With over ten years of experience in payment processing for the fuel industry, the AVATAS team understands that the electronic payment process can seem complex at first. However, it’s extremely beneficial to your bottom line to promote these types of payments over traditional forms, such as checks. Electronic payment options can drastically reduce the amount of time spent waiting for a payment to clear, resulting in improved cash flow and profitability for your fuel oil business. With the busy season quickly approaching, it’s vital to keep the following tips around accepting electronic payments top of mind:
1) Leverage your credit card company to manage your collections.
Once a fuel delivery is completed, there is no longer any leverage to ensure that your business receives a prompt payment. In our experience, we are finding that fuel companies are often still waiting to collect from the previous year’s deliveries, which makes it difficult to hedge for the upcoming winter. If you are currently operating on a 30- to 60-day billing period, then you are pushing those necessary funds further out and adding to your cost of capital. Accepting electronic payments allows you to receive payments at the time of delivery, and also places the responsibility of debt collections back on the credit card company.
2) Avoid pre-authorization charges if possible.
Let’s say you have a new customer and you’re not sure of their exact delivery needs or credit risk so you run a pre-authorization on their card. After the fuel delivery you go back, adjust the transaction and run the card through for payment. Seems like a rational scenario, right? Here’s a little known secret to help save some money this winter: whenever possible, avoid pre-authorizing cards. When a card is pre-authorized, it essentially allows for two actions to run on the card. This causes the card to downgrade, and it no longer qualifies for the best possible rate. We recommend running the card up front instead of using a pre-authorization. That way if you need to make an adjustment you can issue a refund or charge additional funds after the delivery is made. This still counts as two actions for your CSR’s, but allows the card to qualify for the best rates. Whether you utilize pre-authorization or go for the straight sale, it still holds the funds from the consumer—so why not secure the best rate?
3) Proactively manage your processing company.
Did you realize that credit card companies such as VISA and MasterCard typically raise their rates several times a year? If you haven’t had a rate review recently you could very well be overpaying for your processing fees. While these increases don’t always impact utility rates, sometimes processors use it as a way to raise rates across the board. Keep your processing company honest by proactively asking them to run an analysis of your statements. We offer periodic, complimentary rate reviews for our clients for this very purpose.
As a leader in payment solutions for the energy industry, AVATAS is well versed in cash flow strategies for companies that operate just like yours. For more information, visit www.avataspayments.com. To reach AVATAS directly, email firstname.lastname@example.org or call (857) 221-3830 with any payment processing questions.