Changes to POB payments - Now Parked for this year

After a resounding amount of very concerned Licensees discussing the changes to payments at the LEEP meetings, and contacting Australia Post to express the alarm over the proposed change to monthly POB payments in arears, Nicole Sheffield has put the plan on hold for this year. It is very clear to the executive of Australia Post that the network is not ready for this change to happen as yet. 

Monthly POB payments may well be good for our cash flow down the track, but we need to have a very solid transition plan agreed to first, and then we all need to survive any transition period. For this year the concept is now on hold, so we can stop panicking and start looking at the rest of the payment reform.

Licensees might like to consider how the payments could - IN THE FUTURE - be transitioned to monthly payment, and how would that be achieved. It is very obvious that 10 months of no POB payments, then receiving 1/12th in areas was not a winning plan.

What is our opinion? How do we think it could be set up to be successful? How would we wean ourselves off the annual sugar hit?

 

Comments

gully's picture

I can't see any way that delaying any payment could improve our cash flow. And any system where AP receive payment from our customers and then hold onto it is delaying payment. I know they delay it today. Delaying it more will only make cashflow worse, not better.

Now, if AP were going to pay us in January for ALL of our POB's (leased or not) and then billed us in April for those that are not leased, THAT would improve our cash flow. That idea is no more ridiculous than any plan to withhold payments from us.

Also, I'm not a fan of tying our payment to our customer's POB fee. Our payment should be tied to the cost of providing the POB. Nothing else. What happens when AP decides to use POB's as an incentive to tie people into the AusPost network (and as an asset they can promote to their customers)? With this new payment scheme, it won't hurt AP at all to reduce the POB fee to customers since they only pay us 90% of that fee. We'll end up with 100% leased boxes and be earning less money than we do now. Is there anything in this agreement that stops AP doing this?

Well Done LPOG Executive - Excellent Result in the short term.
Is the prepayment based on the 90% of box fee for the other payments to proceed, or the current rate?
As regard to the other question, re the future. I have mentioned previously that I applaud the proposed changes to the volume based payment regime for the majority of the business - it is essential so that we can be paid appropriately for the amount of work carried out at each LPO. The payment for this work is quite clearly required to be paid in arrears as it is based on volume. Whilst POST would prefer that all payments be paid in such a manner, I find it hard for them to justify the payment for the boxes in the same way. For a start, the PO Boxes themselves are funded by the LPOs not only for the purchase of the boxes themselves, but the fitting out, cost of lease etc. etc. all funded by the Licensee in advance. Also as we all know POST themselves have the 12 month "sugar hit" for the rental payments, so it makes sense that this is passed on to the Licensee. In real terms they are not funding the advance payment - The Customer is!.
In summary I believe if POST wants to transition to an arrears monthly payment - LPOG should stick to their guns as previously stated and pay the advance payment next year and immediately go to an arrears payment at the same time. In essence a 12 month free payment to LPOs for the boxes.

THANK GOD!

As we all have I've been trying to work out how this could be achieved with no detriment to LPO's. Very hard to do with no affect on cash flow to existing LPO's. If you change from paid in advance to paid in arrears effectively the LPO looses 12 months of payment no matter when the change occurs. Even if the change is split over 4 years we will be paid 25% less each year for four years. The only way this would not occur is if we were paid our annual renewals as per normal (Early in January remainder in April POMS) then from the May POMS we were paid 1/12th of what POB we held for that month. The issue with that is then AP are the one's loosing 12 months of payments as we are always paid 12 months in advance. Then when we sell we walk away with the extra cash, good but not fair.

If the biggest issue AP has is that incoming licencee's are not being paid the prorata payment for the months owed by the out going licencee, that is no reason to shake the system up this much.

My proposal is that on assignment of Licence, the new Licencee's the prorata payment could be returned back to AP from the out going licencee, then AP would be able to pay this in arrears as a 1/12th share from that day on to the new licencee. All current Licencee's will have the existing system grandfathered so that it is not detrimental to the current LPO's.

