Communication, clarity and consistency can improve state of business

April 3, 2015 By and    

As spring approaches each year, propane marketers find it increasingly difficult to control their cash flow and outstanding accounts receivable percentages.

With operational costs on the rise and margins shrinking, it’s critical to take proactive measures to protect your company’s largest asset and remain profitable.

By creating and maintaining a consistent internal credit and collections policy, you provide your staff with an effective method to approach the retraining of the load-to-load-mentality customer. Many slow-paying customers have the ability to pay. They simply don’t make it a priority until they need their next delivery.

This type of customer not only uses you as a bank, but they often require extensive internal resources to service their needs. Some examples of this type of customer include pre-delivery dispatch calls, rerouting, short loads, tank locks, service disconnect, service reconnect, safety checks, intensive internal collection efforts and third-party collection efforts. All of these inflate operational costs.

It is essential to establish, communicate and enforce your company’s expectations and intentions by clearly defining and documenting a structured credit policy to which all accounts will be subject.

Cradle to grave
Your policy should begin at first contact when the new customer is most likely to provide comprehensive information. It should also cover all stages of delinquency.

Get more than just the sale
Protect yourself on the front end by requiring a comprehensive customer application to gather contact information, social security numbers, employment information, cell and work phone numbers, alternate/emergency contacts, an alternate billing address and email addresses. Permission to call, email or text account updates to cell phones is critical when servicing the next generation of clients who rely on electronic communications.

Electronic communication reduces internal collection expenses.

Stay in touch
Don’t delay or rely on customers to pay off a delivery ticket or invoice left at the time of the delivery.

Average consumers believe their payment terms’ “clock” begins ticking upon receipt of a statement, not from the delivery or service date.

Processing invoices or statements promptly will create a sense of urgency for your customers and positively impact your cash flow.

Set expectations for payment
Provide a toll-free number for clients to call if they have questions.

Provide website information on your invoices, statements and any other communications.

Post-delivery, service call or email clients to establish a rapport with them.

Follow up to determine if the client received satisfactory customer service.

Verify client contact information.

Confirm the receipt of the invoice or statement by the client, using that opportunity to confirm the due date.

Be consistent
Send a friendly reminder to customers immediately.

Use credit/delivery hold.

Assess late fees or charges allowed.

Stagger the days and times you call back.

Change it up
Communicate the company’s position:

  “At this point, we have no option but to …”

  “We feel that we have been more than accommodating …”

  “We would like to remain as your service provider, but …”

Discontinue delivery or service until payment has been made.

Choosing a first- or third-party collection service
Providers must be licensed in every state they provide service.

Consider using a flat-fee model early in the aging cycle to reduce costs.

Contingency collections should be used for older accounts and write-offs.

Industry-specific providers should provide automated interface with your internal software.

Get references.

To manage collections effectively, propane marketers must first establish an internal policy for credit administration, communicate the policy and work with clients in a proactive manner. To do so will improve cash flow and goodwill.  

Milissa Lord is the vice president of business development for A.R.M. Solutions. She can be reached by emailing

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