October 1, 2021 ushered in a new era of the United States Postal Service. As a result of Postmaster General Louis DeJoy’s Delivering For America plan, last Friday the organization implemented increases of both price and delivery times for several of the USPS’s mail services.
The impacts of longer delivery times and higher prices are likely to be widespread. In particular, the construction industry’s heavy reliance on paper checks, notices, and documents requires the delivery of thousands of time-sensitive documents each day.
“We are so dependent on our mail,” says D’Ann Johnson, Corporate Credit Manager with A-Core Inc. “The majority of our customers send [paper] checks, so this is going to drastically slow down our cash receipts.”
With delivery times expected to slow by as much as 30%, construction businesses are concerned about the effect on the timing of their payments.
Some professionals are already feeling the pressure. “The slow down is really hurting the DSO for us,” says Toby Brutsman, Regional Credit Manager for MORSCO. “It is slowing down payments to our customers and resulting in lost profit.”
Others that may have already been affected by the creeping inefficiency of the USPS have not seen any drastic shifts yet.
“We have always made allowances for the USPS delays and we will make adjustments if they become necessary,” says Tracy Turner, Regional Credit Manager at H&E Equipment. We will just stay the course with our normal processes we have in place.”
What is Delivering For America?
Back in March 2021, the United States Postal Service unveiled a new plan for sweeping changes across the organization. The primary goal of the plan is to make up $160 billion in projected losses over the next 10 years by instituting a number of changes to the organizational structure, pricing, and delivery processes for most mail services.
In efforts to improve overall reliability, the USPS has introduced expanded delivery slots for First Class mail deliveries. By the old standards, 100% of First Class mail was delivered within three days, with 47% delivered within two days. Moving forward, deliveries will take up to five days, with just 35% being delivered within two days and 31% taking at least four days for delivery.
This is all largely dependent on the delivery mileage, with closer destinations receiving shorter delivery times. If much of a business’ mailing activity is done locally, it’s possible it won’t experience delivery times any longer than usual.
Prices are also being affected by the new plan. Beginning back in August, most services have experienced only moderate increases (Certified Mail has increased by $0.20 to $3.75), while services such as Priority, received price hikes by over $1.00 per package.
With the USPS announcing that prices will now be adjusted twice annually, businesses sending high volumes of documents First Class, Certified, or Priority Mail may start to see these rate increases adding up.
In short: Yes, mail could very likely take longer to get to its destination, especially if it’s travelling a long way. It will probably cost more, too.
For some in the construction industry, delays are old news
For some construction professionals, mailing delays are nothing new.
“It’s become quite noticeable the past few years that the prompt service has slipped significantly,” says Amy Williams, an Assistant Credit Manager with Washington-based Pacific Plumbing. “This leads to more collection calls to find out why we haven’t received payment. We, in turn, have to work on trusting our customers’ promises that they have, indeed, mailed their payments when they claim to have.”
For others, however, the changes will likely make a difficult situation even more challenging. “Currently, it is taking at least 7 days to get something [in the mail]. We have had checks not even show up [or take] upwards to 3-4 weeks to arrive,” says Dana Hovious, Credit Manager at Goley Insulation. “This has caused us to not rely so much on the once dependable service.”
“This has also resulted in a lot of time lost,” Hovius adds. “Time lost chasing down checks and asking for replacements and salespeople going out of their way to pick up a check.”
Mail delivery is critical for construction lien rights
While these inconsistencies are precisely what Postmaster General DeJoy intends to address with the administration’s plan, the new changes to the Postal Service mean construction businesses will need to remain vigilant to ensure lien and payment rights are in place.
Since most states require lien notices to be delivered via First Class, registered, or Certified mail, the Delivering For America plan may have a direct impact on many construction businesses.
It’s important to factor in the potential for longer delivery times when filing notices or liens, especially when dealing with parties outside your local area. But is a contractor’s notice counted as filed upon mailing, or on delivery?
States differ on their definition of “served” when it comes to notices, and the answer is not always straightforward. Luckily, most states count a notice as filed upon mailing, so longer delivery times shouldn’t necessarily impact many businesses in these cases.
However, there are a number of states where notices may only be counted once the party actually receives the notice:
- New York
- North Dakota
- Washington D.C.
- West Virginia
For businesses located within any of these states, it’s crucial to factor in the possibility of longer mail delivery times to avoid missing a notice deadline and losing the right to payment.
The USPS is also cutting store hours in an effort to reduce expenditure over the next ten years. Construction businesses may need to work around new hours of operation at their local USPS branch, which could add further pressure to important deadlines.
Construction businesses explore other delivery options
The COVID-19 pandemic has already provided a technological shock to the construction industry, forcing many to accelerate their adoption of new systems, software, and payment processes. With the percentage of businesses that don’t use any software at all dropping to an all-time low of 8% last year, the industry appears well-positioned to adapt to the USPS’s recent changes.
Professionals have started to encourage their customers to get on board with digital document platforms and electronic payment methods to reduce the impact of USPS delays on the bottom line.
“We’ll have to push our customers [in]to using EFT/ACH or using credit cards to pay their bills,” says D’Ann Johnson.
“It will continue to force us to leverage technology,” says Toby Brutsman, Regional Credit Manager at MORSCO. “We are looking at ways to avoid mail payments and automate items electronically that don’t use snail mail. Using more emails and DocuSign applications with electronic signatures. Using other electronic payment options.”
Others in the industry aren’t ready to drop paper documents entirely. “We have moved some things to going via Fed X or UPS,” says Dana Hovius. “We have now set up as many ways we can to pay without a customer having to put a check in the mail.”
While the changes to the Postal Service clearly won’t affect everyone in the same way, the construction industry may need to brace for increased delays and costs to mail services.
Still, some are optimistic about the opportunity to modernize.
“I think this is a great opportunity to revisit online payment options for those reluctant or old school, ‘if it ain’t broke don’t fix it’ customers,” says Anne Scarcella, Manager Territory Credit at Crawford Electric. “Because now, the mail is broken.”