs that we can readily assess. There
are also a number of very real "soft" variable costs that aren't
as easily quantified like customer convenience, security, the
costs of bad data information being entered, or the cost of mail
non-delivery.
So what do you do to start? The first thing is gather some
information on your end. This is the information that will feed
the calculation. As with everything, the better information you
put in, the more accurate your results will be. If you can't get
some of the information, just use the numbers we have from our
model to get a basic cost.
WHAT YOU NEED TO GET:
Customer information:
1) Average Ticket: What is the average ticket amount for
each of your deliveries?
2) Payment Terms: Are your terms net 30/45/60 or
something else
Labor information
1) Labor Rate: What is the hourly labor cost for the
people who print, stuff, mail, receive, and enter payments
when the checks come back. Make sure to include benefits,
Social Security, and Medicare.
2) Man Hours: The time that it takes your team to take care
of one bill for one account. Include time it takes to print,
stuff, and mail out the bill and the time it takes them after
the check comes back to open the mail, enter the information.
Material and shipping costs
1) Printing and material costs: This should include the costs
for printing the statement as well as any costs for the envelope
and the return mailing envelope.
2) Postage: How much it costs you to send the bill and any
pre-paid business reply postage
Side by Side Cost Comparison:
Paid by Check vs. Paid by Credit-Card
If you don't know the cost of customer checks, it's good to find out
