Page 26 - Oil and Energy January 2013
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in the heating fuels industry for the last
10 years. During this time there have been
many
changes that I have seen my clients
endure. We have seen record high oil prices,
we have seen the warmest winter in history
and we have seen major acquisitions.
One thing that I have
not
seen change
a lot is credit policies. Let me explain why
that is a mistake!
How many of you reading this article
have a credit card in your wallet? I am
guessing that everyone has at least two and
maybe up to four or five. Why do we all
have these cards? Because we like the float
the credit cards give us. We like the points
and rewards programs and heck, it’s just
more convenient than going to the bank
and getting cash or writing a check.
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Do you think your customers are any
different than the rest of the world? Let me
be the first to tell you that they all have
credit cards too! Many of them have cards
sitting in their wallets that cost YOU less
then 1% to process and yet you still mail
them an invoice, wait up to 45-plus days to
get paid and my question remains,
Why?
Many years ago credit card processing
cost your organizations a small fortune.
Credit
That is
not
the case any more. Eight years
ago AVATAS led the fight to get heating
oil and propane retailers reclassified as
Utilities, and that means your fees have
been drastically reduced for credit card
processing!
There is simply no excuse to sit and
wait for your customers to mail in a
check. We have done many case studies
for our clients, and the result is always
the same: Paper checks actually cost more
to process than a credit card due to things
like cost of capital, postage and labor
expenses.
Here are few key points I have learned
from our clients that are growing and have
positive cash flows.
1)
Change your credit applications!
Instead of having your customers
agree to a credit check, have them
agree to have their credit card charged
after every delivery or service visit!
Get your money in 24 hours.
2)
Advertise that you accept credit cards!
I am amazed at how many of
your
customers do not even know you take
credit cards. They pay you the way
they always have, and I am guessing
your company is one of the
only
organizations they pay with a check.
3)
Utilize your website as a marketing
tool and a payment vehicle. Online
payments are a necessity. If you are
not there yet the time has come. There
are also good solutions for full web
self-service that reduces the reliance on
your customer service teams. It’s time
to start exploring all these options.
4)
Require your budget clients to pay
with a credit card. Some of our clients
have even made their budget programs
MasterCard specific. If you are not
sure why, please ask me!
5)
Stop offering early pay discounts for
customers mailing in a check! If you
can get your money in 24 hours with
a credit card on file then why wait the
seven to 10 days and still give away
some of your profit?
At AVATAS, we partner with our clients
to help you explore ways to improve your
cash flow and become more profitable. It’s
not
just about how much we can lower your
credit card fees. The vast majority of your
payments are not made via credit card, so it’s
important you explore these payments and
put a major focus on your credit policy.
If you have any questions on this
subject please feel free to reach me directly
at
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Encouraging credit card payments is good for the bottom line
By Tracy Richmond, Avatas Payment Solutions
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