Members recorded bad debts totalling £10.8m for the first two quarters of 2009, compared with £5.7m recorded over the same period a year earlier.

NAPM director Tim Bowler said: "If bad debts in the paper merchant industry continue at this pace, we will reach £21.5m by the end of 2009, which is absolutely horrific.

"This not only represents a sad loss of jobs in the printing industry, but also a threat to jobs in the merchanting industry as bad debt at these levels is unsutainable."

The figure has almost doubled year-on-year for the first two months of 2009 compared with the first two months of 2008.

However, Bowler added that he hoped there will be a time when things pick up, but said that sales tonnage volumes had decreased 14% during the same six months year-on-year. 

He said: "This obviously represents a rough time for the printing industry. You'd hope that if the recovery starts to happen, then the incident level of bad debts would lessen, but there are no signs of that at present."

Paper merchants have had to battle against the removal of trade credit insurance cover and Bowler said members haven't got the insurance that they used to.

He added: "Some estimate they have 30% less cover than last year. The government's new trade top-up scheme has received a low take-up in the paper industry. At four times the cost of private sector insurance it is also very expensive.

"And while it may have widened its criteria and reduced the price of top-up cover from 2% to 1%, that is ineffective for a lot of the NAPM members which are locked into credit insurance deals with existing suppliers."