Finances: Cost & Revenue

Unused Land Parcels – Sell, Hold, or Develop?

on Jul 30, 2012 in Finances: Cost & Revenue | 2 comments

The U.S. Postal Service is one of the largest real estate owners in the United States with more than 8,600 facilities and 950 million square feet of land. (The Postal Service leases another 24,600 facilities.) It also has about 357 unused land parcels with no structures on them, which have a book value of $128 million. The lands’ assessed values are likely to be significantly higher.

The Postal Service has contracted with real estate company C.B. Richard Ellis to sell its surplus real estate, which includes both buildings and land. You can find the properties on the following website, http://www.uspspropertiesforsale.com/. The sale of properties would generate cash flow for the financially strapped organization. It would also contribute to streamlining its physical footprint as the Postal Service aligns itself to be a leaner, faster, and more market-responsive organization. However, the sale of real estate assets would not produce recurring revenues.

The Costs, Should They be a-Changin’?

on Apr 30, 2012 in Finances: Cost & Revenue | 9 comments

As the Postal Service struggles to survive, it needs to take a good look at the financial health of its products. However, ascertaining the financial health of a product line requires an accurate estimate of the cost of providing that product. The Postal Service is moving into an increasingly data-driven future; thus, the timeliness and accuracy of cost measurement will continue to grow in importance. The Postal Service has not changed its cost system fundamentally in many years, though it updates significant inputs annually. There have been calls for an examination of the accuracy and relevance of the system and implementation of specific changes. In order to inform the dialogue and debate, the OIG published A Primer on Postal Costing Issues, a discussion of postal costing, including the most salient of the concerns the Postal Service and its customers have raised.

Postal Service Revenue: What Should be Done?

on Oct 10, 2011 in Finances: Cost & Revenue | 56 comments

Much emphasis has been placed on reducing the Postal Service’s costs in response to its financial crisis. Yet financial viability could come in the form of a balanced approach that both reduces costs and increases revenue. How would a smart business respond to declines in its major products? Would it raise prices where possible in stagnant areas and invest the proceeds into existing or new growth areas? Would it selectively discount products to grow volume in price sensitive segments? Disruptive innovation, such as that underway in the communications sphere, requires change to ensure the Postal Service has what it needs to move beyond the critical crossroad it faces today.

Digital Currency: An Opportunity for the Postal Service?

on Oct 3, 2011 in Finances: Cost & Revenue | 18 comments

When you buy your groceries, how do you pay for them? What about when you go to the gas station or neighborhood restaurant? How do you buy items online?

Cash may still be king, but in everyday life, it is being eclipsed by newer digital payment methods such as credit cards, debit cards, and electronic transfers.

These payment methods are often more convenient than carrying around lots of cash, but they are not equally available to everyone. People who don’t have bank accounts or credit cards cannot access the full-range of digital currency products.

Protecting International Revenues Domestically

on Sep 21, 2011 in Finances: Cost & Revenue | 3 comments

In a time when the Postal Service has suffered declines in volume and revenue across many categories, it has turned to the international market. For example, it has seized opportunities, including with China, to increase its overall market share in package and express business. But the Postal Service has to maintain an “international” infrastructure in order to efficiently receive and dispatch this mail flow.

International Service Centers (ISCs) in Chicago, Los Angeles, Miami, New York, and San Francisco distribute and dispatch international mail. International Airmail Records Units are located within the ISCs which are part of the International Network Operation. These units validate mail records before transmitting information to the International Accounting Branch in St. Louis for billing foreign postal administrations.

Operations and Finance – Allies or Foes?

on Sep 19, 2011 in Finances: Cost & Revenue | 12 comments

Let’s take a simplistic view of the Postal Service by dividing it into two groups: Operations and Finance. Operations’ main concern is to make sure mail is delivered and other services are rendered to satisfy customers’ needs. On the other hand, Finance’s responsibility is to ensure that all the information stemming from the Operations side is captured for billing/payment and financial statement reporting purposes. After all, the Postal Service needs to be paid for their good work, doesn’t it?