Polar's David Gask claimed it was the reduction of creditor days and a scaling back of credit limits by his paper suppliers that pushed Polar into administration last month.

He added that paper merchants were "hiding behind insurers" to reduce exposure to SMEs in the print industry.

However, NAPM director Tim Bowler said: "Unfortunately, merchants not only have to act as suppliers but also as bankers and financiers.

"Gask's paper merchants may well have just thought that they didn't want to throw away more money."

Bowler said NAPM members are "very, very wary" at present, and "exert more management control on their trading debts than ever before".

He estimated the paper industry had lost £120m in the last eight years from bad debts.

But Gask has said that the company was winning £50,000 a month of new business and had received agreement from its banks to increase overdraft facilities to £300,000 supplemented by a cash investment of £100,000 from Gask himself.

He said: "More business being won, meant more paper needed to be purchased."

However, paper merchants have recently spoken to PrintWeek citing concerns over the credit worthiness of the business following two County Court Judgements served on Polar Print totalling over £50,000 for the scaling back of credit terms.

Bowler said: "They may well have thought that they didn't not want to throw away any more good money after bad."