Shopping around for an energy supplier can save your business a lot of money. There are many different pricing structures to consider and it is important to compare quotes on a like for like basis in order to work out who the cheapest supplier may be. The below guide is certainly not comprehensive but will give a good indication of how to manage your energy suppliers effectively and how to get the best possible prices for your business.
Before you get a quote
Before you get quotes from energy suppliers it is important to have an idea of how much energy in kWh your business is using per year. This information can be found out by looking over previous bills and adding up kWh over the period of a year, alternatively if you speak to your current supplier they should be able to tell you approximately how much energy you are using per year. At this stage make a note of approximate annual consumptions in kWh for all of your business' sites.
Next construct a spreadsheet with the following information for each of your sites:
Site location
Meter location
Meter number (should be written somewhere on the meter)
MPAN or MPR (MPAN for electricity and MPR for gas, both should appear on current bills)
Account number with current supplier
Approximate annual usage in kWh
The date on which your current contract ends
It is very important to sign a contract with a new supplier before your current supplier's contract ends, this prevents your company from having to pay "out of contract rates" which are extremely high.
Getting your quotes
With the above information you should be able to get quotes for the supply of electricity and gas to your site. Most utility companies will only provide a quote for supply no more than 120 days in advance of the end date of your current contract. Some companies will quote outside the 120 days although this is only recommended if you believe the price will rise significantly across all the suppliers before the 120 day window.
You should look to get quotes from the following suppliers:
British Gas
Haven
Eon
EDF
Scottish and Southern
NPower
Corona
Where possible, phone to get quotes as you should get an immediate quote on the phone rather than waiting for a letter/email response. Take down the name of the person you speak to and their direct dial number and email address if possible. These details could become important later on if problems arise or to help with negotiations. Make it very clear that you are looking only for a quote at this stage and that you will not be making a decision yet.
Make sure you ask for a fixed price quote for a 1 year and a 2 year contract from each supplier. By getting a 1 and a 2 year quote you will be able to see what the supplier believes is happening to prices over that period. If the 2 year quote is much higher than the 1 year quote then the supplier believes prices will rise. Assuming that the price of energy will rise is usually a correct assumption. However I would still recommend 1 year contracts so that you can maintain more control over who is your supplier. For example if your supplier is giving you bad customer service or overcharging you may wish to change supplier and a 1 year contract would allow you to do this much sooner.
Comparing quotes
Comparing your quotes is the next step. First to consider is how much are you going to be paying per year in standing charges. Different suppliers quote in different ways for standing charge. A monthly standing charge should be multiplied by 12 and a daily standing charge by 365 to get a yearly standing charge price.
Next to consider is your usage. Again you want to know for each quote how much your supply will cost you in a year. Multiply your estimated annual consumption by your quoted price per kWh. Sometimes you will have a day and a night quote. You need to divide up your annual usage accordingly for example 28,000kWh divided: 25,000kWh day and 3000 kWh night. Multiply your quoted day rate by you annual day usage and your quoted night rate by your annual night usage. Add these together to get an accurate reflection of your annual total cost of usage.
Now add your total annual cost of usage to your total annual standing charge. Apply any discounts or credit offered (e.g. £100 cashback or 4% direct debit discount) to this final figure and you will now have a figure that can be compared with the same figure calculated for each supplier's quote.
Negotiation
There is not normally a lot of scope with energy companies to negotiate. However there is some and the most powerful tool you have is the fact that you have a comparison of costs from other suppliers. If supplier A is not as competitive as Supplier B then call Supplier A and tell them that they are not as competitive. Try to avoid giving out exact quoted figures and be firm in saying that you will be going supplier A unless supplier B can improve on their quote. Sometimes you will find that the quoted figure is the final figure and sometimes you will find that there is room for movement from the supplier in order to get your business.
