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3 Vital Reasons Why Propane And Butane Gas Businesses Should Hire Outside Debt Collection Agencies (young entrepreneurs)

By David Montana

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

Despite the fact that propane businesses might 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 typically sign a contract for delivery service, and are invoiced at 30 days.

Due to the seasonal nature, with greater need and activity in the winter, debt collection problems can arise. As businesses get busier with more frequent deliveries, their accounts receivable delinquencies also grow, especially if in house debt collection efforts are sporadic and inconsistent.

These problems are further exacerbated as propane businesses are hesitant to stop service for non-payment, because heating is such a critical necessity. They dont want to be viewed negatively in the community. Smaller businesses tend to know most of their clientle. Larger companies with a much bigger client base can get even further behind on their problematic receivables.

Companies also cope with needing to get a handle on their increasing accounts receivable delinquencies, while trying to prevent losing their clients to competitors.

Below are 3 Crucial Reasons Why Propane Companies Ought To Consider Debt Collection Agencies:

Early Intervention Is Imperative

Frequently, propane companies bill and invoice customers at 30 days. It’s not unusual for past due accounts to go beyond 60, 90 days, and even more.

As hectic winter delivery schedules can take priority over recovering on past due bills, its vitally important to enlist the services of a debt collection agency, because the more these accounts mature, they become more problematic to recover.

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

More Cost Beneficial Than In House CollectingLess Expensive Than In House Efforts

Many propane businesses dont have the required personnel, means and proficiency needed to successfully and consistently collect on their past due receivables. Several end up writing off a segment of their bad debt because of the inability to recover. Debt collection agencies are the perfect and cost effective answer for going after these late debts. There are agencies that will charge a small predetermined cost or flat fee to collect. Because many of these accounts tend to be smaller balances, using a fixed fee agency will cost a lot less than trying to collect these debts internally.

Propane businesses might 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 Impact Simply Works

Hearing from a third party collection agency will have a greater psychological impact and be treated as more powerful than hearing from an agent of your company. Most also fear damaging their credit rating, so a debt collection agency can act as a better encouragement for honoring their debt.

In view of the fact that tact is very important, and you dont want to estrange your customers, collection agencies can utilize more tactful and diplomatic methods to persuade customers to bring their accounts current. Since they act as a neutral third party, this removes you from having to be the bad guy in going after your past due customers.

David P. Montana has published much and served as a organization consultant in collection agencies services for thirty years. David provides additional valuable tips and resources regarding in house debt collection strategies for propane gas companies.

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Wednesday, September 30th, 2009 at 1:28 am and is filed under business. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.