By Matthew Mossotti
In today’s downstream petroleum industry, where margins on fuel sales are extremely limited, petroleum wholesalers must have the necessary functionality in their back office to stay competitive. With an array of industry-specific variables and many unique contracts for a given fuel wholesale company, generic back office software like QuickBooks slows down billing processes and creates an environment conducive to manual accounting errors and leaky profits. Top wholesalers are increasingly finding that purchasing industry-specific back-office software solutions to speed up operations to run as efficiently as possible is paramount to profitable growth.
Automated Software Solutions Make a big Impact on Operations
The downstream petroleum industry is a volatile one. It’s an industry that operates amidst fluctuating petroleum prices, challenging businesses to continually adapt in order to grow.
The industry is especially challenging in regions with competing refineries and sources for product. The volatility of gas and diesel pricing has become extremely hard to predict and manage on a daily basis, and the process of locating the best sources of the product continually changes with different suppliers. In order to remain profitable despite the increasing volatility, wholesalers constantly have to have to run extremely efficient and time sensitive operations to effectively work with supply chains to guarantee that they have the best position possible.
For fuel jobbers, maintaining strong relationships with suppliers in the market is very important. One of the most important steps a company can take to remain competitive in the downstream industry is to stay on top of their operations by reviewing and adopting smart technology solutions that automate back office practices, which improve jobbers’ efficiency and effectiveness. Most top tier solutions offer an open architecture system which allows the company to see a very detailed performance of their services, understand how their various products are moving, and know what their costs and bottom-line impacts are at any given time.
When fuel wholesale companies begin to leverage technology to monitor their operations, they often see beneficial changes immediately. With the ability to automate so many more areas of their business, operating costs are dramatically reduced. With the ability to retrieve real-time data out of their accounting systems, wholesalers gain a clearer understanding of what is really going on in their companies. They can market – and sell – their services within their regional marketplace more effectively because they can demonstrate to customers just how smart their operations are running.
Growing fuel wholesale companies should only consider partnering with software providers that can help them become demonstrably superior operations. Jobbers can very successfully market the efficiency and effectiveness of their organization to gain market share.
(*a general note on marketing from a marketing director: a highly functional CRM platform is the fundamental component of any good marketing strategy in any industry… any back office software to be considered by a growing petroleum wholesaler needs to include a CRM module.)
Best-purchase Scenarios
Jobbers are finding that back office software with the capacity to automate best-purchase scenarios at the rack saves them money in two key ways:
First, savvy software generates the actual best purchasing strategy, whereas error-prone, man-powered back office operations often fall into purchasing patterns that may miss other available money-saving options when they periodically present themselves.
Second, all personnel will eventually leave or retire, creating expensive training costs and a loss of their intellectual capital. Best-purchase scenarios that are developed and stored within elite software packages create a system of intelligence that appreciates the intellectual capital of the software asset into perpetuity.
Speeding up Cash-on-Hand
Electronic Bill of Lading (eBOL), an especially useful tool that fundamentally extends jobbers’ credit by speeding up the time-to-cash, is a must-have component of any top-tier fuel wholesale software solution.
Jobbers do well to find a back office solution that features a cutting-edge eBOL tool that processes BOL’s within minutes of loading at the terminal. Manually managed BOLs can significantly delay payment to jobbers from their customers, which in turn ties up the jobber’s available credit for purchasing more fuel at the rack. For example, some common carriers are forced to wait as long as two or three days before a driver’s paperwork gets processed through manual back office operations. However, with a solid eBOL feature, that process is cut to 30 seconds or 30 minutes after the load is delivered. The software downloads the eBOLs from suppliers, imports those eBOLs and sends them automatically to the customer. This information is quickly input by the truck drivers, many of whom are equipped with iPads or touch-screen scanners inside their cabs.
Essentially, eBOL allows users to immediately bill their clients and record the purchase without user intervention. Jobbers can manage their supplier allocation and credit in real time and their customers receive 100 percent accurate invoices in a timely manner. The best software providers are dedicated to making these operational processes simple and quick, so the wholesalers can deliver more fuel and grow their topline profits.
Understanding the Customer’s Credit
A truly intuitive back office software platform for fuel jobbers should perform like a living, breathing credit manager. Wholesalers should look for a system that helps evaluate their potential customers by determining their credit history. The solution should be able to offer recommendation to wholesalers if a potential customer will be one that is likely to pay on time.
Furthermore, a good credit feature will also be able to alert administrative personnel if an existing account is about to reach their credit warning, actual credit or credit overdrive level, or if an invoice is overdue. This allows wholesalers to automatically put certain client accounts on hold or adjust their credit ratings. The inclusion of this important feature in a downstream petroleum back office is a key indicator that the software is designed for growing fuel wholesale companies.
Managing Freight
Freight is often an untapped profit center for fuel wholesalers, and getting an accurate picture of the profitability of freight is sometimes extremely difficult. Another important feature jobbers will want to make sure they have included in back office solution is a tool that allows them to have key insights about how they manage freight costs. Many common carriers are not properly determining what that freight cost is and how it should translate to the customer in order for the company to make the biggest profit.
An insight-providing back office software solution allows wholesalers to separate freight from other costs and also gives them the chance to correctly calculate freight with every delivery their trucks make. Yet, while freight may be separated from other operating costs for the wholesaler, the company is still able to bundle those costs together and deliver a single invoice with a total amount owed to their customers.
The Right Software Team
While the various features of different back office software solutions will significantly help a fuel wholesaler maintain a competitive edge in the industry, working with the right software company should be another perk of the product. A software provider for the downstream petroleum industry should have a smart and responsive team that not only understands the dilemmas fuel jobbers are up against, but possesses the acumen to advise best practices in highly specific scenarios.
The best software providers treat their customers as a business partner, and this should be a high priority that receives careful evaluation during any selection process. If a company does not understand the intricate and unique nuances of the fuel marketing industry, they cannot possibly develop top notch software to automate processes within that business environment. A key determining factor in evaluating a software provider should be how well the software company’s leadership seems to be able to both articulate the present challenges to growth and anticipate the future of the industry, which increasingly seems to be “grow-or-die.”
Matthew Mossotti joined FireStream WorldWide as Marketing Director nearly two years ago. FireStream is a premiere software provider for fuel marketers, c-store chains, and lubricant distributors. One of Mossotti’s achievements since joining FireStream has been the creation of a forum that provides current business insight to companies in downstream petroleum with a focus on how technology is helping to shape the future of the industry (see firestream.com).
