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Electronic bill paying has its perks

February 1, 2007 By    

Electronic payments processing, including electronic check conversion and collection, continues to grow at a rapid pace in the U.S. Surprisingly, one of the last industries to adopt electronic check processing is the propane industry.

Paul Lufkin CEO, ePayments Corp.
Paul Lufkin CEO, ePayments Corp.

The LP Gas 2005 State of the Industry survey confirmed this, but also indicated that things are starting to change.

Historically, the propane retailing business has been slow to include technology in their operations. Over the last few years, however, more retailers report that they are using computer systems, primarily for their administrative and record-keeping functions.

Going electronic

The newly published 2006 State of the Industry survey reinforces the growing technology adoption trend, with computerized accounting now used by 87 percent of retailers responding to the survey. As propane retailers start to understand the benefits of automated electronic check processing and its potential to help control costs, adoption rates for this technology are sure to rise as well.

Electronic check conversion covers the entire range of check processing and offers many benefits for both businesses and consumers. Propane retailers can turn paper checks into fast-clearing electronic ACH items, ensuring better cash flow, reduced risk and improved customer service for merchants. Retailers can also eliminate trips to the bank and reduce bank deposit charges. And in this competitive, narrow-margin business, every penny counts.

In addition to other cash flow improvement strategies such as billing more frequently, billing in advance of delivery and allowing customers to pay from the delivery ticket, processing – and collecting – checks electronically has huge benefit potential.

The move to electronic processing is inexpensive and streamlines payment processing for suppliers. With electronic check conversion, the entire range of check processing activities can be handled through a single vendor. Electronic check processing services should include:

  • Electronic Check Conversion – Allows merchants to turn paper checks into fast-clearing electronic transactions, ensuring better cash flow, reduced risk and improved customer service for retailers.
  • Returned Checks (RCK Services) – Non-sufficient funds (NSF) checks can be processed electronically and automatically re-presented to the customer’s financial institution. Unlike traditional check recovery services, retailers get 100 percent of the original check.
  • Consolidated Returns – The processing and reporting of returned check items is centralized-streamlining operations, improving cash management and reporting.

Both dealers and retailers can benefit from these additional services that some providers bundle with their offering.

  • Check Guarantee – For a cost that is less than credit card processing-and with no chargeback risk-dealers and retailers can protect themselves from virtually any bad check. Funds are immediately and automatically available.
  • Check-By-Phone – This service can also be consolidated into electronic check processing

It allows businesses to easily accept and process electronic check payments directly over the phone or fax.

  • Check-Over-The-Web – By adding this feature, dealers and retailers can improve cash flow and provide a safe, secure and easy method of payment for customers. This service enables customers to “write a check” electronically, immediately taking care of their bill.
  • Credit Card Processing – Many payments service providers have agreements with major credit card processors, allowing dealers and retailers to process major credit card transactions.

Electronic check conversion offers benefits for your customers as well, including greater security, safety, privacy and accuracy. With electronic check conversion, customers’ bank accounts are debited within 24 hours of receipt of payments. The transaction appears on your customers’ bank statement as an electronic funds transfer.

Some customers may not be used to the immediacy of electronic check conversion. But due to the already widespread use of electronic payments processing, the entire notion of “floating checks” is rapidly disappearing.

Getting customers on board

It is important to notify customers of any change in the billing process. However, positively conveying the benefits of electronic check conversion will go a long way toward allaying fears associated with this change. Benefits of electronic check conversion that should be conveyed to consumers include:

  • With faster check clearing, you will have an up-to-date picture of your account balance.
  • Information is more secure because checks will no longer be physically transported to various locations.

The propane industry is a business of narrow margins and bargain basement pricing as competitors try to grab customers at almost any cost. One very powerful way for retailers to maintain their reputation as legitimate, ethical business operation while still competing effectively on prices is through electronic check conversion and collection.

For more information on electronic check conversion, visit NACHA, the national electronic payments association at http://nacha.org.

Paul Lufkin is CEO of ePayments Corp. (www.epaymentscorp.com), specializing in check and credit card payment processing and support services. He can be reached at 303-486-0850.

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