Accounts receivable at record high levels, fear of bad debts lurking, suppliers tightening credit terms, operations expenses escalating all the while retail volumes are dropping as the public cuts back on driving. Add a nervous banker and you may already have realized this environment demands a new skill set. Here’s what you need to do to thrive despite the high fuel prices.

Meet with Suppliers – If you can’t get fuel, customers and credit don’t matter! The smartest marketers aren’t waiting for their supplier to call. They are proactively arranging meetings with key suppliers armed with their strategic plan (short and long range) and information about key customers and credit procedures. Remember a supplier’s biggest fear is not getting paid. While I hate to call it a dog and pony show, the purpose of your meeting is to reduce supplier fear and instill confidence in you, your company, and your ability to pay. Take this exact same step with your bankers.

Focus on receivables – You need cash now! To keep cash flowing take these five steps:

1)    You MUST collect receivables electronically. If you are still waiting for customers to mail checks, you are likely already feeling a cash pinch and are feeling the risk as you watch your A/R balloon. Many marketers are experiencing a rash of customers slowing down payments.  So..

2)    Get actively involved in more frequent A/R monitoring and account review including meeting personally with slow pay customers to develop action plans. Enforce finance charges so when cash-strapped customers are making decisions about which vendors to pay or not pay, you get paid.

3)    Even with customers paying on time, assess all major customers to determine any new economic risk and take action on riskier accounts before they become delinquent or a problem. Many marketer CEOs are personally visiting with top tier customers, and even negotiating collateral positions on large dollar exposure accounts.

4)    Use an appropriate risk assessment matrix for new accounts. The decision matrix needs to incorporate industry risk, individual account risk, willingness to pay, etc. By quantifying your measures, you no longer have subjectivity. If your credit manager can’t put together a decision matrix, they may not be competent to be making credit decisions!

5)    Set appropriate credit limits on all accounts and adhere to them (have a consequence or responsibility for override).

Don’t cut the wrong expenses – As margins get squeezed, cash gets tight, and expenses are still escalating, you’ll be tempted to cut your marketing and sales budget. Don’t! If there is any area you want to expand in tough times, this is it! There is no hunkering down to ride the storm. Instead, get as aggressive as you can. Actually, some of the best marketing ideas are low cost and even no cost. There was a terrific book written ages ago that still applies today titled Guerilla Marketing by Jay Conrad Levinson if you need marketing ideas.

Get strategic about profit and volume – Are you heavily retail or dealer supply? Then it’s likely you’ve seen your volume drop. The strategic solutions to volume decline will be different depending on your market sector. If pure retail, focus your strategy on non-fuel sales. There has been much written in the press about that lately so I won’t elaborate here. Are you strictly dealer supply? Then diversification or geographic expansion are your top two choices. Remember it’s the bottom line that counts and your return on capital is far more important than your volume. Concentrate on punching up profit without being too concerned about actual fuel volume declines unless supplier contracts are at risk.

Seek out new ideas and best practices – Since 1991, I’ve been bringing marketers together in a unique “no-competitors-allowed” environment for 2 ½ days of intensive idea generation and best practices open sharing. If it’s been a while since you’ve joined us, or you’ve never experienced this event, check it out at www.bestpetroevent.com or call one of my staff at 800-728-9005 for details.

Finally, don’t expect things to go back to the way they were. All indications are that high fuel prices and multi-day price changes are here to stay. Therefore, change what needs changing in your company, not just what is easy. In a great easy to read book on change titled Change is Good…You Go First, by Mac Anderson, founder of Successories, the most frequent obstacles to change are identified as outdated systems, outdated procedures, outdated people, or a combination of all three.

In conclusion, to thrive through this change and beyond will require you to change. In fact, if I can leave with you one final word of wisdom, it is either change and grow, or make that hard decision to get out. Either way, I’m here to help!

PetroAnswers How to Thrive Despite High Fuel Prices