If you have more than one site I would recommend ensuring that all your energy contracts are to be tied in to the same contract end date. Some suppliers are happier to do this for you than others but you will find it may affect the quoted price slightly. There are 2 reasons for tying in the contracts to the same end date. Firstly you will only have to deal with getting quotes once a year, and secondly you can sometimes negotiate a better deal by agreeing to sign a contract for more than 1 of your sites.
Doing the deal
Now you have got to the stage where you have made a decision you can sign or agree to a new contract. Ensure that anything you have agreed up to this point can be confirmed in writing and check carefully that the contract you sign is exactly what you have agreed to.
You may find mistakes on your first bill. This is common across all of the energy companies and these mistakes include:
A different price than the price you agreed to
A different contract start date than agreed
A charge that was not agreed to
It is therefore important to keep information on your agreement including written confirmations from your supplier so that you can back up your story when you call the supplier to complain.
And finally
Keep an eye on meter reads, especially when switching supplier, very often the closing read from one supplier is different to the opening read of another. Ensure you inform your new supplier of any issues. Take meter readings regularly so that you can spot any discrepancies between your reads and the estimated reads you are being charged for. These mistakes are very easily made by suppliers and don't always sort themselves out.
Tuesday, 8 November 2011
Saturday, 5 November 2011
Stamps, Franks, Printed Postage Impressions
Almost all businesses send mail but how many businesses know exactly how much they are spending on sending mail?
If your business is looking to save money then taking control of the mail your business sends could save more than you think. There are so many different ways to send mail it can be difficult to analyse which way is most cost effective for your business. This guide will take you through three major options with regards to sending your mail: Stamps, franking and Printed Postage Impressions.
Whichever option you choose, it is highly recommended that you understand how much mail your business is sending. Have one person responsible for the post so that that person will be able to count exactly what is being sent each day. Ask them to tally each type of post for a month and then use this data to work out what your business is sending per day, per month and per year.
Stamps
Using stamps for business mail should only be considered for businesses sending less than 5,000 items of post a year. Stamps cost more per item to send than franking or Printed Postage Impressions. Your standard DL first class stamp is 46p whereas the same mail franked or sent under the Printed Postage Impressions (PPI) system would cost 39p.
Stamps are your only real option if you are sending less than 5,000 items per year because a PPI account requires your business to be sending over 5,000 items per year. Franking machines are expensive both as a capital cost and a yearly maintenance cost and so franking is only really an option when you are sending large amounts of mail so that the postage price savings outweigh the franking machine costs. For example 5,000*7p (the difference between stamped DL first class and franked DL first class) =£350. Realistically a franking machine is going to cost a lot more than this per year.
The advantages to using stamps is that your mail can go in an ordinary post box, anyone can send mail within the organisation if they have stamps and there are no fines for putting the incorrect stamps on mail, however your letter may not be sent!
The disadvantages to stamps are that they are costly, someone has to keep buying them, they take more time as the size and weight of each item must be judged so that the correct amount and type of stamps can be used. Furthermore if an item is borderline on a weight category then to be safe, extra postage would have to be paid. Finally, stamps do not provide a breakdown of post sent and so a manual analysis would have to be done in order to work out what the business is sending.
PPI
PPI should be considered for businesses sending more than 5,000 items a year but not more than around 60,000. PPI postage is charged at the same rate as franked postage but without the cost of running a franking machine. If a business is sending more than 200 items a day then PPI starts to become unrealistic as it involves reporting at the end of each day exactly what has been sent.
If a business uses PPI they will be supplied with a JPEG file which is the PPI logo with the company specific registration number contained within it. This file can be printed onto envelopes, stamped onto envelopes, or printed onto labels that can be stuck onto envelopes. It is likely that a business would have a stock of envelopes with the PPI logo printed onto them but would also use stamps or labels for packets or items that do not fit into conventional envelopes.
PPI works by allowing a company to basically print their own stamps but then that company will have to accurately report what they send each day or face extra charges for their mail. This is done via the Royal Mail website.
