on Dec 13th, 2010 in Finances: Cost & Revenue | 35 comments
 
  The Postal Service does not receive tax dollars to sustain its operations, but relies on accurate postage payments for support. While the vast majority of the Postal Service’s customers pay the full cost of mailing, revenue loss, otherwise known as revenue leakage, can occur when individual or business customers don’t pay the appropriate postage for their mailings. Postage may be paid in a number of ways. Customers can buy stamps at a customer service window and apply them to letters and packages as they need them, which can sometimes lead to underpayment of postage. Business customers can pay through meter or permit accounts. Business Mail Entry Units make sure that the correct postage has been affixed or claimed when discounts are claimed. Online sellers can use PC Postage and Click-N-Ship® postage with free carrier pick-up, eliminating the hassle of taking their goods to the Post Office to be weighed and shipped. Of course, this could lead to mistakes in mailings sent out under the wrong, and cheaper, mailing class for which the goods do not apply, such as mailing a set of skis as media mail. Because of its dire financial situation, it’s now more important than ever for the Postal Service to protect the revenue it is due whether it comes in from the post office window, meters, online postage accounts, or from permit accounts. Now is the time to share your thoughts and help the agency get back in the black. What are the best ways to protect Postal Service revenue? Enter your comments below. The Office of Audit Sales and Service team is hosting this topic.

35 Comments

The biggest risk right now is right-sizing "revenue protection" in the first place. Don't spend $10 in order to collect $1. Don't make the mailing requirements so complex and convoluted, and both mail presentation and mail acceptance will be greatly streamlined and enhanced. Don't use penalties to raise cash, use penalties as a corrective action in extreme cases. Don't allow revenue protection to cancel out any type of customer service and business relationship building. Don't treat good, established, repeat customer/partners like potential thieves.

Thank you, Mail Girl. That sounds like good advice all around. The Postal Service should strike a balance with revenue protection and customer service so everyone's business wins.

first: cancel all stamps! stamps received from the plant on flats and small parcels many times are not canceled and many times are being reused.

second: Stop delivering postage due mail, if proper postage is not paid, return to the sender and collocet the postage there. This will stop many of them that intentionally short pay postage.

RuralRandy, you are correct that ALL stamps are supposed to be cancelled, and that is part of what we are trying to identify, so thank you for your comment.

On the postage due comment, how many out there think that it is intentional or a mistake? Do you think that returning the mailpieces to the senders would take care of the short pays?

Eliminate Media Mail if it is possible. Even though it is the only class that is not protected from examination, most office do not have the time to check the inside of the package to see if it qualifies. We lose money on every media mail piece getting sent out, and there are way too many people out there that abuse this class, whether intentional or not.

I also have to agree with Mail Girl with spending a dollar to save a dime. There is way too much emphasis being placed on running individual pieces around just in case there might be an EXFC test piece in there. In my district )Philly Metro), there are processes in place for the "Blue Box Flats" and the overnight 1st class parcels where we have to log how much goes out, and the fact that it is being processed manually. We also have to type in all the DelCon numbers and zips everyday. Are we making any money on these pieces if they are being processed this way? I doubt it. A lot of excess labor just so a few district managers can get a bonus.

Thanks, Lenny. I understand your frustration. Anyone else out there experiencing the same thing? Please let us know!

1. Stop paying managers and supervisors bonuses.

2. Cut back on grievences by holding management accountable for intentionally not following the contracts with unions. Also hold them equally accountable for failures, mistakes, or accidents they may have. It seems that when they screw up, nobody is on their heels with written warnings and threats of termination. Make ALL equal and people will be less likely to create these grievable situations.

3. Stop contracting out so much work and saying it save money. I’ve been around a while, I’ve served in the military and ran my own business for several years…I know it’s possible to play with statistics and math to support contracting out, but I also know that it rarely save any money and often ends up costing more in the long run. Management often claims that funds for contracting come out of another pool of money…huh? Isn’t ALL money in the pool property of the USPS? this is the type of thinking we need to change.

As a former processing plant employee, it was amazing to me how much mail did not get cancelled or did not have enough postage (meter and stamp). This aspect of processing is not emphasized because it might slow down the sortation operations. In addition to training, employees need to be encouraged to locate this mail and cancel the postage or collect the deficiency. Operations would have a minimal impact once employees develop good habits in this area.

