Is Free Really Free?

All of us are aware of the free shipping software solutions provided by carriers like FedEx, UPS and USPS. They spend millions of dollars to develop these solutions for the shipping public and they all perform rather well. You may be asking yourself, how can they afford to provide free shipping software to their customers? The answer is “They can’t!”

Using the carrier supplied shipping system helps “lock” you in to that carrier, making it harder to use a different carrier. Their systems are primarily designed to help the carrier reduce its operating costs, but not necessarily yours. During rate negotiations, the carriers consider a number of factors in determining the rates that they will offer you. Things like box dimensions, claim frequency, and, not least of all, whether or not your company will use their shipping software. So, if the software really isn’t free, should you look for an alternative; one that might have an initial cost, but might save you money in the long run? We certainly know that one carrier can usually satisfy a shipper. Of course, that carrier can vary from shipper to shipper. The more important question to ask is, can a third party shipping system help even single carrier shippers?

Let’s use our CPS Shipping Software as an example. Shippers using just one carrier have praised the superior package processing times with CPS. Some single carrier shippers take advantage of the considerable savings on declared value insurance supported through the alternate insurance carriers. Still others like the safety net – “just in case” - of the multiple carrier capability of CPS. If the ability of your main carrier to pick up and deliver your packages is interrupted, the multiple-carrier safety net could be the difference in business as usual or a very real “worst case” scenario for your company.

In the world of “free” carrier software, we stay in business when your company profits on its investment in CPS. There is a yearly fee for CPS, and this should be compared to the cost of the “free” carrier software. The carrier provided systems are designed to be good for the carriers. And if you decide to use multiple carriers, each with the carrier provided software, there are definitely costs associated with using the different systems. Is shipping packages one way for one carrier and another way for another carrier the most efficient way? Using two systems, shipping system expenses double: shipping staff training; configuring the systems to work with your data; system updates, etc. These are costs that affect your bottom line.

The free systems lock you in and limit how effectively (if at all) you can make wise business decisions. CPS users and professional rate negotiators alike tell us shippers have a stronger negotiation position when using third party systems instead of free carrier software. Negotiate your best deal, and then use CPS to make the best choices for your shipping and possibly save even more by using an alternate declared value insurance company. Just a 1% or 2% edge can go straight to your bottom line. So, reward your bottom line every year and take advantage of the savings that a multi-carrier shipping system will bring to your business year after year.

For more information about CPS, visit www.HarveySoft.com.

Follow Up on the Post Office Update for April 2011

The recent April 2011 Post Office rate and service update underlined a couple of points that serve as good reminders for future updates.

Be sure to update your shipping system on time. This is important since the Post Office is different from the other carriers. The carriers that send a bill for shipping will always calculate the bills correctly even if the shipping system is not updated to show the latest rates. But with the Post Office, the postage that is applied to a package (or the manifest) has to be right for the day the package is taken by the Post Office, not just on the day the postage is applied. This gets tricky when the update is on a Sunday, you ship on the Saturday before but won’t give the Post Office the packages until Monday. I think the only exception to this is the “Forever” First-Class letter stamp that you can use anytime. But that’s not much help for package and envelope shippers.

And for good measure, test your update by checking a rate that you are familiar with to be sure your update installed correctly. Normally, the best way to do this is to start up your shipping system on the day of the update. It’s hard to get away from this procedure when everything needs to take effect on a specific date.

Next, if you use any application for Internet Postage, be sure to update it, also. There will almost always be an update for Internet Postage software when there is a rate/service change. Run your shipping system updates on time and you should be set when the rates go into effect.

A note about the new First-Class Mail Commercial Plus Parcel pricing-

The Post Office is treating the new First-Class Mail Commercial Plus Parcel pricing two different ways, and this has been a little confusing. This service applies to very high volume shippers for companies that qualify specifically for these rates and sign a contract. The Commercial Plus rates apply to all packages from 3.5 ounces to 15.99 ounces. The new First-Class Mail Commercial Base Parcel pricing is for lightweight packages from 1 to 13 ounces. The Post Office has just clarified that, if a shipper prefers, the new First-Class Mail Commercial Base rates can be used for packages up to 13 ounces and the Commercial Plus rates can be used for those between 13 and 15.99 ounces. Since the single Commercial Plus price is higher than the highest Commercial Base price, it doesn’t appear obvious why anyone would pay more and this has led to some confusion. The price advantage for First-Class Commercial Plus parcels is in the weight range between 13 up to 15.99 ounces.

If you are lucky enough to have the shipping volume to qualify for the Commercial Plus pricing, to take advantage this or any discounted USPS service, a shipper still must be using either manifesting or Internet Postage. Harvey Software's CPS Shipping Software is a multiple carrier shipping system that handles both. And simply using Internet Postage or manifesting with CPS immediately qualifies the shipper for a number of discounts, even if not at the highest Commercial Plus discount level.

A multiple carrier shipping system can help leverage Post Office services to their best advantage for your shipping. For more information about CPS, visit www.HarveySoft.com.

Watch for These New Post Office Rates Next Week

Like they promised, the Post Office is changing their prices on schedule again and maybe a little sooner than you might have expected. This is this year’s second of their new twice a year rate update schedule and is a month ahead of last year’s May timeframe. The changes take effect on April 17th. I summarized the changes below, and you can also see them at http://www.usps.com/prices/welcome.htm.