The advantage to PPI is that it can save money on a franking machine and maintenance for a franking machine yet still allow a company to send mail at franked prices. The Royal Mail sends an invoice at the end of each month for the post sent and this allows an organisation to analyse their mailing costs. The Royal Mail will also send a VAT summary for PPI users which allows VAT registered companies to claim VAT back on Special Deliveries. It is surprising how much money this alone could save a business.
The disadvantages to PPI are that it means that whoever is in charge of the mail will have to count every type of post and every weight class of each type of post and accurately upload this data every day. This can take a little extra time but if a business is sending less than 200 items a day then this will not be a massive inconvenience. Other disadvantages include the fact that PPI does not allow a business to claim compensation for lost items. This is an important cost to factor into decision making and so it should be found out how much compensation your business currently claims (if any) each year. Another disadvantage of PPI is that as with stamps, to ensure there are no problems in sending items, there will be a tendency to overestimate weights that are borderline. A final disadvantage of PPI is that this type of post can only be collected (check to see if your business qualifies for free Royal Mail collection) or taken to a Post Office directly each day. PPI Mail cannot go in a franked mail post box or ordinary post box.
Franking
Franking is a much more automated process as the franking machine will weigh, count and apply postage to your items. Franking machines should only be considered by businesses that send more than 50,000 items per year as a franking machine is expensive to run. The franking machine market is complex and confusing and if you do not know what you are talking about the likelihood is that you will be ripped off.
A franking machine typically involves the following costs: The capital cost of the machine, the maintenance cost per year of the machine, ink cartridges for the machine, labels for items that don't fit under the machine, recrediting the machine and royal mail rate changes.
The capital cost:
If you are sending around 250 items per day then you should be able to get a machine for around £3,000. For example this usage would require a machine similar to the Neopost IS420 or the Pitney Bowes DM400. The salesmen for these machines will try to tell you that you need a bigger machine, they will try to tell you that their machines cost £6,000 and they will try to hide other costs from you. Stay strong and know exactly the costs involved and you should be able to pick up a NEW machine for around £3,000 if you are sending about 250 items per day. Any more or less items per day then just bear in mind that you will have to do a significant amount of negotiating to get the correct machine at the correct price.
Maintenance:
Your maintenance should include at worst: Next day call out, parts, labour and license, as well as annual service and inspection by Royal Mail. At best your maintenance will include the above as well as re creditting your machine and royal mail rates changes. Maintenance costs vary by machine but again if you have a IS420 or DM400 then do not accept paying more than £500 a year and if you are paying £500 a year ensure that this does include rates change, re creditting and that it is a fixed price.
Ink:
You will need to buy ink and if you get it from the franking machine supplier it may be more expensive. However this way they cannot say that your maintenance is void due to using the wrong ink. Make sure when you are costing that you work out how much the ink is per impression and then multiply this by how much mail you send a year to work out a true ink cost per year. It could be quite high (with the above example it could be as high as £400 a year)
Advantages of franking machines include that they automate a businesses mail. Because the machine wont make mistakes you will always have the correct postage on your mail and so you prevent spending extra on those borderline weight classes. A franking machine is expensive but if your business pays £600 per year on maintenance that works out at around £2.30 per working day. PPI could add an extra half hour if not more to your businesses workload and so a franking machine would be justifiable in this situation. Not only this but with a franking machine you can claim back compensation whereas with PPI you cannot. Also with Franked mail it can be collected or put in a franked mail postbox which allows more flexibility than PPI if you have a franked mail post box nearby. Finally franked mail will also entitle you to claim VAT back on your Special Deliveries and so if you send a lot of these and your business does not already claim VAT back on them, you might find that this alone covers the cost of a machine.
The only real disadvantages to franking is the cost of the machine and its maintenance. Because of this your business really needs to be sending more than 50,000 items a year to make franking your cheapest option. Another disadvantage is that you will need to train people to use the machine correctly although this should not be complicated.
