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