Chargeback and MPS: Top Tips For a Chargeback Program

MichaelDErricoCITby Michael D’Errico | 3/7/16

Despite the move to digitization, printing still reigns as an essential office function. While this would seem to indicate the need for organizations to have a clear understanding of how much they spend on print and document-related services, the reality is that most companies have limited insight into the complexities of their document infrastructure.

To meet this need, dealers can help their clients get control of their print environments and find new efficiencies while at the same time assisting in the transition to a more digitally-based environment. One effective means of gaining control is to institute a chargeback program.

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What is a Chargeback Program?

Corporations typically have numerous hardcopy devices in multiple locations and have begun to realize the benefits of getting those devices under financial control.  The ideal model is consistent across all platforms, encourages the lowest cost options and captures the true cost of printing.

Chargeback programs track and manage printing costs through PIN codes, user cards or other methods. Costs are pooled and charged back to the correct departments, which allows them to better manage usage or implement rules for printing. When a specific user or department exceeds the budgeted usage level, any excess hardcopy costs are debited to their specific departmental account.

It is important to ensure that the program is designed properly, however, as the printing environment can be challenging. The total cost of ownership, including toner purchases, maintenance, and lost productivity due to equipment down time need to be included in the calculation.

Designing a Chargeback Program

A common method of attempting to control costs is to channel print jobs to a centralized device or copy center where the costs are more easily understood and better managed. While centralized printing makes sense in some situations, a great deal of productivity can be lost as workers “commute” to get their documents. As a result, users are more likely to print on their local device when possible. Without a chargeback program to put some checks and balances in place, the associated expense can balloon.

What are the most important things to consider when designing a chargeback program? Here are a few things to keep in mind:

Optimize fleet utilization – Most organizations are unaware of the true cost of printing and copying to the company; even more so at the department level. Studies have shown that managing printing fleets holistically can save upwards of 30 percent on printing costs.  Understanding actual costs, something that can be accomplished with a good managed print program, will help realize efficiencies.

Know usage – Many organizations do not know how many pages are printed each month. Usage data is essential to understand whether a client’s machines are over or under-utilized and is a valuable way to begin the inventory process to identify deployed devices. There are a number of tools available to do a proper assessment, including third-party tools such as PrintFleet, PrintAudit and FMAudit, as well as those from hardware OEMs such as Konica Minolta, Xerox, Ricoh, Toshiba, Canon and others.

Understand the equipment – What types of machines are deployed in the environment? Are they owned or leased? Are they connected to the network? Do they print in black and white or in color?  Knowing the machines puts you in a position to design a chargeback system that will save your client money and meet their needs.

Implementing a Chargeback Program

Possibly the most important thing to consider in implementing a chargeback program is communication with the client, including involvement of both department heads and end users. The reasons for implementing the program can be key to enthusiastic participation and acceptance. Often, cost savings are used as the key underlying benefit to the program. This may be an adequate explanation for a manager responsible for a department’s budget, but for a mid-level employee, the promise of 30 percent cost savings to the company is not always an incentive for walking the extra distance to the print room, strategic print hubs or simply the device placed down the hallway. Advantages such as the environmental benefits that go along with managed print programs are often more persuasive in getting employee buy-in.

Incorporating applications like pull-printing, in which the document is not printed until the user has input a PIN code or swiped an identifying card at the desired output device,  create additional benefits for the end-user including enhanced security, eliminating the risk of leaving printed documents lying in the out-tray, and the ability to go to any device in the office to get their document printed.

Look for Partners

Don’t overlook the billing capabilities of the financing provider in your solution. A few finance companies, like CIT, have highly sophisticated invoicing systems that allow your customers to design their invoices to include the relevant information needed to allocate costs internally and understand usage.

Moving Forward

Management thinker Peter Drucker is often quoted as saying that “If you can’t measure it, you can’t manage it.” Providing the ability for your clients to collect and review data helps get their departments involved in decisions that impact expense to the organization. The result could deliver cost savings, and will allow tracking of departmental accountability. By providing your customers with the ability to use benchmarks to gain a better understanding of their environment, you have become their trusted advisor.

Michael D’Errico is the Office Imaging Market Leader for CIT Equipment Finance and is based in Jacksonville, Florida. Michael has been with CIT since 1999 and has held several positions including management of outside sales, inside sales support responsibilities and relationship management. Michael has been in the small ticket vendor industry since 1988. From 1988 to 1997 he was Assistant Vice President and Relationship Manager with Copelco Capital in Northeast New Jersey. From 1997 to 1999 he was with Captive Leasing Services as VP – Relationship Manager.