postal cuts may cost businesses $100M annually
by Susan R.
January 5, 2012
the U.S. Postal Service to do away with next-day delivery of
could prove costly for America’s large companies.
report released by REL Consulting, a division of Miami-based The
suggests the lag time created as a result of the cuts could cost a
large U.S. company up to $100 million a year by making it harder to
collect payments from customers
the U.S. Postal Service said it would eliminate next-day delivery of
first-class mail as part of a move to close about half of its nearly
processing centers nationwide. It also would cut about 28,000 jobs. The
is looking to find $20 billion in annual savings by 2015.
dramatic decline in mail volume and the resulting excess capacity,
a vast national infrastructure is no longer realistic,” Postmaster
Patrick Donahoe said in announcing the cuts.
lost $5.1 billion last year, and is projecting a $14 billion loss this
had a rough time lately as competition from carriers such as FedEx
United Parcel Service
, e-mail and the
decline of regular first-class mail has put the squeeze on it, as well
expanding costs and the $5.5 billion Congressionally-mandated health
notes that more than 60 percent of all invoices are still delivered by
that typical U.S. companies take more than five weeks to collect
delivery is eliminated, the report predicts it would add at least two
days to the collections cycle for many companies, which would
increase Days Sales Outstanding (DSO) for many companies by up to $100
need to get ahead of the game, and measure float now in areas like
clearance, and payment processing,” the report notes.
suggests companies take the following actions before next-day delivery
• Bill more
quickly or consider sending bills via email. However, always follow up
sure the bill was received;
proactive collections a priority. Segment your customer base to better
understand where collections problems are, and where the best
payments via electronic means, such as using an automated
or debit/credit, starting with those customers accounting for the
float now in areas such as mail, bank clearance, and payment
will enable them to set reasonable improvement targets,” suggests
Heald, REL global customer to cash practice leader;
Understand and enforce terms and conditions of contracts;
Reconsider grace periods and discounts; and
Re-evaluate your lock box strategy, and consider changing the mailing
customers use to send in payments so that lock box distribution matches
customer distribution, potentially cutting mail delivery time.
Regulatory Commission is studying the proposed changes and is expected
release an advisory opinion. No changes are expected to take place
April. The U.S. Postal Service has said it will run out of money by
unless there is a congressional overhaul of its operations.
and other articles at the Dayton Business Journal