Factoring & Small Business Blog

post-office

Post Office to Proceed with Cost Reduction Plan; Service Cuts Could Impact Businesses

March 28, 2012

In case you haven’t heard, all signs point toward the U.S. Postal Service moving ahead with previously announced plans to close or consolidate more than 260 mail processing centers early this summer.

The Post Office can’t make the changes until after May 15, when a Congressional moratorium on the proposed closings expires, so the moves are expected by late May or early June. Congress had been looking into potential alternatives, but has yet to offer any possibilities.

The Postal Service is in a bad financial position due to declining first-class mail volumes and a congressional mandate to prefund its employee retirement health care benefits. The actions would save the agency about $2.1 billion next, but are part of an overall plan to save $20 billion in the next three years, which indicates that more changes are in the works that could potentially further cut current services.

In the near term, your business will be most impacted by the closing of the processing centers, and the probable slowing of first-class mail delivery. This would be the result of the additional distance mail would travel from post offices to the centers, thereby slowing correspondence, deliveries, and – most critically – your accounts receivable payments.

Some potential strategies for coping with the slower delivery were addressed in an earlier post. In summary, there are several things your company can do:

  • Where possible, convert to electronic payments. Offer an electronic payment option with your invoices, allowing customers to pay via secure web form, rather than mailing a check. Many companies offer this service. Check with your bank.
  • Invoice faster. Enclose invoices with deliveries, or leave them after service calls. An extra two or three days suddenly becomes a big deal when the mail service is taking longer.
  • Consider discounts for early payments. This is a fairly common strategy for improving the receivables cycle. The size of the discount varies by company and industry. If you go this route, make sure your sales department aggressively promotes the opportunity to your customer base.
  • Use an invoice factoring service. MP Star Financial invoice factoring can ensure that funds are in your account as soon as possible. Call us for information.

Other proposed actions include increasing the cost of a first-class stamp by a nickel, to 50 cents, and eliminating Saturday delivery to street addresses. Both changes would require Congressional permission. Hundreds of post office locations could also potentially be on the chopping block, but no formal plan has been submitted.

MP Star’s invoice factoring services can help make your cash flow more predictable, enabling you to meet your company’s obligations on a timely basis. Call MP Star Financial for more information at 800-833-3765 Ext. 150.

Gage Price
Gage is the president of MP Star Financial, founding the company in 1995 to provide invoice factoring and other asset-based lending services, focusing on freeing up cash flow for small to medium-sized businesses. Gage earned his MBA at The Stern School of Business in New York City.
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