What you will see are new rates for these services:

Domestic
First-Class Mail Parcels
First-Class Mail Retail Letters
First-Class Mail Retail Non-machinable Letters
First-Class Mail Retail Flats
Parcel Post
Bound Printed Matter
Media Mail
Library Mail

Includes new First-Class Parcel Pricing:
First-Class Commercial Base Parcels
First-Class Commercial Plus Parcels

International
First-Class Mail

The Post Office reports these percentages of increase for this rate update:

Percentage Price Change by Product Category

First-Class Mail — overall 1.7%
Flats 5.3%
Parcels 3.8%
International (outbound and inbound) 4.0%

Package Services — overall 1.7%
Single-piece Parcel Post 1.8%
Bound Printed Matter (BPM) flats 0.7%
BPM Parcels 2.0%
Media Mail/Library Mail 2.0%

Extra Services and Fees — overall 1.7%

Also – why pay retail? To get the best deal on Post Office services, you want to be sure your shipping system uses online/Internet postage or, if your company qualifies, that you are manifesting. Harvey's CPS Shipping Software is a multiple carrier shipping system that does both. And qualifying for a discount is a whole lot better than paying a fuel surcharge!

Use your multiple carrier shipping system to leverage Post Office services to their best advantage for your shipping. For more information about CPS, visit www.HarveySoft.com.

Getting Paid

This tip was a suggested to me to share. Days Sales Outstanding (DSO) is a calculation used to determine how long it takes, on average, to collect receivables. A low DSO shows that a company collects receivables quickly. A higher DSO means that receivables are outstanding longer. Companies using this typically look at this monthly. To calculate DSO, divide the total outstanding receivables at the end of the period by the total credit sales, then multiply that times the number of days in the period analyzed (typically 90 or 365 days).

Right off, a low DSO seems preferable to high DSO, and that’s generally right. But if DSO goes too low, it could be that credit policies might be too tough and could be limiting sales. Most of the time, though, it’s the higher DSO that cause concerns. As the DSO gets higher, cash flow problems can result. This could result from customers being unhappy with a company’s product or service, selling to customers who are not ideal credit customers, or that the company’s collection/credit department is overloaded or not well-organized.

Looking at DSO as it changes over time can often point out trends. Sometimes, a “gentle reminder” needs to be communicated to your customers about their outstanding invoices (or sometimes a not so gentle reminder). One way to send the message is to make sure that your billing process tells your customers that you expect prompt payment. Your company’s shipping system can be one important tool to help keep DSO in check. First, use the shipping notification feature when the order is shipped. In our CPS shipping software, the SHIP eLERT® email lets customers know their package is on the way. When your billing department knows that every customer is notified that their order is shipped, they have information that lets them be more effective in the collection process when they contact customers about accounts receivable. That’s the first “helping hand” from the shipping system.

Next, your shipping system can also let you know that delivery has been made. Instead of tracking one package at a time, CPS can track every shipment in a given date range and let you know, at a glance, the delivery date. One ploy by slow payers is to say “We didn’t receive the order.” There can always be delays in payments due to many reasons, and you may want to continue to do business with at least some slow paying customers. Use the tracking information from your shipping system to help your collection process become more successful and keep DSO in the right range. For more information about CPS, visit www.HarveySoft.com.

Be Sure You Get Your Discounts for Post Office Shipping

How many packages do you need to ship each day to qualify for discounts with Post Office shipping? Hundreds? Thousands? The answer is one! That’s it. When you use on-line/Internet postage, you get discounts starting with your very first domestic or international shipment using these services. For domestic shipping, save up to 13% off of retail rates on Priority Mail shipments and 5% off of retail Express Mail® rates, depending on the package weight and distance shipped. For International shipping, you save 5% on Priority Mail International shipments and 8% on Express Mail International. Along with these savings comes the convenience of a shipping label with postage already printed directly on the label. When the label is printed, you are done! What could be easier?

How can these discounts help your company? Spending less is its own reward and helps right off with better profits and more sales. When your company carefully controls shipping costs, you can establish flat-rate or even free shipping offers. Studies prove the right shipping price strategy attracts customers and decreases abandoned shopping carts, which increase your company's sales. The “trick” is making it easy to use on-line postage so you get the discounts but still get your packages out the door quickly. That’s where a shipping system like our CPS shipping software can help. CPS lets you use your existing data to make the actual shipping process very fast, plus CPS can automatically determine the best way for you to ship, so you use the Post Office when it’s the best deal, or another carrier if that’s better for you.

Use the Post Office in combination with your other package carriers to intelligently create a competitive advantage for your company to make more sales and save on shipping, too. With their offer of several "flat-rate" services, no extra charge for rural or residential delivery, plus package tracking through Delivery Confirmation, the Post Office can play a significant part in a company's shipping strategy. We definitely see Post Office services becoming more and more popular with our CPS users.

If your current shipping system cannot ship with Internet postage now, ask about adding it. If it's just not available for your current system, our CPS(TM) multiple carrier shipping software includes this capability, using Endicia.com, in every package. CPS can solve the problem of using Internet postage, and the solution can win sales. For more information about CPS, visit www.HarveySoft.com.