By Nick Quaratiello
Blue Cow Software
Budget payment plans can be a helpful service to your fuel oil and propane customers. More than 90 percent of energy retailers offer budget payment plans, while more than half offer fixed pricing plans and just under 50 percent offer price cap protection plans.
But that does not mean these pricing and payment plans have to be a loss leader for your company. Accessing historical data through your fuel management system is one way to make sure customers are paying the right amount.
Setting appropriate payment amounts for individual budget plans has long been a mix of art and science. Ideally, a budget plan will come as close as possible to matching each customer’s actual fuel use, with only slight monthly variations. You don’t want to bear the cost of “carrying” too many gallons through the season while waiting to be paid. And no customer likes to be surprised with a big “catch up” invoice at the end of the budget period.
The key to more accurate budget plan pricing is more accurate data. This is where a data analytics program can be a big advantage. By creating reporting parameters that include historical fuel usage measured against K factor calculations, you will be able to create more predictability in your budget pricing plan for individual customers, minimizing the monthly variations between fuel use and budget payment.
Accessing this kind of historical data is even more important when offering fixed-price or capped-price payment plans. While most fixed and capped plans include a fee to protect your company against unexpected price spikes, you may be able to further reduce your risk exposure by factoring historical trends into your calculations.
If this sounds like a lot of work to be done, it is. However, the best fuel management software systems incorporate analytical tools that make it easier and faster to access multiple data points from previous heating seasons, then to produce the kind of report that makes it simpler to prepare more accurate budget pricing.
Not getting that kind of data from your software? Learn how Blue Cow Software’s Ignite® Analytics tools can put the right information at your fingertips by clicking here. Or schedule a demo by calling us at (888) 499-2583.