Advantage of proposal

Existing LPO- No change, No pain.

New LPO- No cash flow issues as they will start under this system. New licencee will be paid the same annual amount as the Old Licencee just split over the year. The figures we provide for potential buyers will be the same just the cash flow through out the year will be different.

Disadvantage of proposal

AP will have to have two payment systems in place at the same time until all of existing licencee's sell out. The issue with this is AP's accounting capabilities are questionable at times, possible errors with AP confusing who is on the new payment system & who has been grandfathered.

I can not work out a system that will not be detrimental to LPO's or to AP to try to transition existing licencees. Changing payment systems at change of licencee is the best I can come up with.

maggiesimpson's picture

It should never have been part of payment reform. They are our boxes, why do we have to change from lump sum anyway? If cashflow is the reason, I would bet my bottom dollar that's because AP do not pay us enough to do everything they expect us to do and this is why LPOG was formed. BECAUSE AP DONT PAY US ENOUGH! If we wanted to fix our cashflow monthly we would put the money into an account of our choice and make our own interest on it, or pay it off a loan and save that interest. AP was a brilliant brand when we brought in 16 years ago but over the years, apart from the lack of money they have also ruined their brand and service. Now they have turned into parasites wanting to not only use our labour but now our money to make their money.

goodykj's picture

My biggest concern was getting 1/4 of the usual payment in one financial year (Apr/May/June in arrears), and the effectively the remaining 3/4 rolled into the next year. It will make a big dint in that year's income, and this will have a huge effect on anyone selling. Also on anyone needing to take out a loan for whatever reason.
I personally would like to see the full payment received in the usual way, and then the pro rata start from July 1st. That way a full year of PO Box income will show. AP will be paying us in advance I guess?
Maybe if they want to change this then they need to take a hit, and just make it a monthly payment entitlement not related to the customer payment.

Otherwise just leave it as it is. They are the ones pushing for change. Why is it so important for them to change this?

I do like the idea of getting the payments monthly when the actual work occurs, so that if you pay staff, the money is there each month, but not at the cost of making one year's taxable income drop by that much.

The other point that people are making about not trusting AP to reduce the PO box cost to customers is sadly very valid. We just don't trust AP. It is sad but true.

The Mongoose's picture

Just printed out the Summary of Changes and one thing stood straight out.
POB fees paid monthly in arrears.
Well that was kept very quiet wasnt it ?? And the form was already printed ???
before this afternoons temporary rethink by Aust Post.
Great consultation wasn't it when us Plebs out here didn't even know.
I reject this idea completely. It needs to be left out and negotiated properly.
Our PO Boxes, our assets, and our labour.

goodykj's picture

It was in very small writing under delivery section, not with the percentages of PO box payments. Almost looked to be hidden!

Where did the decision for PO Box fees to be paid monthly in arrears? Was it part of the negotiations or was it a further step by AP? I assume the PO box fee will continue to be paid annually. This is a most concerning development and we need to have a clearly agreed view on what if any changes are made with this payment. From my point of view if the fee is to remain an annual payment which makes sense and minimises our work, we should be paid our revenue but the latest at the end of April. AP has no entitlement to r3etain our revenue any longer than under the current arrangement. I am a little perplexed by the comments on the use of these annual payments and I would have thought that what we do as independent operators is our business and not for others to scrutinize.
Another major concern from my point of view is the very significant cut in the mail management fees payable going forward. Do we have a clear agreed understanding of what the mail management fee is specifically for as it has been expressed to me that this payment is to cover heating and cooling in accommodation provided to contractors. Whereas my understanding is the payment is to cover "our" costs in supplying operating space and storage. The interpretation being pushed by AP almost seems like where are the defacto employers of the contractors and as such must meet all accommodation needs including any OHS requirements. We need to see the understanding of the mail management fee clarified asap.
The contractor accommodation payments must be clarified with AP as well. The old agreement referred to payments for each contractor whereas AP has argued to me that the payment is per contract. We are getting to the stage that if we are to move forward with any changes we must have clear agreed guidelines about the interpretation of the changes to ensure that we are not being herded slowly but surely towards the slippery slope.

