Learn 3 Central Reasons Why Propane Gas Companies Ought To Employ Outside Debt Collection Agencies

By: David Montana Click author's name for more of his/her articles

Propane and butane gas businesses all over the country supply much-needed services to both consumers and businesses. Many people, principally in rural areas, use propane for cooking and/or to heat their homes in the winter.

Despite the fact that propane businesses may supply their customers year round, their busier season is clearly during the colder winter months, when fuel usage increases. Billing practices can vary by company, but customers ordinarily contract for delivery services and are billed at 30 days.
Due to the seasonal nature, with greater demand and activity in the winter, debt collection problems can arise. As businesses get busier with more frequent deliveries, their accounts receivable delinquencies also multiply, especially if in house debt collection attempts are erratic and not consistent.

These delinquencies are further amplified as propane companies are hesitant to suspend service for non-payment, as heating is such a important necessity. They want to prevent a negative image in the community. Smaller companies tend to know most of their clients. Larger companies with a much bigger client base can get even further behind on their delinquent receivables.

Owners also deal with needing to get a handle on their ever-increasing accounts receivable challenges, while trying to prevent losing their customers to competitors.

Listed below are 3 Principal Reasons Why Propane Businesses Should Hire Debt Collection Agencies:

Early Intervention Is Key
Propane businesses customarily bill for their services and invoice their clients at 30 days. It's not unusual for past due accounts to go past 60, 90 days, and even more.

As hectic winter delivery schedules take precedence over one's bad debt, hiring a debt collection agency becomes even more essential. It becomes harder to collect past due accounts the more they mature.

If these receivables are placed early enough, at around 60 to 75 days, not only are the collection recovery 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 CollectingLess Costly Than In House Efforts
A lot of propane businesses don’t have the required staffing, resources and knowledge required to effectively and consistently collect on their past due accounts. A number end up writing off a segment of their bad debt due to the inability to collect. Debt collection agencies are the perfect and affordable answer for going after these late debts. There are agencies that will charge a small fixed cost or flat fee to collect. Because many of these accounts tend to be smaller balances, using a fixed fee agency will cost a great deal less than trying to collect these accounts in house.

Propane companies might also consider traditional contingency fee agencies, but some contingency based agencies may treat these smaller balance receivables with lesser importance than their larger account customers. This is known as "skimming."

Third Party Impact Makes A Huge Difference
Being contacted by a third party collection agency will have a greater psychological influence and be considered as more powerful than hearing from an employee of your organization. Many also worry about hurting their credit score, so a debt collection agency can act as an added encouragement for payment.

Because tact is very important, and you don’t want to distance your customers, collection agencies can implement more tactful and diplomatic methods to encourage customers to bring their accounts up to date. Since they act as a dispassionate third party, this removes you from having to be the “bad guy” in pursuing your delinquent clients.

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About The Author: David P. Montana is a well known author, expert and company counselor in debt collection agency services for thirty years. David offers much more beneficial tips and information in relation to internal debt collection strategies for propane gas companies.