US Postal closes 50% of mail distribution centres: effect on Accounts Receivable

December 30, 2011  |  Electronic Invoicing, North America, Payment

US postal office 225x225 US Postal closes 50% of mail distribution centres: effect on Accounts ReceivableDespite a new US Postal campaign to promote paper invoices, the United States Postal Service announced early December that it plans to close roughly 50% of mail distribution centres. The reason: to accommodate expected declines in revenue from first class mail.

As a result of these closures, first class mail will no longer be delivered in a single day, adding to the time it takes for checks to reach US businesses. And this could slow Accounts Receivable for US businesses.

Cultural differences

From of our readers this comes as a surprise that this can actually slow down Accounts Receivable. But we have to consider that a lot of businesses in the US (and as a fact a lot of other countries too) still send a lot of checks by regular snail mail.

In fact, in an article for the Associated Press, Jonathan Fahey highlighted concern among America’s business owners: “It’s less of a disaster than it would have been 10 years ago, but it’ll be a cash flow crunch for some companies.“.

Todd McCracken, president and chief executive of the National Small Business Association confirmed this and added: “It’ll be longer to get your invoice, and longer to get a check back.”

Both cause and solution

The US Postal Service claiming that the rapid decline in First Class mail revenue is directly due to the conversion of bill delivery and bill payment to electronic means.

So the cause in the decline is because of using EBPP means. But that same transition holds the key to protect and even increase Accounts Receivables. Both weird and great at the same time.

Still, with this decline in service from the US Postal Service, combined with a complementary decline in check writing, businesses who rely on checks in the mail for revenue need to find alternatives. Fast.


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