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Green Office Blog

Do you know if your contracts are up to scratch?

Posted by Melliza Giliomee on Aug 7, 2019 12:00:00 PM
Melliza Giliomee

It is imperative for businesses today to work in an optimal environment to increase efficiency. Office automation is one area in which a business can reduce costs and increase productivity significantly, provided you do your homework. Office Automation is critical for many businesses and because you are replacing many devices such as scanners, printers and multifunctional devices, the partner you choose becomes even more important.

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Success in office automation is dependent on determining your exact business needs and subsequently designing and implementing a system that meets your exact specifications and requirements. When you carefully consider the partner to assist you with the implementation of the solution, the benefits of increased productivity can be extremely cost-effective.

It all boils down to the structure of your contracts and the key factors you should look out for. Often key people are presented with contracts that contain very onerous clauses written in such a complicated format and in extremely small fonts that are simply, very difficult to understand. Signatures are applied by representatives without completely understanding the long-term implications and contextual relevance of some clauses.

Some of the questionable clauses have some of the following effects:

  • Prejudice the client’s options and choices at a future date
  • Provide for unaccounted escalation of costs
  • Have automatic renewals that keep your commitment for periods beyond required
  • Including ad-hoc costs for services not applicable to the client

For example, a salesperson will sell you an upgraded device, it could be faster or have more capacity than the old one, they will propose to settle the original rental contract and include the settlement (usually rental multiplied by the outstanding months) at a lower monthly cost. Looks like a good deal but if you take the new device and keep doing this transaction the settlement value will eventually be so far in excess of the market value of the device that you will sit with a huge contingent liability.

So, how do you know your contracts are up to scratch?

What are some key items that you should be aware to avoid signing a bad contract?

checklist

  • The commencement date – Often companies avoid putting a commencement or an expiry date in your contract, so that when a client wants to cancel the contract, they could argue the exact date that it was signed, therefore making it very difficult for a client to track the term of their contract.
  • The “Evergreen clause”- This clause states that if a client does not give notice to end the service / lease within the notice period prior to the anniversary date, the contract automatically extends for another period (usually twelve months).
  • Minimum billing - Companies that are signing for minimum billings especially using an “all-inclusive” rate are often in a worse position than if they just pay a rental. Usually a minimum billing situation is there to cover the recoupment of the capital elements within the cost-per-copy or “all-inclusive” type contract. Go over these in detail to ensure that it is reviewed with your overall volumes on an annual basis, to ensure that you are not overpaying.
  • Escalations – It is imperative that clients look at this clause and ask about the % of the escalation rates on an annual basis. Rentals should be fixed for the contract term and SLA rates should not escalate more than CPI annually.
  • Price increases – Very often companies find that their print bill has been higher the last couple of months than previous months, make sure that your office automation partner is not increasing your rates without an agreed notice period. Vetting of invoices monthly against agreed contracted rates are critical to not overpay without knowing about it.
  • Anomalies - Some vendors include insurances, software charges and charges for scans. Clients should fully understand the terms & conditions of their contracts to ensure they are not being charged for extras with no value.

Signing into a new contract with a new office automation partner can be exciting but also very challenging, if done incorrectly. It is important to ensure that you cover yourself in situations like these and that the contracts are looked at with a “close eye”. Green Office specialises in vetting contracts for our clients ensuring that the office automation solution they choose to sign with, meets their exact specifications and requirements to make their business run effectively and efficiently.

vetting

Request a call from one of our consultants should you wish to have your contracts vetted by Green Office.

Request a Call from Green Office

 

Topics: Office Automation and MPS, Efficient, Green Office