What happens when I switch copier companies (and why)?
It might be time to review your copier contract if…
The majority of companies are looking to reduce their operating costs as they budget for the 2023 fiscal year. One easy cost reduction item is evaluating their current copier lease and service contracts. The reason this portion of their expenses is an easy target to reduce cost is that 80-90 percent of copier agreements run for 3–5-year terms.
This means that most organizations signed up during their peak printing days with offices full of employees pre-pandemic and were stuck with that agreement during and through the pandemic despite all the changes it brought to the workplace.
Now these organizations, like you, are seeking to restructure to align these costs with the changes that they have seen over the last two years. Whether that is to downsize the device itself or adjust the amount of prints and copies they are covered for, there are plenty of ways to reduce this cost and save money.
What is the timeline of a copier lease?
One benefit of leasing a copier, other than not outlaying a chunk of cash up front, is that it gives the organization more flexibility in making a change to their needs and reducing cost. The biggest question surrounding this early refresh is “When can we make a change, and what happens to our copier that we currently lease if we make that change early?”
Typically, when an organization’s 60 month copier lease and service agreement has 24 months left on the term it can be refreshed to reduce the current monthly cost. If the initial agreement was 36 months then you should be reviewing this no later than 12 months from the end-of-term.
This timeline can vary depending on numerous factors of your initial agreement. Like mentioned above if you are printing less than you were when you signed up, if your lease and service was bundled and your total payment has been escalating, or if you just need a lessor device to print on, etc. All of these could change the timeline on when you could realize cost savings on your current lease and service agreement.
What does the refresh process with a current vendor look like?
If you aren’t looking to make a change to a new vendor for your equipment, then your current technology partner should handle all of this on your behalf. They will come to an agreement with your current leasing company to execute the new lease and pay off the old lease on your behalf. With that being the case, the copier will immediately go back to the leasing company once your new unit has been delivered and installed, or the dealer will opt to purchase that unit from the leasing company.
What does the refresh process with a competitive vendor look like?
You’re now at the point where you’ve compared some quotes to your current vendor. You liked some pricing options and service offerings from another technology provider, and now you’re planning on making the switch. The nice thing about this process is that there are only a couple of other steps which could be very well worth making the change in providers.
This happens all the time in our industry so let’s break down the two components when you make the change early in a lease to another vendor.
“What are we going to do with our remaining payments?”
The first question that arises when moving to a new provider is “What are we going to do with our remaining payments?” You’re new technology partner should outline exactly how much you owe to make all the remaining lease and service payments on your current agreement.
This should cover any taxes, property taxes, etc. You will want to provide your most recent invoices with overage usage so that the numbers are calculated correctly. This is what is known in our industry as a stream of payments buyout and is the most cost-effective way to exit a lease early.
The reason being, if you ask your current vendor for buyout numbers to terminate your lease early, they will hit you with additional fees and charges that will escalate what you truly owe to terminate your lease early. Once you have a clear understanding of exactly how much is owed to make all remaining payments for your existing agreement, your new technology partner should cut you that full amount of those payments in one lump sum after they have delivered your new device to you.
“What happens to my current copier during this period of time?”
The second question is “What happens to my current copier during this period of time?” One thing you need to know before we get to the logistics portion of this process is that leasing companies will not take back your old copier until they have released a return authorization for the asset. You would think the company that leased you this device and owns it would want all of their payments for the copier and getting the machine back as quick as possible to resell it, but that is not the case.
When your new technology partner delivers the copier to replace the old one, they will remove the old unit and take it with them to a secure warehouse to store. During this time, you will use the lump sum of money they provided you to keep paying your old agreement. Your new technology partner will also inform you of when you need to provide your notice (LOI) to your existing leasing company that you do not intend to renew your lease or service with them once the term has completed. This is typically 90-120 days from the end of that term.
Once you have turned in your LOI and made all of your existing payments on your old lease from the money provided by your new vendor you will receive the return authorization to deliver the copier back to that leasing company. You will send that return authorization over to your new partner. They will take your device from their warehouse, coordinate return shipment and complete the shipment to finalize the termination of the old lease.
With many pre-pandemic copier agreements nearing the end of term, we are seeing that an early copier refresh plan for organizations is saving them anywhere from 20-30% of their monthly costs to print. Now that you have a little more insight on what this process looks like, it should be an easy way to reduce some operating expenditures for your organization as you head into 2023.