With collections down, firms going bust

(Jonathan Wiggs/Globe Staff/file 2007)

While consumers struggle to pay for heating oil, dealers are finding it harder to collect - and to stay in business themselves.

Consider the story of Mark, a struggling fuel oil dealer on the South Shore for the past 10 years. He asked that his last name not be used because he worries that his remaining customers might go elsewhere if they knew of his business troubles.

Mark said that customers' failure to pay him for deliveries left him with a six-figure debt. To get some of that money back, he has taken 19 former customers to small claims court, and won about $30,000 in judgments - but to date has been able to collect only about $1,900.

"I felt bad taking people to court, but I had the oil company taking me to court," he said. "What could I do?"

Given the debt load he is carrying, Mark's business has had to retrench significantly. What remains is a very scaled down operation that is in stark contrast to the thriving business he says he once had. For years, says Mark, he steadily expanded his business, amassing a good payment record and expanding his credit line. But as the price of fuel skyrocketed in the last two years, oil companies steadily tightened the credit requirements for dealers like himself who buy oil in bulk.

"Two years ago, it was common to have 30-day terms when it came to paying for your oil," he said. "Then it was 14-day terms. Then you had to pay by electronic transfer within 2 to 3 days after receiving the oil."

He said companies started demanding letters that showed an established credit line at a bank, or assets pledged as collateral, including, in some cases, a dealer's home. "If you didn't have either, they could shut you off and put you out of business," he said.

As customers started having trouble paying, and the total owed him reached $100,000, Mark said he found himself borrowing money to pay for his oil. He fell further and further behind.

Now he has a lien on his home for the amount of money he still owes the oil company.

Mark said that while he never pledged his home as collateral, a friend who is also a fuel dealer did - and no longer has a home.

RICH FAHEY