LPOGroup's picture

It’s been on the back burner and rolled out and looked at many times over the past 19 years that I am aware of. It’s back on the back burner again. We are working on the definition and boundaries, and clarifications for every aspect of each payment. This time around if it is not itemised, it’s not included, not the other way around.
gully's picture

POB payment in arrears should be taken off the back burner then taken out the back and shot. It should be a non-starter. UNLESS AP decide to change the way customers pay for the POB (which no one wants). AP get paid by our customers in one lump sum, and that money should be paid to us in one lump sum.

Forget "transitional arrangements" or "migration periods". There is no scenario that involves delaying payment to LPO's that helps LPO's.

maggiesimpson's picture

I'm with you Gully :)

hi, buddy, it not only po box montlhly payment but also reducing our po box income from 98% to 90%. why everyone here not mentioning this ? ap let our customers pay more year by year with cpi index or more but reduce our payment ? we are losing box clients and box clients complain we rip them off by increasing the box rental fee every year but actually we are getting less next year.
HI, Angela Cramp, i wonder what and how you and your members have negotiated with ap on such box payment decrease ? could you pls share some "work" you would credit yourself in this regard ? thanks.

Margee's picture

jj I can see you are a newbie and am going to cut you some slack. I can see you have commented all over the place on these forums. Perhaps it would be wise of you to do some homework, there is many hundreds, actually thousands of hours of reading you could do to see where this group has come from it's humble beginnings. the fights, the tears, the friends we have lost along the way. This group is a community and we treat each other with a lot of respect. Due your homework and you will find the answers to all your questions. The hardworking board are busy trying to run their own businesses whilst helping everybody else along the way. The do not have the man hours to keep answering the same questions over and over again.

LPOG WORKS FOR OUR GOOD however nobody would be able to forsee what Aus.Post is doing behind our backs In warfare they are planning well in advance as all wars will show, sneaky little conspiritors and that is why it is so difficult for Angela and her team to match their moves. We do everything honestly and above board but "they" are feathering their own nest at our expense. History will show this to be fact

P.O. Box payments.
Rent on Post Office boxes should be paid with POMS payment following each months trading.I for one don't want my box payments deferred in any shape or form not now or in the future, this so called Sugar hit can be managed most banks have all different kinds of accounts or term deposits to park the money until it is needed. When we first bought our LPO we needed the "sugar hit" to keep our overdraft and repayments on our Purchase Loan under control now we are in a better position , but my box rent is still my money

I would like to get my po box payment monthly but at the same time I agree that AP are then holding on to our money which I am against. I do think they could look at changing the payment year from 1 July to 30 June. I don't like paying tax on money that I am really earning the following year. Especially when tax rates change 1 july. I don't agree with the reduced payment for my PO boxes. I pay for them I maintain them and repair them I put the mail into them even when they aren't addressed properly. I also cut my own keys as I have a key cutting service so the only thing I get help with from
AP is their computer system and renewal letters. I don't think that cost them 10% of what should be my income. I hope they don't decrease their prices on PO boxes, but they should look at stopping the increases every year. As most people aren't getting much mail these days and AP are doing everything they can to stop mail. I know they don't want to be in the mail industry just parecels. But I am afraid that for small lpos in rural areas the po box and mail are still a big part of the yearly income.

LPOGroup's picture

Mail is still a big part of AP's business too, and C1 wants to protect it, and nurture it.

Any update on PO Box advance payment early next year ?

LPOGroup's picture

LPOG is advised it will be as usual. In advance in early Feb - probably 40%.