Thank you, Opportunity. Do you have any recommendations for just how employees should locate the uncancelled/shortpaid mail as it is being processed and/or how to go about collecting the postage due? We are looking for some really good, feasible answers.

While under payment and re-useage of stamps is certainly fraud against the USPS, I wonder what the value of this fraud is? Certainly major misuse should be driven out of the system and people held acountable, but what is the value proposition of revenue protection versus the value proposition of making it easier to use the Postal System?

I don't know the numbers and would be interested, but I hope that the correct value of revenue protection versus improved customer service is determined. Just this morning I went to ship two packages valued at $16 postage and wanted to buy 100 stamps. I used the APC for the parcels pretty quickly but left the Post Office as the line to buy holiday stamps was very long.

We want to thank everyone for your posts here. Due to the sensitivity of some of the information provided in some of your comments, we may not be able to publicly post all of them. However, all comments, whether posted or not, are being reviewed and taken into consideration by our audit team. Please keep posting!

In the Western Pa district, letter-size mail is often run with the automated flats instead of in the DPS. This results in carriers casing plenty of mail (fletters) that should never had been handled manually.

Also, our clerks and carriers are often manually sorting and casing bulk mailing rejects that were given deep discounts for automation compatibility. If we have bulk mailings rejected by our equipment, then the mailers should be back-charged at a considerably higher rate. However, if the cause is from us not maintaining equipment properly then that issue should be addressed too.

Like others have stated, frequently stamps are not canceled on flat mail in this district either. Click-N-Ship items should all be weighed before going through the system as I feel a fair number of individuals are being less than honest with stated weights.

An item of cost concern would be the "free" supplies we provide upon customer request. Go to YouTube and search "graffiti slaps" and you will find video after video informing viewers how to receive our supplies to use for other purposes. Perhaps a charge card and $1 fee (like we do for change of addresses) would help deter this abuse.

Discounts to catalog companies should entail these mailers using us to deliver a minimal percentage of orders. If they are only interested in UPS or Fedex for delivery, then no discounts should be given.

To help contain costs, Advos, Pennysavers, and other such city carrier saturation mailings should not have street addresses, but rather be addressed only as "Patron/Customer, YourTown, USA", like rural routes. This eliminates the need for carriers to put each bundle in exact sequence and would help ease some of the chaos(wasted workhours) that occurs when routes are adjusted/JRAP'd/COR'd.

Seenoevil,

Thank you for your comments. It sounds like there might be some revenue leakage in your location that would be worth management's attention. The "Neighborhood Mail" idea sounds interesting; what do others think about this?

You fellas still hung up on these stamps?

Sorry, can't define a technology that will process such a large variation of objects,
without a leak......

However, citing from financial reports from recycling operations, might provide the
answer. I would suggest talking to waste management companies about how they handle
this revenue protection conundrum?

How many secure bytes represent $00.44?

I'm quite certain some folks at the US Department of State are pondering this very same thing right now.....

The clerks must be more knowledgeable regarding the different pricing structures that the USPS charges so they can catch underpaid postage. Clerks should be encouraged to use common sense if something seems heavier than stated. Scales should be placed nearby to doublecheck any suspect weights. Clerks must be able to understand how to figure out dim weight pricing manually without the POS machines. They are given a worksheet but most will never have to use it as they will just rely on the POS.

Common underpaid postage is the Tyvek Priority Envelope being paid for as a Flat Rate Env rather than based on weight.

Chunky bubble mailers underpaid as large envelopes rather than parcel rate.

Another problem is labels are printed deliberately tiny and the older clerks can't see the postage paid.

Postage labels should be made to be a standardized size so it can be read easily.

Thank you, Mamamonkeyclerk.Those were all good points. Do you think that it is related to a lack of training, being rushed at the window, or something else? I'd like to hear what you think the reasons are.

I would say it is mostly being rushed at the window. If you're working at a level 18 and up office, you have very little time allowed to do anything more than your basic jobs-sorting mail, throwing po box, working window and dispatch.

I am sorry, I should have been more specific re: clerks. I am talking more about the distribution clerks being more knowledgeable so they can catch as they sort. I do know it is hard as they have deadlines to meet in the morning. Because of that reason, I am very adamant that it very much the responsibility of the originating office to ensure that they catch any incorrect postage on their end and send it forward as postage due. To expect the destination office to have to try to audit and collect the revenue before the deadline is a little unrealistic.

