Managed Print: rental contract overcharges

During more than 25 years within the Managed Print Industry as an Account Manager, I was always diligent in making sure that my clients were aware of when their minimum contract ended.

As their Account Manager, I felt it was my duty to ensure they were aware of the minimum term and both the period and the process by which they could give notice to terminate the contract.

Sometimes, I would retain the business, but sometimes that business would go elsewhere. Importantly, I kept the client aware of their obligation so they always had the option of exercising the right to terminate the contract.

Since joining ERA 4 years ago and operating as a Managed Print Procurement Consultant, I have been staggered at just how many clients have been misled, incorrectly advised or ignored completely when ending their contracts. Since then, I have identified and recovered nearly £130,000 of rental refunds for different clients. In all these cases, the clients were unaware that these refunds were due – their suppliers had certainly not made them explicitly aware of them – and on contracts they would still be overpaying for had we not got involved on their behalf.

Lease agreement cancellation

All finance companies require normally a 90 day notice period to cancel their lease agreement at the end of the primary rental period.

For example: a company with a 36 month lease agreement is required to give at least 90 days’ notice prior to the end of the primary term, otherwise the rental agreement would continue into a secondary lease at the same rate. In all the overcharges that I have identified, the clients were incorrectly informed by their supplier that they would cancel the lease agreement on their behalf.

But here’s the key: the finance company will only accept the notice period directly from their client and not the supplier, so the result has been that whilst the companies concerned thought that their contracts had been cancelled, the reality was that, unbeknownst to them, they had entered into a secondary lease term, running alongside their new lease, thus making them liable for two concurrent lease payments.

Remarkable frequency

I’ve found it remarkable that nearly 1 in 3 of the contracts analysed since I joined ERA have resulted in overpayments being identified. Some have been overpaying unnecessarily for more than eight years! Of course it is true that the companies concerned had a responsibility to check that they had cancelled their agreements, read their terms and conditions, and understood their contract terms. It is however, very easy indeed for contractual terms to be overlooked months and years into a contract and due refunds and cancellation dates to be missed.

But both the supplier and finance companies also have a responsibility to their clients to check whether the contracts have been cancelled correctly at the end of the primary term. Without our involvement, many of the refunds obtained would not only have not been identified but also not been returned, as it is very difficult four or five years later to
obtain refunds.

Sadly, the industry has a poor reputation and there are many, many companies who are being overcharged and it looks like there is no sign of any improvement. For more information on how my experience could generate due refunds, develop sustainable solutions with reliable and honest suppliers and provide cash savings, feel free to get in touch.

Article by: Andrew Kinnear

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