Bursars Review | Autumn 2018 | Sample

In this article, prepared by ISBA in consultation with The Buyers Buddy, we suggest that bursars should thoroughly scrutinise any photocopier contract, to make sure they only pay for what they need. Photocopier service contracts can be tricky There are specific areas of concern: The agreement: Typically, a contract may start with a clause stating that the contract is the whole agreement and supersedes any other verbal or written agreements. Therefore, whatever has been quoted or promised previously does not count. This allows suppliers to change previously quoted prices, rates and terms. Minimum volume commitment: See if there is a minimum commitment level (monthly minimum billing level) and if it correlates to any proposed service rates. Check that the proposed levels are realistic by looking at your existing photocopier meter readings and your invoices. Toner inclusive and restrictive covenants: See if the toner is included in the contract or charged separately. If inclusive, is there a restrictive covenant on toner coverage? If a restrictive covenant is in place, such as no more than five percent coverage of an A4 page, then what is the ‘escalated’ or pro rata rate for higher toner coverage yields? Annual admin fees: Fees can be levied annually to cover invoice charges or annual statements, but if you pay by Direct Debit there should be no reason for these charges. Parts warranty: Are parts warrantied for the term of the service agreement? Some suppliers put a clause in to enable them to charge for parts after the first anniversary of the agreement, or at any time before the end of the term. Parts should always be included for agreements up to the end of the contract. Price increases: Some suppliers will levy an increase on the first anniversary of the agreement. Service level agreements (SLAs) do not always state the increase percentage, so try to negotiate a cap on any annual price increase using the RPI as a guide. Some contracts allow price increases more often than annually with 30 days’ notice, these often have onerous termination clauses. Contract termination: The contact period should reflect the period of agreed ownership or rental term for the equipment. If you agree to a three-year lease for example, you should not commit to a service agreement with a longer term. Feature 13 @the_isba Autumn 2018 Many agreements will go in to an automatic renewal if no notice is received, this extension is usually a further 12 months but can be longer. Cancellation or penalty clauses can guarantee the supplier of their profit or revenue for the minimum period of five years, whether the devices are in use or not so it is critical that you find out exactly how your cancellation penalty would be calculated. Meter charges: Some suppliers quote separate rates for black and white pages and colour pages in their proposals, which are assumed by the customer to be priced per A4 page. SLAs may term these rates as ‘scans’, ‘development counts’ or ‘tiers’. These are all terms used to increase the actual price paid for an A4 page. Development count: All print devices use the CMYK method of printing, (cyan, magenta, yellow and black) toners. Many manufacturers use default or factory setting meters, which count up in developing scans, i.e. one count per colour used to make up a an A4 page. Therefore, if rates have been assumed at 2p per page for colour and 0.5p per page for mono, the actual cost will be 6.5p (3 x 2p for the colour toners and 1 x 0.5p for the black). Tiered billing: This is sold as a cost-effective method for charging for colour usage based upon the amount of toner coverage of an A4 page. Most manufacturers’ machines can bill for usage, using three tiers of billing based upon percentages of coverage in each tier e.g. tier 1, 0-5 percent, tier 2, 5-10 percent, tier 3, 10 percent and above. This can be a fair method of charging for small amounts of colour (such as printing letterheads) however, when a heavier coverage is produced then the rates are escalated way above a nominal, all-inclusive page cost. Only manufacturer-trained engineers are able to alter the coverage levels within the tiers, therefore many suppliers have them altered at installation of the machine to lower coverage levels, which means that they are charging much more for lower yields of toner used. This method of charging is usually spotted with a very low page cost, way below other competitors, it is then ramped up within the invoicing, all of which will appear to the customer to be correct as they are unable to examine the coverage levels recorded within the machine. www.buyersbuddy.org Photocopiers.indd 13 15/10/2018 17:14