In April 2012 stamp prices rose by their largest increment in many years. A 2nd class stamp now costs 50p - 39% more than previously. It's been reported that from March 31st the price of a first-class stamp is to increase by 2p to 62p while a second-class stamp will increase from 3p to 53p. If your company has found that its outgoings on post have risen dramatically now could be the time to look into getting a postal franking machine.
A postal franking machine is provided by a Royal Mail approved supplier and adds a mark (or ‘frank’) to your outgoing mail which shows that postage has been paid. Most types of mail are available via franking machines including recorded delivery, special delivery and airmail.
The amount of postage applied is measured through a Royal Mail franking account to which your machine is connected via a telephone line. Annual Royal Mail inspections ensure that there is no tampering. You either pay up front for your postage or get billed in arrears by your franking machine supplier.
Benefits of a Postal Franking Machine
There are numerous benefits to using a postal franking machine over purchasing stamps:
- Franking is cheaper than purchasing stamps – in some cases by as much as 38% (see below)
- Postal franking machines can automate large mailouts – just stack the machine with letters to have postage applied automatically
- Letter folders, inserters and sealers are also available on larger machines
- Have your mail collected from your premises to avoid post office runs
- Carefully measure, track and control your postage spend
While the convenience and time saving benefits of a franking machine – especially for businesses who send large volumes of mail – are clear, it’s the recent stamp price rises that have made postal franking machines a viable option for many smaller businesses.
Franking Machine Options
Postal franking machines are available in various shapes and sizes from a range of suppliers throughout the UK. Your choice of machine and supplier will depend on several factors:
- Volume – the amount of mail you send will determine how large your potential savings are and how affordable the machine is;
- Bulk mailing – if you send out mail shots you’re more likely to require extra features like feeders, inserters and folders;
- Mail order – if you send out lots of parcels you’ll need scales, label printing and perhaps special delivery and recorded delivery options. A SMART franking machine will track how much of your spend constitutes VAT which you can reclaim;
- Available capital – purchasing a machine outright eventually leads to great savings but also ties up a hefty chunk of working capital. New machines cost anywhere from just over £1,000 to around £22,000. Leasing offers the advantage of being able to upgrade to new machines at no cost and tax deductable repayments. Lease prices start from around £20 per month;
- Maintenance and support – different suppliers offer different service contracts;
- Account management – many franking machine suppliers offer online account management which makes it easy to track your postage spend and budget for the future. This is a necessity for large organisations who send out lots of mail;
- Payment options – you’ll have the choice to pay as you go or get billed in arrears.
Choosing a Franking Machine Supplier
A full list of Royal Mail approved franking machine suppliers can be found on the Royal Mail website. Choosing between them is often a matter of comparing as many quotes as possible to find the most cost efficient solution. However, there are a number of hidden charges to look out for so we recommend getting answers to the following questions in order to build a complete picture for each supplier:
- Will I be charged for topping up my machine?
Pay as you go customers will often face a charge for topping up their machines with credit. This means the less often you top up the less you’ll pay but also means you have to carefully plan your postage spend in advance. Check whether you’ll have to pay each time or pay a fixed amount for a set number of top ups in a single period (e.g. a year).
- What does my service contract include?
You often have no option but to take out a service plan – one off call outs are generally unavailable and franking machines need to be maintained by Royal Mail approved technicians. But the level of service differs considerably. For example – if your machine breaks down will it be replaced, repaired on the spot or taken away to base? How quickly will it be repaired? Will you have to pay for parts? Does your contract include regular scheduled maintenance visits? Does it include telephone support?
- Will I have to pay extra for inspections?
The franking machine needs to be inspected each year to remain Royal Mail approved. If these inspections aren’t part of your service contract you’ll find yourself facing additional charges.
- Will I have to pay for postal tariff updates?
Every time the Royal Mail update their prices the franking machine needs to be updated too. This is a simple process – the software update is sent to the machine down the phone line – but could also incur an extra charge.
Service contracts range from 10% to 16% of the purchase price of the franking machine per annum so it’s well worth checking every particular. For lease machines the cover will often form part of your monthly fee but you still need to know if any additional charges are heading your way.
If you spend upwards of £100 per month on postage, a franking machine will almost certainly pay for itself and could even save you a tidy sum. In order to realise these savings though, a careful comparison of the available deals is essential. Hopefully we’ve made that process a lot easier and wish you luck in your postal franking machine shopping.
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