Small businesses could find it much more difficult to collect payments quickly following the U.S. Postal Service’s decision to stop its next-day delivery.
Forced to downsize considerably, the U.S. Postal Service announced last month that it would shut down half of its 500 processing centers, fire 28,000 employees and eliminate its service of delivering mail the next day. According to the USPS, about 40 percent of all first-class mail is delivered the next day.
New research from REL Consulting indicates that the change could cost up to $100 million per year for businesses that collect payments by mail.
More than 60 percent of all invoices are still delivered by mail, and REM’s findings concluded that the typical American business currently takes more than five weeks to collect from customers. Eliminating the next-day delivery service will likely add at least two to four days to many companies’ collection cycles, according to the research.
What to do? Businesses can avoid dealing with the postal service altogether by simply optimizing their system to collect payments online.The REL Consulting research found that a typical business making $10 billion could net an additional $260 million in capital by simply transitioning into an electronic payment system
“Organizations should, now more than ever, conduct focused efforts to transition more of their customer payments to electronic methods, such as using an automated clearing house (ACH), wire or debit/credit, starting with those customers accounting for the majority of revenue,” said Veronica Heald, REL’s cash practice leader. “ACH payments are a fraction of the cost of checks and ensure faster delivery.”
By setting up an online payment gateway, scheduling recurring billing, accepting credit cards online and processing ACH payments online – businesses can completely avoid the hassle of hoping payments make their way through the postal system without being delayed.