When Bryn Oakley felt the hairs on the back of his neck prick up it had nothing to do with static down the phone line. The partner at Astra Printing Group had just been talking to an angry supplier.

The commercial printer based in Cullompton, Devon, is creditworthy, pays on the dot and, with this touchy supplier, always made sure it was within the standard, and agreed, 30-day period. Despite this, the supplier phoned Oakley 10 days before the payment deadline and demanded money immediately.

I said ‘no’; stuck to my guns, he says. We always pay at the end of the month: without fail. It was annoying, I could understand if we were a few weeks late. The market is like a coiled spring; after so much bad news people want to move forward, but some suppliers are scared to go the whole nine yards.

To be fair, suppliers are taking a double hit, says Oakley. Around 300 print firms collapsed last year, some of which were bought out of administration only to fold a few months later. And with more unpaid bills, leaving suppliers taking the hit twice, adds Oakley, who can understand their philosophy, but it doesn’t make it any easier.

Sadly there is little that printers can do to protect themselves from the agony of tighter credit terms, and any new laws will probably prove reactive and too administrative.

Robert Jupp, managing director of Digital Printed Image (DPI), has also had that tingling sensation at the back of the neck.
When he wanted a high-street bank to help with new digital and finishing kit, Barclays said it didn’t look at firms under £5m turnover. Yet, not so long ago, that same bank was delighted to talk asset finance to his company, which is well established and never overdrawn or in debt.

Jupp may not go to Barclays again and suppliers who squeeze printers may face similar backlashes. Some suppliers, he insists, are fantastic. Others are not so good and these need to balance the short-term gains of tightening credit with the long-term risks that printers will go elsewhere.

Sticky moment
DPI in Verwood, Dorset, will do just that with one supplier that threw a strop when asked to accept £500-a-month part payments instead of a one-off of £2,000 while the company overcame a sticky moment Jupp says.

It was no better than a snub. A few companies our size would have gone under, popped up two weeks later and given them nothing.

But paper prices are popping up, and staying up. Printers used to swallow one rise a year of 3%; now they face three rises of 10%, he says. If only printers would club together, they would enjoy more bargaining clout, he adds. Sadly, many strike individual deals with suppliers and are unlikely to play ball.

Steve Parkins, credit manager for paper merchant Antalis, says the credit position is still very poor. Existing insurance cover is being reduced, and while Antalis’ policy has not changed, it visits customers more often to check their finances. If the market does not recover and bad debt piles up, however, we may have to review our policy.

But Philippa Charlton, marketing director at Robert Horne Group, says a gradual return of credit insurance to the market has given her firm a cautiously optimistic outlook. Her company checks credit worthiness of customers and claims to have no dealings with phoenix firms, but has no plans for tougher or draconian measures.

Crediti insurance
Susan Ross, an insurance broker at AON, echoes Charlton: Credit insurance is getting better from a two-year low point prompted by economic circumstances that saw Lehman Brothers go bust. In hindsight, this was perhaps too hasty a reaction from credit insurance. Things should pick up.

Richard Gray, BPIF commercial director, also sees early signs of improvement, but the cosy, comfortable world of generous credit insurance is over. The industry must change habits: sales, customer-services and finance staff need to work together more closely.

Ipex saw BPIF and its financial partner Begbies Traynor launch the Red Flag Alert. Companies signing up can draw down credit reports and ratings of firms. Such a service aims to ease credit risk management, but Bryn Oakley wonders if anything can change a credit culture marked by neck-tingling cold calculation.

They want to squeeze the credit terms of the good guys – those who pay – rather than those who won’t or unfortunately can’t. Bankers meanwhile make calculated decisions and if that means squeezing everybody for credit, so be it: there’s no emotion.