Small businesses will now incur more cost as Royal Mail charge business owners an extra £170 per year for one collection per day.

The new flat rate fee offers a service with fewer collections as the morning collection has been abandoned, but with additional charges to businesses amounting to £450 per year. The changes were introduced in April, and now the Forum of Private Business (FPB) believes this is having a significant impact on SMEs both in terms of cost, value for money, and efficiency of service.

Owner of stationery suppliers Britsales Business Supplies, John Foley says his annual Royal Mail bill has soared by 60%. He said of the rate increases: ‘The collection service was more convenient than having to send a member of staff to the nearest post office, which was three-quarters of a mile away. We only have a few employees, so this is not an option.’

He continued: ‘This is an additional cost when I can least afford it – Royal Mail has small businesses over a barrel.’ Further price hikes have been seen in timetabled collections, with businesses having to pay a £750 annual fee.

A Royal Mail Spokesperson said: “In response to requests from our customers for a flexible and time-specific collection service, earlier this year we made changes which simplified our business mail collection service and provided customers with greater choice around the timing of their collection. These changes have involved a change in the pricing structure so that the service is better reflective of the costs that we incur, but at less than £2 a day we believe the service still represents good value to all our customers.

“We can assure customers spending in excess of £15k per annum that there free collection service will be unaffected by this change.”

Brigid Benson, director of financial services company Gaia Partnership said that collection errors had not increased since the changes had been implemented. However, a spokesman for Postwatch, suggested that the Post Office network is “unsustainable” and further changes will have to be made to strengthen the system. The spokesman also advised that business customers should formally give feedback to Royal Mail before any more alterations to the service are made.

The additional costs are compounding the negative effect of post office closures on SMEs. An earlier study by the FSB found that 97% of small businesses believe post offices to be the ‘hub’ of local communities. And as post office closures reduce accessibility and force changes to the logistical operations of companies, the rising annual cost of collections seems to be muscling out small businesses from a market that favours larger firms.

The cost of post collection is yet another additional financial burden put on SMEs. As small businesses are facing problems with rising energy costs and chasing late payments, smaller independent companies are not able to pass on the cost onto customers.

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