Change in Post Office Mailing Standard Seen as Positive for ARM Industry

A new standard for letter coding at the United States Postal Service (USPS) could have a sweeping positive impact on the accounts receivable management industry as collection organizations will be able to more effectively track letters and save on bulk mailing costs.

Scheduled for implementation in May 2009, USPS’ Intelligent Mail Barcode (IMB) combines POSTNET and PLANET Code barcodes along with other data into one 65-bar code.

The new standard barcode not only gives letters a cleaner look, but it also confirms the status of each mailing from the time it is mailed to when it is received. The new barcode also offers free Address Change Service (ACS) benefits.

IMB has great potential for the accounts receivable management industry, according to a letter-sending vendor that serves collection agencies. “IMB gives customers huge advantages and intelligence that they never had before,” said Ed Horworitz, Chief Operating Officer at PSC Info Group.

The new barcode will allow collection agencies to track letters and remittances, which will enable them to more effectively predict cash flows and facilitate more accurate calling strategies.

Through the confirmation mechanism built in to IMB, call centers will now know when a customer receives a dunning letter, and follow up at the appropriate time, according to Mike Pompa, managing director at Pitney Bowes Group 1 Software, a mailing systems hardware and software provider.  “It will be incredibly powerful for the collection industry,” Pompa noted.

Pompa, said that the barcode is supposed to make postage cheaper, although a definite pricing scale has not been published released. The prices are expected to be published in late February.

The USPS says on its Web site that bulk mailers will need to implement the IMB standard to qualify for the maximum automation discounts.

Collection agencies and other ARM firms are typically classified as bulk mailers, depending on their size. For most debt collectors, mailing costs are a major expenditure each year.

According to a recent survey conducted by ARM industry trade association ACA International, the average collection agency with more than $100 million in account placements per year spends nearly 5 percent of its revenues on postage and delivery costs each operating year.

Rich Turner, vice president of Sales & Marketing at DANTOM Systems — a competitor of PSC in the ARM letter segment — said that IMB gives clients more services to pick from. The new system will allow mailers to pick a level of usage, and that choice will likely dictate savings.

The new system will have two types of services for collectors and other mailers to choose from: 1) Full service method and 2) Basic service method. The primary difference between both services is that the full service method requires a unique identification number that will allow mailers to uniquely identify and track individual mail pieces with their associated trays, sacks, pallets and containers.

According to Horowitz, all mailers using the basic option of IMB will have higher postage costs than those mailers using the full service.

So far, PSC and DANTOM have come up with solutions and systems geared toward collection agencies that adhere to USPS guidelines for IMB.

Both companies are certain that this change in mailing will not present any hassle to their customers.

Even though no hassles are predicted, Pompa did note a hurdle in deploying their new IMB-compliant system, Mail 360, is spending the time to understand how to maximize the information that can be obtained from it. “You really want to have your end state goals in place. In other words, to understand the maximum business benefits and deploy it to take advantage of that,” he said.