Neither Rain Nor Snow Nor Dark of Night – Michael Dennis, CBF

USPS service delivery truck in a residential a...
Postal Service

For those of you who may have forgotten, this phrase is part of the creed of the United States Postal Service.  Someone asked me recently if I thought that the proposal by the USPS to reduce services such as Saturday delivery could have a negative impact on credit and collection and on DSO.  It was a great question, and is one that I have given a lot of thought to and the answer is —- It Depends.

If the majority of your customers pay you by check and those checks represent more than 50% of the amount collected, then reduced service [such as the elimination of Saturday deliveries] could have a negative impact on DSO.   If the majority of customer payments are made by check but those payments represent, let’s say 20% of the total amount collected each month [based on the now well known 80/20 rule] then any reduction in services provided by the USPS would have a far less dramatic impact on DSO and collections.

If the majority of your customers pay the majority of the money collected each month by wire transfer or ACH payment, then clearly a reduction in USPS services would have a limited impact on your collections and your collection effectiveness as measured by changes in DSO.

I recommend migrating as many customers as possible, as quickly as possible, away from checks and to electronic payments (Fed wire and ACH).  Customers, including many midsized customers, have the ability to generate electronic payments.  Some do not do so because they recognize that issuing checks results in mail and process float.   However, the efficiencies associated with electronic payments for both the seller and the buyer are so significant that it is something that vendors need to recommend to their midsized customers and should expect to receive as the preferred payment mechanism from their larger customers.

Michael Dennis, MBA, CBF, LCM

What are your thoughts?

Michael Dennis’ Covering Credit Commentary. Michael’s website is

The opinions presented are those of the author.  The opinions and recommendations do not necessarily reflect the views of CMA, or their Officers and Directors.  Readers are encouraged to evaluate any suggestions or recommendations made, and accept and adopt only those concepts that make sense to them.

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4 Replies to “Neither Rain Nor Snow Nor Dark of Night – Michael Dennis, CBF”

  1. Michael,

    I always only thought about the post office service with regards to my own personal mail. This is very interesting and I’m curious if members have already been making plans to accomodate for if/and when this will occur. Will watch with anticipation…

    1. Michael,

      It is not clear to me whether the proposal to eliminate Saturday delivery service includes elminating any Friday night/Sautrday sorting and internal mail processing. If non-retail businesses are open M – F, then the checks that might have been received on Saturday would be received on the following Monday. This would not really impact the deposit date. It would be more of a concern if mail was not sorted in time for a Monday delivery. Of course, if you have a P. O Box and could otherwise pick-up and deposit Saturday a reduction in the inside postal workforce would also create a delay. If the processing is still done on Saturday, then leasing a P.O. Box could save a day if you wanted to pick-up Saturday as opposed to Monday. If only the actual Saturday delivery service is elminated, then our mail carriers will simply be pushing a heavier cart on Monday.

  2. I expect a delay in some payments due to the cutbacks in staffing by USPS – and a further delay in some payments by customers that want to gain additional time by holding on to mail longer before they put it in the hands of the USPS and then point to the cutbacks in staffing by USPS as the complete reason for the delay. I agree with the points that a) many major companies have already switched over to payment methods other than USPS and b) every company will benefit by encouraging customers to pay by methods that will get payment in your hands faster than it will if mailed with USPS. It’s a vicious cycle that USPS is in. They cut back services to deal with decreasing use of their services, then the fact that they cut back service forces people to find alternatives to their services.

  3. I see no delay in payment with Saturday mail being canceled & with the current technology & experience being used in its place.

    Checks by mail are old school & will go with the baby boomers.
    Most generation Xers & Generetion Yerss do not even use checks anymore or even know what checks are! Direct deposit & EFT is the future and is already replacing old school checks.
    The future is now!

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