*Author's Note: In early April 2013, the US Postal Service announced plans to postpone implementation of its five-day mail delivery schedule based on recent feedback from US Government officials. Postmaster General Patrick R. Donahue has publicly called for Congress to allow USPS officials flexibility in designing a new delivery schedule in order to modify the organization’s current costly business model. While there is no certain future for immediate changes to US mail delivery schedules, today’s businesses need to familiarize themselves with the proposed changes NOW in order to adequately prepare for the potential impact on their business should a new delivery schedule be approved.
Within today’s ever-changing print and mail industry, the introduction of new technology to meet customer preferences has substantially impacted the way businesses and consumers alike send and receive mail. Based on continually declining physical mail delivery and subsequent loss in revenue, the US Postal Service (USPS) launched its strategic network realignment plan in July 2012 to improve profitability through the consolidation of more than 200 mail sites. Based on these proposed changes, US Congress officials requested the USPS spread out the site consolidations to lessen the impact on businesses and consumers and allow the government time to enact reforms capable of revitalizing USPS profits.
Due to current inaction from Congress and continually decreasing profits, the USPS recently announced its decision to discontinue Saturday mail delivery, starting in August 2013*, as an additional method of cost reductions. Although the overarching goal of the plan is to drive profits back up, the USPS hopes these newest efforts will help the organization return to solvency without dipping into the pockets of businesses and consumers.
From a transactional standpoint, many businesses are concerned what this next round of changes may mean for outgoing billing and incoming payments from customers moving forward. The migration to a five-day mailing cycle will require businesses and consumers to make several adjustments to adhere to the new pickup and delivery schedules.
Although the verdict is still out on what direct impacts businesses and consumers may experience, USPS officials urge both parties to educate themselves on what changes are coming in order to avoid any serious disruptions or problems.
Understanding the new delivery schedule
While the suggested changes to mail delivery may come as a shock to some, the decision to eliminate Saturday services was not a spur-of-the-moment idea. Since 2007, the USPS has seen a 37% decrease in first-class mail, which resulted in a $15.9 billion revenue loss in 2012 alone.
Beginning in August 2013*, the USPS’s new delivery schedule will take effect. The organization recently released a projected list of services expected to change, as well as those that will not require updates, to allow businesses and consumers to begin educating themselves on what they can expect moving forward.
New delivery schedule components
Mail Delivery: Delivery services available Monday through Friday.- Post Offices: Post offices (PO) will remain open on Saturdays and continue to deliver mail to PO boxes as well.
- Package Delivery: Based on rising demand for package delivery as a result of continued e-commerce growth, Monday through Saturday package delivery services will continue as normal.
Based on these changes, the USPS currently projects an annual cost reduction of two billion dollars and an annual decrease of 45 million employee work hours.
While a recent poll from the USPS reports 80% of Americans support the new delivery schedule, there is still a great deal of concern as to how the new schedule will impact consumers and businesses. With less than six months* until the new delivery process takes effect, consider the potential impacts and determine what adjustments will be needed moving forward.
What should we expect?
From a transaction management standpoint, eliminating Saturday mail services could pose a substantial challenge to businesses that send bills and receive payment by physical mail. Adjustments will need to be made based on potential impacts—both minimal and major.
1. Minimal Impacts: After the USPS announced its decision to discontinue Saturday deliveries, many businesses immediately focused on the negative aspects of this update. While there are plenty of negative results that could come from the new delivery schedule if it is not handled properly, there is also potential for a positive outcome as well.
As mentioned previously, the USPS consolidated more than 200 of its sites over the last year as the first step of its strategic network realignment, which resulted in longer processing times for larger facilities. Because of these longer processing windows, remittance mail processing significantly increased, as employees were able to handle more incoming work.
While the transition from a six- to five-day mail delivery system may impact the level of incoming mail, previously increased remittance processing times should allow businesses to continue processing as normal and possibly have mail ready for pick up earlier than before.
2. Major Impacts: With the elimination of one full day of mail delivery and pickups, businesses could see substantial changes in incoming mail volumes. Because residential and blue box pickups on Saturday will have to wait until Monday evening for processing, businesses and consumers should add in three days for expected delivery on all mail dropped on Saturdays. Not only will these delivery changes impact the overall pickup and delivery of mail but also the allotted timing businesses give themselves and customers to submit payments or delivery invoices.
For example, most electric utility companies allow customers 20 days from the billing date to submit a payment. If a customer pays bills on Friday night or Saturday morning, they would have to make sure the payment was made five to seven days in advance to ensure arrival before the due date. Also, the electric company will have to factor in enough time for the bill to be delivered, paid by the customer and returned based on the five-day delivery cycle. Based on adjustments in pickup and delivery timing, the traditional 20 days for payment delivery could be reduced to 10 days, which may result in more late payments and charges to customers.
From a remittance standpoint, a significant area of concern focuses on the physical transportation of mail based on the new five-day delivery cycle. If weekend mail transportation is reduced, remittance processing and delivery costs and timing will be heavily impacted. With some mail being held for delivery over the weekend, processors will see an unusually high mail peak, which will require them to restructure labor and equipment in order to handle the high incoming volumes.
"The USPS currently projects an annual cost reduction of two billion dollars and an annual decrease of 45 million employee work hours."
Successfully managing the changes
With the decreased time frame for bill payment, many consumers may choose to make payments online rather than by mail. For businesses managing these payments, this will require a well-choreographed process to ensure optimal efficiency across all channels, especially print, as the new delivery changes begin to take effect.
Between new mail delivery schedules changing the traditional flow of incoming mail and the continued expansion of consumer payments and data delivered via electronic channels, now is the time for businesses to consider implementing a multi-channel billing and payments process. Regardless of the outcome from the USPS mail delivery changes, those with a solid multi-channel billing and payments strategy will have a significant competitive edge as consumers continue to adopt alternative payment and presentment options.
TODD HAYCOCK serves as senior product manager for TransCentra, a leader in multi-channel billing and payments solutions and software. He has more than 22 years of experience in the financial services industry, previously serving as engineering project manager and director of business development services before joining TransCentra. Contact Mr. Haycock at todd.haycock@transcentra.com.
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