I think it's very imporatant for the dispatch clerk to be able to recognize any shortpaid and to tag it as short paid before send to destination. They don't realize what an important job they have. It's not just put the boxes in the cage and send it on.

The big problem is everyone thinks they are doing their job but they don't seem to realize that catching shortpaid mail is part of the job also. Management all the way to the top must be made to understand that too. Their thinking must change as all of our jobs are on the line at this point in time.

As for the lack of training, yes I do believe that is part of the problem. We have distribution clerks with over 15 yrs with the USPS that were not formally trained with the shape based pricing when it first went into effect several yrs ago.

The window clerks have the POS machine to detect incorrect weights so that isn't really a problem.

Thanks for the clarification, Mamamonkeyclerk.

I don't know about other distribution centers but the people that handle manual mail at our installation is not allowed to mark-up mail for any reason except no address. This started about two years ago and prior to that time we always marked up the mail and now we are told that we don't have the training and that it will be caught at the delivery point. We used to markup thousands of dollars a day and now we mark up nothing and I know that it is not marked up at the delivery point because they don't have the time, the people, or the training to do so. Figure it for yourself. If our small plant does one thousand a day, how much do the large plants let go. We are not talking small change we are talking hundreds of thousands of dollars a year. Bring back the markup of mail by anyone who catches a mistake.

I've preciously mentioned that contracting out vehicle maintenance is more costly than doing work in house. I want to elaborate on that just a bit. At my VMF, management has been increaingly sending out our vehicles -statewide- to car dealerships for routing maintenance, repairs, overhaulsms, and body work. These actions have been taking work away from VMF mechanics. Of course, there is the arguement that we are not keeping up with the demand, so there is no choice; there's always two sides to a story. We have been seeing many of these outsourced vehicles come into our shop due to breakdowns and various other failures...we have discovered various faulty and/or dangerous incidents with these vehicles. When brought to mgmt's attention, we are told not to worry about it and just fix it. We have also seen numerous receipts and work orders from contractors. Contractors overcharge for work, charge for for extra on items that normally include overlap work, and have even charged for work that was never performed.
We have brought these contractor charges to mgnt's attention and again told "to drop it, money is no object because contract money comes from a different postal fund, not the VMF budget." That upsets me in many ways for many reasons...but I'm particularly bothered by the fact that mgmt has no concern about the cost of vending out work and they have absolutely no intention of following up on the amounts charged by contractors or if contractors even do the work they have charged us for. There is no Checks and Balance system in place to protect the Postal Services money.
According to the OIG's website, the "Fix as Fails" Strategy has been fixed. I submit that in the Omaha VMF, we are failing due to intentional ruination.

PLEASE check into the intention mismanagement of the USPS's money.

Mopar9285,

I will make sure to forward this to the appropriate team within the OIG. Thank you for your comments and concern.

I have a strong feeling that the post office could save a lot of lost revenue by not promising extreme pay to it's employees; clerks, carriers, factory workers, etc. etc. With over 700,000 employees strong all getting paid an extremely generous dollar, and very generous benefits, it goes without say that the Post Office has done more than it's capacity in taking care of it's own. Not to mention that holiday pay for those it's applicable for get double time if I'm not mistaken. Perhaps it's time that the employees themselves give back. If all employees were to give up one dollar an hour, the post office would save 1.45 billion a year. Frankly, I don't believe that a dollar per hour loss should be so detrimental to anybody that they are going to be bouncing checks at home. If that is the case, perhaps some individuals need to be better budgeters at home. Regardless, that is not a problem any company needs to worry about. A company is designed to make money, not provide benefits. For holiday pay, what is wrong with time and a half as opposed to double time? I also feel the employees should pay more into their own insurance as well as starting an employee contributed only 401k. I feel unionized employees get too confident in the protection a union brings but frankly with all due respect, I was raised not to bite the hand that feeds me. No union signs a paycheck, the company does. I think the employees need to understand that and if they wish to keep their job, keep overtime (I.E. -Saturday Delivery), perhaps they should take that into consideration. A 401k is better for an employee anyway because the employees have more control over how their retirement is shaped. I get tired of hearing about how management does nothing in my Post Office. Management does a lot, and they take a lot of heat from employees who all things considered, act like children at times. It's irritating. This is a serious business, and serious people are needed.

