Postal strike pain avoided by well-wired businesses

“The cheque is in the mail,” will probably be among the most dreaded phrases for many small and medium sized businesses (SMBs) as Canada’s postal workers continue their rotating strikes.

The Canadian Federation of Independent Business (CFIB) estimates that the strike may cost many SMBs in the country as much as $250 a day as they anticipate widespread instances of delayed invoices and deliveries.

Following the collapse of negotiations with the government last week, Canada Post employees seized operations in Winnipeg, the first city to be hit in the rotating strike. Hamilton, Ont. was the next city on the list. The Canada Union of Postal Workers (CUPW) which represents about 50,000 letter carriers and other workers, are asking a four-year contract with wage increases of 3.3 per cent for the first year and 2.75 per cent in the following two years. Sick leave and pensions are also included in their demands.

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While SMBs can expect delays and disruptions to hamper their operations, businesses can use a combination of technology and no-tech alternatives to lessen impact of the strike according to sources consulted by ITBusiness.ca.

Critical areas affected by the strike.

In a letter to its members the CFIB said: Our dependence on Canada Post has dropped over the last few years, but many small and medium-sized firms will still be affected by the latest action:

The letter said SMBs may be affected in the following ways.

  • Delay in delivering or receiving goods, sending invoices, receiving payments and sending documents
  • Loss of advertising opportunities and revenues via flyers, coupons and letters
  • Potential average loss between $200-$250 per day to your business
  • Potential cash-flow issues as a system-wide strike will freeze many payments for smaller firms
  • During a lengthy mail interruption private shipping and courier companies will struggle with capacity issues to quickly replace the immense footprint of Canada Post

In an interview with Canoe.ca last week, Dan Kelly, senior vice-president of legislative affairs for CFIB said he was however hopeful that the effects would be muted compared to previous postal strikes.

“Compared with postal strikes in the past, the cumulative effect will be less serious as there are now alternatives,” Kelly was quoted as saying.

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The are two critical business areas that will be affected by the postal strike, according to Barb Anderson, director of small business marketing for Intuit Inc., makers of Turbo Tax, tax preparation software and QuickBooks, automated accounting software.

“To a large extent, many businesses will likely be hit at the cash flow level and also somehow be affected at the compliance side as well,” she said.

While incoming payments may be held-up in the mail, businesses also face possible penalties for being late in their sales tax remittances to the Canada Revenue Agency (CRA), explained Anderson.

Alternatives to snail mail

Electronic payment systems and automated accounting and tax preparation software are a boon to Zenporium, a Toronto-based wholesale and retail furniture and furnishings store which specializes in eco-friendly products.

“I would like to think our business is pretty much isolated from the effects of a postal strike because of the systems we employ,” said Omar Kamal, owner of the business.

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For instance, Zenporium’s financial data is stored on QuickBooks. Kamal said when the time comes to pay taxes he simply emails the documents their accountant. The accountant in turn sends the documents to CRA vial email and remits the payments to the revenue agency electronically.

Similarly as much as 85 per cent of Zenporium’s clients are set-up for some form of electronic payment, said Kamal.

Many customers who come to the store already use credit and debit cards that are hooked up to an electronic point of sales systems (POS). Many wholesale customers or architects purchasing Zenpporium’s products also use electronic money transfer systems tied to their respective banking accounts.

Paying taxes during the strike

In a bulleting to its members entitled: Postal strikes and tax remittances: Tips for the SME, the CFIB encouraged its members to increase their use of electronic means to interact with CRA.

The CFIB advised businesses to use CRA tools such as NetFile, EFile and the My Payment option which allows individuals and business to send payments to the CRA from their bank account using the Internet.

CFIB also said that mail drop boxes will also be available at local Tax Services Offices and Tax Centres for individual and business taxpayers.

The organization warned that in areas affected by the strike, there will be no mail delivery of material to and from the CRA including tax refunds, rebates, goods and service tax credit payments and universal child care benefits.

Holdout to tech adoption

There are however, some hold outs to technology, according to Kamal. For instance, the store’s landlord insists on being paid with a cheque. A lot of Zenporium’s suppliers also prefer receiving cheques or cash. “We’ve asked them if they would consider electronic payments, but generally they would rather wait out the weeklong delay,” said Kamal.

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He believes many people are put off by the set-up cost of electronic payment systems and the payment fees that are around $1.50 to $7.00 per transaction.

Another hurdle is the lack of confidence and familiarity with the technology. Kamal said the much publicized incidents of credit card fraud and online phishing such as those involving Honda Canada have done little to encourage adoption.

“Also there are people who are fine with using electronic payments as long as they are the ones paying and not receiving,” Kamal said.

Nestor Arellano is a Senior Writer at ITBusiness.ca. Follow him on Twitter, read his blogs on ITBusiness.ca Blogs and join the ITBusiness.ca Facebook Page.

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