Summary
The above advice was based on one organisation's postal needs. If your business sends largely recorded mail for example then the option to choose may be very different. It is important that you understand the costs of each option, know exactly how much of each type of mail is being sent and weigh up the costs. Below I have supplied key contact information to help you with your decision making.
PPI:
08457 950 950 choose option 1 if you are a business, choose option 1 again and then choose option 5 (this could change so listen to the options to make sure you get to the right people).
Franking:
There are 2 major franking machine suppliers and unless you are experienced in this field then I recommend sticking to these two:
Neopost: 01708 746 000
Pitney Bowes: 08444 992 992
If your business is looking to save money then taking control of the mail your business sends could save more than you think. There are so many different ways to send mail it can be difficult to analyse which way is most cost effective for your business. This guide will take you through three major options with regards to sending your mail: Stamps, franking and Printed Postage Impressions.
Whichever option you choose, it is highly recommended that you understand how much mail your business is sending. Have one person responsible for the post so that that person will be able to count exactly what is being sent each day. Ask them to tally each type of post for a month and then use this data to work out what your business is sending per day, per month and per year.
Stamps
Using stamps for business mail should only be considered for businesses sending less than 5,000 items of post a year. Stamps cost more per item to send than franking or Printed Postage Impressions. Your standard DL first class stamp is 46p whereas the same mail franked or sent under the Printed Postage Impressions (PPI) system would cost 39p.
Stamps are your only real option if you are sending less than 5,000 items per year because a PPI account requires your business to be sending over 5,000 items per year. Franking machines are expensive both as a capital cost and a yearly maintenance cost and so franking is only really an option when you are sending large amounts of mail so that the postage price savings outweigh the franking machine costs. For example 5,000*7p (the difference between stamped DL first class and franked DL first class) =£350. Realistically a franking machine is going to cost a lot more than this per year.
The advantages to using stamps is that your mail can go in an ordinary post box, anyone can send mail within the organisation if they have stamps and there are no fines for putting the incorrect stamps on mail, however your letter may not be sent!
The disadvantages to stamps are that they are costly, someone has to keep buying them, they take more time as the size and weight of each item must be judged so that the correct amount and type of stamps can be used. Furthermore if an item is borderline on a weight category then to be safe, extra postage would have to be paid. Finally, stamps do not provide a breakdown of post sent and so a manual analysis would have to be done in order to work out what the business is sending.
PPI
PPI should be considered for businesses sending more than 5,000 items a year but not more than around 60,000. PPI postage is charged at the same rate as franked postage but without the cost of running a franking machine. If a business is sending more than 200 items a day then PPI starts to become unrealistic as it involves reporting at the end of each day exactly what has been sent.
If a business uses PPI they will be supplied with a JPEG file which is the PPI logo with the company specific registration number contained within it. This file can be printed onto envelopes, stamped onto envelopes, or printed onto labels that can be stuck onto envelopes. It is likely that a business would have a stock of envelopes with the PPI logo printed onto them but would also use stamps or labels for packets or items that do not fit into conventional envelopes.
PPI works by allowing a company to basically print their own stamps but then that company will have to accurately report what they send each day or face extra charges for their mail. This is done via the Royal Mail website.
The advantage to PPI is that it can save money on a franking machine and maintenance for a franking machine yet still allow a company to send mail at franked prices. The Royal Mail sends an invoice at the end of each month for the post sent and this allows an organisation to analyse their mailing costs. The Royal Mail will also send a VAT summary for PPI users which allows VAT registered companies to claim VAT back on Special Deliveries. It is surprising how much money this alone could save a business.