Wow, thanks for the repulican talking points!!

Did I misread this weeks topic or was it Revenue Protection?
Ranting about employees was the topic several weeks back.
In response to your post, I will try to help clarify some misinformation.
The Postal Service currently employs approximately 670,264 individuals. That number includes non bargaining and bargaining, full time and part time, career and temporary. The figure includes the Postal Regulatory Commission, HQ, field offices, OIG and the Inspection Service. There are too many to list them all but as you can see, the positions that make up the Postal Service go far beyond just clerks, carriers and mailhanders.
It is a fact that the bargaining employees are represented by various unions. Thus their wages, benefits and working conditions are negotiated by their respective unions with the US Postal Service and their contracts are legally binding just like any other contract between two or more parties. Contrary to whatever you may feel, the Postal Service negotiated the terms of the contracts with the various unions, meaning they sat down and agreed. For non bargaining employees, they have their associations with representatives that advocate the wishes of their members but without a contract.
The US Postal Service is a company in the looses sense of the word. They can just as easily be considered an association, a troop or a corps. What the US Postal Service constitutionally is, is government. The employees are government employees, public employees just like the ones that work down at your local City Hall or in your public schools with the one exception being that the US Postal Service can generate revenue.
When postal employees receive their paychecks, they receive a government check, not a company check. It looks just like the check one receives from the IRS when getting a refund.
It is debatable though, whether government should make a profit or just be a service to it's people.
Postal employees do have a retirement program similar to the private sector 401K but being that the Postal Service is government, it's only available to government employees. It called the Thrift Savings Plan and all government employees who entered government service after 1984 are eligible to participate. It's the same retirement program that your Senators, your Congressman, and your Armed Services members participate in.
Lastly, I don't know what the management at your Post Office is complaining to you about but this is America, the land of the free and if they don't like their job with the Postal Service, they can quit.

You didn't ask about sequenced coverages that get a discount for being in walk sequence but yet they come in out of sequence and require the carriers to case them. We have no way of recovering this discount from the mailers that endorse their coverages as ERWSS but in reality are not in order. Once we have them we have lost revenue because of the discount granted and also lose with added labor expenses. In fact, if you just required all coverages to not have an address, you could save even more. Just one per address, and no address info on the mailpieces would be the best way to go. EAsier to work as a separate bundle as well.

One other thing,

We shouldn't be providing collection service to UPS stores. They are our competition and they do not push our products to their customers. When their customers do decide to use USPS via a UPS store clerk, the UPS store charges a huge mark up over and above the postal rates. This should be made illegal or we should refuse to pick up from their stores if they're going to insist on continuing this practice. I pick up from these stores regularily on a collection run, and most days I don't pick up enough in postage to pay for the time that I spend pulling into and out of the parking lot. It a loss of money to bother wasting our time servicing UPS stores and other similar outfits.

We want to thank everyone for taking the time to post their comments and votes. Again, if your comment was not made public due to the sensitive nature of the content, it is still being taken into consideration by the team. Again, thank you all for your many and varied comments!

Promote the use of stamps to pay your bills. We get plenty of solicitations to use the internet and email instead of using stamps. Use these reasons:

1. Reduces e-mail clutter.
2. Saves online time.
3. Don't have to worry about lost passwords and user ID's.
4. Reduces chances of online identity theft and fraud.
5. Post Office employs inspectors for illegal mail or theft but Microsoft does not come to the rescue.

I forgot to mention that I agree too many stamps are getting through not cancelled. Why can't the delivery person take notice and cancel them? Surely the operations manual instructs the delivery person in this regard. My old postman used to strike a pen through but since he retired I don't find the new people as efficient.

How about management receiving bonuses for cutting certain costs...or bonuses in general. Seems that bonuses are contrary to the USPS goal of getting out of debt and serving the public at an "affordable" price. ...or
How about VMF management "saving" $4000 through cuts in overtime by contracting out work and towing services at a total cost in 2010 of just over $1 milliion? Of course, that money comes from a diferent budget...so that makes it okay!
ONE more...Why does the USPS send upper management to etiquette schools to learn how to mingle with high position politicians, rich businessmen, and foreign dignitaries. These people are put up in 4-star like hotels as well. Just like our government - overspend, blame the people who do the work, raise prices, and spend more on the white collars!!!
PROVE ME WRONG OR LOOK INTO WASTE, FRAUD, AND ABUSE at the Omaha, NE VMF

