In fact, it’s perfectly conceivable that many printers with kit in need of replacing get misty-eyed about the days of free and easy access to cash.
“Going back to before the credit crunch, there were people falling over themselves to fund equipment,” says Mark Bailey, director at Lancashire-based finance firm Asset Finance Solutions.
The finance market has since readjusted itself. And for printers, there’s a not-so-quiet revolution going on – and it’s digital.
A combination of proven digital press and finishing technology, more confidence in the equipment, more benign lending conditions and, vitally, cheaper prices, mean that some printers are finding it much easier to get finance for digital kit than ever before. It seems that more and more companies are taking advantage of it, too. Printers and lenders alike seem to like digital kit because it’s relatively cheap, and the sort of work that it’s suited to is there in abundance.
Neil Handforth, sales and marketing director Apex Digital Graphics, says: “A digital printer might cost around £50,000 – an equivalent four-colour press would cost five or six times as much.”
Better reputation
Digital equipment has improved as well – as has its reputation. While in previous years there may have been a degree of scepticism around digital machines regarding what they could deliver, along with reliability and lifespan, they are now very much a fixture in many printers’ factories. And in many cases, indispensable. “Even smaller printers are now on their second or third digital device,” says Handforth. “It’s not like it’s new technology.”
Andy Cousins, director at AC Print in Torbay, Devon, describes the process the firm went through when it wanted to replace an existing four-year old digital press, which was proving increasingly troublesome, in January earlier this year. “It had come to the end of its life,” he says. “The engineer was in every other day.”
With the old machine coming to the end of its lease purchase terms, AC Print decided it was high time to invest in a new Canon imagePress C6011. It gave an instant boost to productivity, with the gremlins that blighted the old machine consigned to the past. “It runs all day without interruptions – you just have to keep it stocked with paper,” says Cousins.
With a decent balance sheet and a long-standing relationship with Asset Finance Solutions, the time taken to research, identify and install the new printer was remarkably rapid.
“If you’re a printer and you’re doing well, you’ll find that there are companies who will fund equipment over five years for little or even no deposit,” says Asset Finance Solutions’ Bailey, who helped secure AC Print the finance for the C6011.
“Lenders can make a judgement quickly because digital kit is cheaper,” adds Mark Nelson from Kent-based finance company Compass Business Finance.
The people holding the purse strings at the finance companies also recognise that the work is out there for digital equipment. “You’ve only got to look around the high street to see all the point-of-sale work,” says Bailey. “There’s big growth in that area and a printer can spend less than £20,000 and have a great offering for that market. It’s minimal expenditure for a one-stop shop.”
Whether you’re looking to start or refresh your digital services, then opting for new equipment might just be the best way to go, simply because the finance deals tend to be much better as they represent less of a risk.
Finance packages for digital printers that have already seen several years of use are usually much less favourable than deals on new machines, if you can get them at all. However, that’s not to discount second-hand digital altogether. While ‘previously loved’ gear might be a bit more difficult to find finance for, there’s still a place for it.
For those new to the market, second-hand kit might be a good way to help get started – and there are ways, such as warranties, to help convince lenders that they’re not going to be financing kit that spends more time being prodded by engineers than doing its job.
For firms wanting to invest in complementary digital finishing kit, getting the finance for that shouldn’t be any more difficult than it would be for a press. “Digital post-press kit can be financed quite easily by mainstream providers,” says Paul Holohan, chief executive of Richmond Capital Partners, a mergers and acquisitions business specialising in industrial sectors including print, whose subsidiary, Contour Business Finance, provides finance.
“Finance has been a huge part of our success,” says Peter Jolly, managing director at Duplo UK. “The Regional Growth Fund has probably been the biggest enabler of funding in the last two or three years, it has opened up so many doors.
“We tend to work with three or four strong finance partners who are flexible and reactive.”
Jolly cites finance deferrals, whereby the customer pays a deposit and then has a three- to six-month gap before repayments begin, as an example. “Something like layflat books is relatively new, so that type of solution gives the customer a window to drum up business and get the work in.”
Broker benefits
While the options to buy digital kit are numerous – you can take your pick from purchase, lease purchase and lease rental, or perhaps even a loan on structured repayment terms – the important thing is to get the right one for you. This is where a broker can come in.
While many equipment vendors have their own finance packages available, it could pay to check out what’s on offer elsewhere – particularly as brokers usually have access to exclusive finance deals. A bit of time spent identifying potentially better deals could deliver big savings over the course of the repayment terms.
A broker can also be a useful sounding board for your investment prospects, and help you identify what you might need – which might not necessarily be the same as what you initially thought. In fact, estimating what kit might actually cost, and how it fits in with what your business demands, both future and present, can sometimes be trickier than it seems – and can prove a nasty shock if you’ve underestimated running costs.
When it comes to actually presenting a case for finance, to get access to the tastiest deals, the bottom line is usually the most important aspect.
“Most lenders will look at a whole range of aspects,” says Asset Finance Solutions’ Bailey. “But the balance sheet is usually a good indicator.”
Finance conditions have mellowed since the dark days of the credit crunch, but that’s not to say that lenders are dishing out finance for digital kit indiscriminately – perhaps mercifully so. But if you present a strong case as to why your intended investment can enhance your business, then you might well enjoy some success.
It’s still important to remember that some serious homework is required on behalf of the prospective borrower – a solid business case of how the machine will benefit your business really goes a long way. “You’ve got to quantify what it’s going to do for you,” says Bailey. “It makes the underwriter’s life easier, and shows that the customer isn’t buying on a whim.”
Thankfully, the benefits of new digital kit can make for a compelling case – maybe it’s time that your business refreshed its digital offering.
Top tips for financing new digital kit
Plan ahead Having a clear and strong financial plan for your business in the short and long term can help convince those holding the purse strings that your case for new equipment is sound.
Share responsibility Lenders like it if you are prepared to share a bit of the risk on the kit. “Be prepared to offer some security in addition to the asset itself unless your credit limit is high,” advises Richmond Capital Partners’ Paul Holohan. “This could be a personal guarantee or security on other equipment.”
Make records Finance sources need to see clear evidence of your firm’s spending habits and income, so make sure that everything is in place before you make an application.
Make your case Make a compelling case for how the digital equipment will benefit the business. You might be looking to enter new markets or deliver cost savings through increased efficiency, for instance. Whatever your reasons, lenders are generally not interested if it looks like you’re buying equipment on a whim.
Look for hidden costs Don’t just look at the cost of the kit and the repayments - think about what it will cost you to run. Thankfully, the world of print is generally pretty convivial, so ask around and see what other firms have been up to. Sometimes, it’s just a case of picking up the phone.
Shop around for finance Rather than accepting the first deal on the table, take a look at what else is out there. Seriously consider using a broker, as they often have access to some deals which you might not be able to get on your own or via the equipment vendor’s own finance partners.
