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When it comes to contracts, don’t get locked in

Paul Callow explains what small businesses must do to avoid the pitfalls of managed print service contracts.

Long, complex contracts are not everyone’s cup of tea, especially not time-poor small business owners. The idea of meticulously reading through pages of terms and conditions fills managers and buyers in SMEs with dread, because unlike big multinational companies with teams dedicated to reviewing and negotiating contracts, they just don’t have the time and resources to scour all the fine detail and linked clauses.

Paul Callow,  CEO at Cartridge World
Paul Callow, CEO at Cartridge World

Many SMEs are paying a high price as a result. Just recently the Federation of Small Businesses (FSB) revealed that more than half of small businesses have been ‘stung’ by unfair contract terms with suppliers. Fifty-two per cent of the firms it surveyed said they had signed up to unclear and inflexible contract terms that had cost them an estimated £4 billion in the last three years. What’s more, two in five feel powerless to do anything about unfair terms as many suppliers are too big to challenge.

A managed print service that wraps all your business printing needs into one monthly payment makes complete sense – on the face of it. However, buried in the small print of the contract there could well be questionable practices that mean small businesses end up paying far too much for toner, ink and devices and are locked into onerous contracts that they can’t get out of.

So what can buyers do to remedy this situation? How can small businesses avoid being locked into crippling contracts? Here are the five key questions I would encourage all SMEs to ask before signing a contract with a print supplier:

1. How long does the contract tie me in for? Many contracts are for three or five years. In business terms, that’s a long time, and the nature of your business and your printing needs could change a lot over that period. You should therefore look for is a degree of flexibility and a service that enables you to enter into and exit an agreement whenever suits you.

2. How fixed are those monthly fees? Because they might not be as fixed as you thought. It’s worth checking with your printer supplier what charges are incurred when you exceed your monthly printing limits. It’s also important to watch out for an incremental price increase, sometimes referred to as the fixed price increment. In many case, this can take place at any time, without notice.

3. What happens if I don’t use my monthly allowance? If you don’t use your monthly allowance, it’s possible that you will still be charged for the pages you don’t actually print. In many cases, these unused pages won’t be rolled over to next month’s allowance, meaning you lose out. It’s important to have a good understanding of your print activity and business print requirements. If these vary throughout the year, ensure that any agreement gives you the option to flex from month to month or only pay for what you use.

4. Does this service really meet my business needs? There is no ‘one size fits all’ solution when it comes to printing – every company has different requirements. By using intelligence gathering tools, a service provider can accurately predict usage to make sure you pay the right amount for your printing needs and avoid paying over the odds, even if these change over time. Alternatively, you can ask your supplier to carry out a print audit to find out how much you print on a weekly and monthly basis. This will give you the insight you need to sign up for a contract that meets your company’s specific requirements.

5. Have I really read the contract? Unfortunately, there is no shortcut to thoroughly reviewing what you are signing up for. Doing so takes time but is invaluable if you want to ensure the contract meets all your needs and to avoid being stung later. Just as importantly, you’ll need to ascertain what the contract doesn’t contain or provide you with. For example, does your managed print service contract allow you to use your existing printers? Does it include the paper? If not, you will need to account for this separate expense with another supplier. If, as is likely, your print services contract includes maintenance, does it specify how quickly your supplier must respond when something goes wrong? If your printer is essential to the day-to-day running of your business, a delay in getting the problem resolved could be detrimental to operations.

It’s important to check these questions with suppliers, and on the contract, before signing. Failure to do so could well cause headaches further down the line. Just because a business is small doesn’t mean it has to settle for unfair terms. Taking the time to scrutinise the small print and choosing wisely in the first place is essential to avoid vendor lock-in and unnecessary overspend.

Paul Callow is CEO at Cartridge World, the UK’s largest specialist provider of ink and toner cartridges, including OEM-branded cartridges and its own compatible and remanufactured supplies. In addition, to printer consumables, Cartridge World offers a variety of tailored business printing solutions including hardware, supplies and service.

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