I was fascinated by your response to Lenny with respect to his observations about EXFC and the way it managed. I contacted the PRC with concerns about the manner in which EXFC was distorting behavior and was referred to the OIG. I had several exchanges with someone at OIG, he had me look at an audit done in the Dallas area with respect to a shadow Priority delivery network - nothing unique there. Ultimately though the answer was always that management's approach to EXFC was within the confines of their discretion. I am reminded of the old saw I learned as a steward many year's ago - management has the right to mismanage.
It is no secret that every district has adopted some form of shadow network to chase EXFC perfection. A measurement that was designed to report on the efficiency of the network as it operated normally has become more a measure of our ability to identify extraordinary means and procedures in the quest for higher numbers. It is truly a shame that no one has been able to address what amounts to a fundamental element of our institutional culture with respect to systems measurement.
As far as revenue protection goes, it would seem that there are many opportunities for improvement. Start with an obtuse rate system that is virtually impenetrable to the layman. Add to that the infatuation with programs like Click and Ship that appear to have no real controls - ironic that we treat employees as if they are all dishonest and apparently give little thought to the idea that customers with economic incentive will not abuse the system. Finally, mix in an institutional culture that worships numerical goals without a basic understanding of the elements from which many of the goals are determined.
The Postal Service is an essential institution that does amazingly well in spite of itself. Unfortunately as the challenges of sustaining an unsustainable business model become more evident the resulting cognitive dissonance becomes ever more deafening.

I agree with most of these posts {except for COMMONCENTS} I believe that the craft employees have great ideas for cost cutting since they are in touch with the customers as well as the mail. I also agree with MOPAR. You should be investigating wasteful spending as well as revenue protection. How about Potter? He should be held accountable for what he's done to our service, and to hard working, honest employees. Grievances and lawsuits are costing the PO millions and no one tries to correct these situations. MOPAR, the waste, fraud, and abuse is going on all over our country. The public needs to know about this.

We are still listening to all of you out there (even if we are unable to post you comments due to the sensitive nature), so please keep the dialogue happening!

Most Postal employees do not realize the negative impact that short paid mail has on the Postal Service. From the data collected last year it was estimated that the USPS lost 600 million in revenue due to short paid mail. The District I am in was held accountable for roughly 6 million of the 600 million. You would think with the declining revenue and mail volumes each District Manager would put some effort in collecting a portion of the lost revenue.
I first started detecting postage due mail as a clerk. Each morning I would challenge another clerk to see who could come up with the most postage due mail and the lesser would pay for the coffee during the am break. It would be easy just to put everything you thought was postage due on a pile but we added if you guessed wrong on the weight you would lose two pieces so this made the game a little interesting. Later in my career I began to take it a bit more seriously and realized this was no longer a game. Since the shape based requirement many meter customers did not change the way the postage was applied partially because no one told them. From what I have learned is most of the short paid first class is collected by carriers, brought in to the back door for dispatch where the dispatch clerk has little or no retail knowledge or picked up on a dedicated collection route by either a PVS driver or carrier. The P&DC is a funnel and is a great place to start however most mail handlers and clerks in the plant have no rate knowledge. The P&DC will not utilize work hours to detect postage due mail and customer service clerks cannot work in the plant environment. I propose to create a EAS revenue protection specialist position. This individual would identify and document the postage due mail and then contact the Postmaster of the origin zip code. The Postmaster then would contact the mailer to educate the mailer. There are four areas for identification of postage due mail first the 010 or opening unit. This is where the incoming comingled mail is separated then sent to specific areas in the plant. Second would be the rough cull area. This is where fat letters, flats and small parcels are culled before going to the Advance Facer Canceller. The third place would be at near the loading station on the flat sorter. The fourth would be the dumping station for the SPBS and APPS.
Marketing is dong a great job at getting additional customers but the customers we currently have should be paying the correct rate. Having a carrier take a postage due letter for 17 or 44 cents to a customer actually costs the USPS more in man hours than what is collected. The key is contacting the mailers and educating them, this is also a great way to then promote other services that we as a company have to offer. Many times you see a large brown envelope get mailed from a company with Priority postage applied and no Priority endorsement. The Company probably did not realize it was Priority or did not have the needed packaging priority supplies on hand. Studies show companies that have the packing on hand use them.

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