The union representing Canada Post employees is once again talking strike. Though it still may be avoided, I'm an advocate of planning for such possibilities in advance ... because the effects of just such a prolonged strike on unprepared companies could spell the end for those companies.
The reason; the demise of many companies is not lack of profitability, but rather cash flow issues. If cash isn't coming in fast enough to pay outgoing costs, then eventually a credit limit is reached, and companies are forced into insolvency.
Having thought about this possibility, here are 6 options you as business owners should consider, and rationale supporting the conditions in which each might be most useful. Keep in mind, the best approach may be to utilize a combination of approaches
- 1. Use a courier service such as Purolator to pick up cheques from clients, and cover the cost. While this may seem extreme, think about the logistics. The cost of hiring a courier may be a fraction of a percentage of the value of a cheque, where credit card fees may be much higher (2-3% or higher). In cases where cheque sizes are reasonable, courier services are a legitimate cost effective option.
2. Online banking transfers. Having clients transfer funds from their bank accounts to your business' account online may be one of the most inexpensive options. Its therefore very worthwhile to explore. There may be some challenges however preventing all companies from participating, such as the inability of the bookeeping person/people in companies to gain more than "read-only" access to an account.
3. Paypal or another online payment processing service is another viable option. This solution may work best when cheque amounts are lower, as typically a percentage of the payment is taken as a fee for service.
4. Credit Cards is another strong option, especially if you can utilize this (Canada Post) opportunity to get clients on an automatic payment schedule. Warning though ... the merchant fees charged by the banks will add up, and are NOT inexpensive. To some extent however, the higher banking fees paid are offset by the reduced costs associated with accounts receivable when clients are placed on an automatic payment schedule (read: and you don't have to chase them for payment each month).
5. Hire a summer student to drive around and pick cheques up. For businesses with a geographically concentrated client base, and that are located in smaller rural centres, courier costs will be very high. In such as case, paying a summer student to pick up cheques may be a viable option.
6. Incent clients with discounts to get creative about getting you payment on-time. This way, the problem is not necessarily yours, but your clients, and they have incentive to figure out the best solution for them.
In the end, the best solution will likely involve a combination of approaches. The solutions chosen will be a function of the geographic distribution of your client base (city, province, country?), size of the payments being collected, client size and structure, and other factors.
Again, having a plan 'just in case' the strike does progress, is solid business planning. Hopefully, we've been able to give you some ideas to help protect your Canadian business.
What other ideas do you have that could help Canadian businesses stay afloat through such a strike should it occur?