Cash Management: Postal Service Evaluates Its Bank Relationships

When the U.S. Postal Service decided which of the 5,000 banks it did business with would go, the technology that the bank brought to the table was key, says Stephen M. Kearney, the Postal Service's treasurer. "At every level, computerization is important to us, and it will be," he says. "As far as our field accounts went, a significant issue for us was whether we could do electronic reconciliation of our accounts." The Postal Service plans to migrate to electronic payments and away from checks and cash, says Kearney; as a result, the surviving banks had to be able to handle that. "Going forward, we expect to convert more and more of our cash flow to an electronic format, so technology will play a big role" in the Postal Service's future bank relationships, he says. Being an existing technology provider was also important, in many cases, for a bank's making the short list, says Kearney. NationsBank and Citibank, for example, not only handled field accounts, but also the Service's debit and credit card business, and lock box and electronic payments, respectively. For the Postal Service, which has $85 billion in annual cash flow and pays about $100 million in fees, the pare-down was inevitable, says Kearney. "From a management point of view, it's impossible to manage 5,000 banks," he says. -reinbach tfn.com