Going Postal: What delivery cuts mean for your cash

There’s so much hoopla around whether or not the Postal Service will eliminate Saturday delivery. But here’s what should really have you concerned.

Turns out there are plenty other cutbacks already in progress that have much greater potential to impact your company’s cash flow.

So noted a panel of experts at a session entitled “The Impact of USPS Network Consolidation Upon Remittance Mail” at the recent Association for Financial Professionals Conference in Miami.

We were there to get the real scoop to see if your company’s collections will be impacted.

And odds are they will be. But maybe not for the reasons most think.

Check out what’s already happening and the best strategies to make sure your cash flow doesn’t suffer from the feds’ need to tighten their own belts.

Guess what? It’s been happening for months!

Fact: If your company still mails its bills to customers, it’s been taking it longer to get into their hands for a while now. As in since last summer.

Back on July 1, 2012 the USPS put a new delivery standard into effect. It eliminated the guaranteed two-day delivery for certain distances around processing centers, adding an extra day to the cycle and doing the same with guarantees for one day or even 12 hours in other areas.

And that’s not the last of it. By 2014, there will be no more overnight commitments at all.

So in most cases, it’s already taking your bills at least an extra day to reach customers. Which means the payment due date clock doesn’t start ticking as soon as it used to.

Most of this comes from the consolidation of processing locations. Check out how the Postal Service’s capacity has changed in recent years:

• 673 locations in 2006
• 461 locations in 2012
• 321 locations expected by 2014, and
• 232 locations left in 2015.

And even if your own mail facility wasn’t one of the casualties, your company will likely still feel it. For example, so far a closure of a key facility in the Los Angeles area has resulted in a half day delay in all surrounding areas.

Strategies to survive and thrive

You don’t have to take this lying down, of course. You have several strategies at your disposal that can keep your collections from taking a dip.

1. Bump up your billing. Since this is the new reality and not a temporary situation, it may be time to make an adjustment to your own internal processes to compensate. By moving up when you send your bills by a day, you’re keeping your timetable the same as it’s always been, despite what happens once the invoices leave your building.
2. Make it clear when your clock starts. If in the past you haven’t highlighted the terms that state exactly when you consider the payment clock running, now’s the perfect time to do that. Of course, you can’t change your policy without creating a whole host of headaches, but you can remind everyone of when you consider Day 1 of the cycle.
3. Lean more heavily on the lockbox. Of course there’s one group that isn’t feeling the pain just yet – these consolidation changes have yet to impact lockbox processing. So if that’s the strategy you tap to keep your cash flow healthy, you shouldn’t be noticing any changes. You might even consider moving more customer payments to a lockbox arrangement so those changes coming in 2014 and beyond don’t put a pinch on you.