The disadvantages to PPI are that it means that whoever is in charge of the mail will have to count every type of post and every weight class of each type of post and accurately upload this data every day. This can take a little extra time but if a business is sending less than 200 items a day then this will not be a massive inconvenience. Other disadvantages include the fact that PPI does not allow a business to claim compensation for lost items. This is an important cost to factor into decision making and so it should be found out how much compensation your business currently claims (if any) each year. Another disadvantage of PPI is that as with stamps, to ensure there are no problems in sending items, there will be a tendency to overestimate weights that are borderline. A final disadvantage of PPI is that this type of post can only be collected (check to see if your business qualifies for free Royal Mail collection) or taken to a Post Office directly each day. PPI Mail cannot go in a franked mail post box or ordinary post box.
Franking
Franking is a much more automated process as the franking machine will weigh, count and apply postage to your items. Franking machines should only be considered by businesses that send more than 50,000 items per year as a franking machine is expensive to run. The franking machine market is complex and confusing and if you do not know what you are talking about the likelihood is that you will be ripped off.
A franking machine typically involves the following costs: The capital cost of the machine, the maintenance cost per year of the machine, ink cartridges for the machine, labels for items that don't fit under the machine, recrediting the machine and royal mail rate changes.
The capital cost:
If you are sending around 250 items per day then you should be able to get a machine for around £3,000. For example this usage would require a machine similar to the Neopost IS420 or the Pitney Bowes DM400. The salesmen for these machines will try to tell you that you need a bigger machine, they will try to tell you that their machines cost £6,000 and they will try to hide other costs from you. Stay strong and know exactly the costs involved and you should be able to pick up a NEW machine for around £3,000 if you are sending about 250 items per day. Any more or less items per day then just bear in mind that you will have to do a significant amount of negotiating to get the correct machine at the correct price.
Maintenance:
Your maintenance should include at worst: Next day call out, parts, labour and license, as well as annual service and inspection by Royal Mail. At best your maintenance will include the above as well as re creditting your machine and royal mail rates changes. Maintenance costs vary by machine but again if you have a IS420 or DM400 then do not accept paying more than £500 a year and if you are paying £500 a year ensure that this does include rates change, re creditting and that it is a fixed price.
Ink:
You will need to buy ink and if you get it from the franking machine supplier it may be more expensive. However this way they cannot say that your maintenance is void due to using the wrong ink. Make sure when you are costing that you work out how much the ink is per impression and then multiply this by how much mail you send a year to work out a true ink cost per year. It could be quite high (with the above example it could be as high as £400 a year)
Advantages of franking machines include that they automate a businesses mail. Because the machine wont make mistakes you will always have the correct postage on your mail and so you prevent spending extra on those borderline weight classes. A franking machine is expensive but if your business pays £600 per year on maintenance that works out at around £2.30 per working day. PPI could add an extra half hour if not more to your businesses workload and so a franking machine would be justifiable in this situation. Not only this but with a franking machine you can claim back compensation whereas with PPI you cannot. Also with Franked mail it can be collected or put in a franked mail postbox which allows more flexibility than PPI if you have a franked mail post box nearby. Finally franked mail will also entitle you to claim VAT back on your Special Deliveries and so if you send a lot of these and your business does not already claim VAT back on them, you might find that this alone covers the cost of a machine.
The only real disadvantages to franking is the cost of the machine and its maintenance. Because of this your business really needs to be sending more than 50,000 items a year to make franking your cheapest option. Another disadvantage is that you will need to train people to use the machine correctly although this should not be complicated.
Summary
The above advice was based on one organisation's postal needs. If your business sends largely recorded mail for example then the option to choose may be very different. It is important that you understand the costs of each option, know exactly how much of each type of mail is being sent and weigh up the costs. Below I have supplied key contact information to help you with your decision making.
PPI:
08457 950 950 choose option 1 if you are a business, choose option 1 again and then choose option 5 (this could change so listen to the options to make sure you get to the right people).
Franking:
There are 2 major franking machine suppliers and unless you are experienced in this field then I recommend sticking to these two:
Neopost: 01708 746 000
Pitney Bowes: 08444 992 992
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