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Learn 3 Vital Reasons Why Propane Gas Businesses Ought to Hire Outside Debt Collection Agencies

Propane gas companies’ services are in great demand to organizations and customers all over the country. Many people, specifically in rural areas, use propane for cooking and/or to heat their homes through the winter.

Even as propane companies may supply their customers year round, their busier season is obviously during the colder winter months, when fuel usage increases. And while billing procedures can differ from one company to the next, customers normally sign a contract for delivery service, and are billed at 30 days.

Because of the seasonal nature, with greater demand and activity in the winter, debt collection problems can grow. As businesses get busier with more frequent deliveries, their accounts receivable delinquencies also intensify, especially if in house debt collection attempts are erratic and not consistent.

These challenges are further exacerbated as propane businesses are usually unwilling to stop service for non-payment, because heating is such a critical necessity. Keeping a respectable image in the community is important. Smaller companies tend to know most of their client�le. Larger businesses with a much bigger client base can get even further behind on their problematic receivables.

Owners also manage needing to get a handle on their growing accounts receivable issues, while trying to avoid losing their clientele to competitors.

Below are 3 Principal Reasons Why Propane Companies Should Hire Debt Collection Agencies:

Early Intervention Is Critical

Propane businesses customarily bill for their services and invoice their clients at 30 days. However, it’s not uncommon for unpaid accounts to go past 60, 90 days or more.

As frantic winter delivery schedules can take priority over recovering on past due bills, it’s significantly important to enlist the services of a debt collection agency, because the more these accounts mature, they become more difficult to recover.

If these accounts are placed early enough, at around 60 to 75 days, not only are the collection success rates much greater, its also early enough to get customers back on good terms with the fuel supplier, and before the late balances grow even more.

More Cost Effective Than In House Collecting

Many propane companies do not have the requisite personnel, resources and proficiency needed to successfully and regularly collect on their past due receivables. A number end up writing off a segment of their bad debt due to the inability to recover. Debt collection agencies are the ideal and affordable solution for going after these late debts. There are agencies that will charge a small preset cost or flat fee to collect. Since many of these receivables tend to be smaller balances, using a fixed fee agency will cost significantly less than trying to collect these debts in house.

Propane businesses may also consider conventional contingency fee agencies, but some contingency based agencies may treat these smaller balance accounts with lesser importance than their larger account clients. This practice is called “skimming.”

Third Party Influence Simply Works

Hearing from a third party collection agency will have a greater psychological influence and be considered as having more impact than hearing from an agent of your organization. Most also worry about harming their credit rating, so a debt collection agency can act as a greater motivation for paying their debt.

Given that diplomacy is very important, and you do not want to distance your clients, collection agencies can utilize more tactful and diplomatic methods to encourage customers to bring their accounts up to date. Because they act as a impartial third party, this removes you from having to be the “bad guy” in going after your problem customers.

David P. Montana is a well known writer, specialist and company consultant in collection agency services for three decades. David provides much more valuable tips and resources in relation to internal debt collection strategies, propane companies.