Mike Ginsberg

Mike Ginsberg

Yesterday the U.S. Senate passed a plan to save the Pony Express, an effort that could save tens of thousands of jobs and keep opened a staggering number of processing plants and post offices slated to be closed or consolidated as soon as next month.

Rescuing the USPS will have a dramatic effect on debt collection nationally. It is a struggling dinosaur in desperate need of a dramatic overhaul. Traditional mail volume has dropped significantly over the past decade in direct proportion with the rise in email and social media usage. The Great Recession also hammered down the use of express mail, historically a profitable service offering. Add to the mess a congressional mandate to prefund retirement benefits and the results are staggering: losses of more than $5 billion for the year ended Sept. 30. How many companies do you know that can survive multi-billion dollar annual losses? Not many.

Without help, the USPS would have to cut Saturday service, delay daily mail delivery, do away with overnight delivery of many kinds of first-class mail, and close hundreds of processing plants and post offices at a cost of an estimated 35,000 jobs.

The good news for everyone directly or indirectly involved with salvaging the USPS is that attempts are being made to address the issues but, like almost everything else with political overtures that need to be addressed during an election year, the current bill is expected to meet resistance as it is passed to the House.

So, how is this relevant for companies that provide debt collection and other accounts receivable management services? Directly, the answer is obvious for anyone tasked with collecting. Today, the primary sources of communication between collectors and debtors (in today’s politically charged society, “consumers”) are mail and telephone. Whether a bank, hospital, government agency, or any other type of credit grantor is utilizing internal resources or external ones, the methods of collection all stem from these two primary methods. Mail is a critical and expensive method used to communicate with debtors about their obligations. Until the rules change enabling collectors to use the internet (email, Facebook and the vast array of social media resources available at a fraction of the cost) credit grantors, debt buyers, collection agencies, collection law firms, and vendors that provide mail-related services to these end users will be impacted by changes to the USPS.

Indirectly, the effects are also significant. The collection industry has been hit square in the mouth by the mighty blows of the Great Recession. Simply stated, if people aren’t working then bills start to pile up. Adding tens of thousands more people to the unemployment line will take its toll on recovery efforts on a nationwide basis. When an auto company closes a plant, the affect is felt locally. If a large company goes out of business, the affect is dramatic but contained to specific locations where the company is situated. However, very few companies truly operate nationally and if the USPS is forced to close over 200 plants and post offices the effects will be felt in most cities across America.

ARM professionals should be rooting for the Federal government to find a solution to the USPS dilemma. Unlike highway tolls, it is apparent that postal services will not be outsourced to the private sector anytime soon.


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