But even following successful print shows that many prefixed with the 'D' word, such as 'Digital Drupa' or 'Digital Ipex', where manufacturers and suppliers in the sector boasted record sales and strong showings, access to finance has proved a stumbling block, and that has meant that not all print businesses have been able to embrace the technology - regardless of whether or not they want to.

The post-recession world of finance is rapidly recovering its savoir faire (and there’s nothing like a six-figure salary plus bonus to bolster one’s savoir faire) and finance is available to anyone who needs it and has a viable business plan – or so we’re told. The reality is, this is not the experience of SME print operations; in the eyes of many banks and lending institutions, digital print remains an unattractive proposition. This is chiefly because digital presses do not hold their value to the same extent as litho presses.

"Funding digital is hard," according to David Bunker, director of Close Print Finance, the largest single lending body in print. "Digital equipment is something Close wants to be involved in. It is, however, an area that has lost banks a considerable amount of money over the years."

So what can businesses do to secure the necessary readies to fund their digital print investments?

Holding value
According to Bunker, if your business has a good track record or you have a long history with a digital supplier, then funding the next piece of digital kit shouldn’t be too hard, if the item is below, say, £35,000. However, once you get above that, banks and finance houses tend to "run for the hills", says Bunker

Stephen Palmer, production print director at Ricoh, agrees adding that recently it has been difficult for many printers.

"The print industry tends to be one of the first to suffer in an economic downturn, and that, combined with many printers wanting to make the transition to digital, where the presses aren’t seen to have the same residual value as offset, has meant that finance houses have been more reluctant to lend funds to support such investments," he says.

Slough commercial outfit X1 operates both litho and digital presses and invested in a Kodak NexPress in July last year.While sales director Tim Lance says the process was relatively straightforward, he believes it would be far more difficult in today’s market and lays at least part of the blame for that at the feet of the printers themselves. "Part of it is the industry’s own fault for selling jobs at such stupid prices. And with companies going under, the banks are far more cautious," he says.

Ricoh’s Palmer concurs that it has been very difficult to achieve credit approval for the finance of capital equipment, with approximately 60% of applications for hire purchase agreements or leases typically refused in the first instance. However, he stresses that those companies that have the best chance of securing finance are those that can demonstrate they have their accounts in order – the more information supplied, the easier it is to achieve the investment. "In our experience, firms that have successfully implemented a digital print operation and demonstrated growth, are the ones that typically continue to secure finance."

Supplier demands
So, what are suppliers doing to help? "They have tried to support their products the best they can, but lack of liquidity in the balance sheet has meant that providing open or undisclosed buy-backs to the banks to support the deal has been rare," argues Bunker.

Digital manufacturer Xerox’s credit assessment is dependent on the financial strength of each company and, if that is insufficient, it asks the customer to consider additional security, such as deposits, director’s guarantees or debentures. The majority of the company’s financed sales are supported by its very own Xerox Finance and Jason Barnes, general manager of Graphic Communications at Xerox UK, adds that this body has "experience and expertise" in the market.

Barnes claims that in 2010, Xerox has seen an improvement in its credit acceptance ratios and adds that it would be prudent not to take excessive dividends and to leave some net profit in the business, all of which could ease lending. According to Ricoh’s Palmer, the company is also very active in helping print organisations to finance their investment in digital presses, through its in-house finance company Ricoh Capital. "We look to support our customers wherever possible and work closely with them to help achieve the right print solution needed to grow their businesses."

Following a successful Ipex, in which the manufacturer bragged of signing deals for more than 300 machines, Canon UK surpassed national sales targets by 160%. More than 100 imagePress printers were bought off the stand, while sales of its colour production engines increased by 40% compared with Ipex 2006.

Many of the manufacturer’s larger print sales are financed through its preferred partner GE Capital, as Canon does not have an in-house finance body. Trevor Dodsworth, head of product marketing in business to business at Canon UK says that by working with GE in the sales cycle "from the get-go", they ensure the best chance for a company to secure investment and find it reaps dividends. "This often helps make a sometimes protracted process shorter," he adds.

Close’s Bunker offers some further food for thought. According to the finance company’s director, the lack of a strong secondhand market for digital presses means that banks are simply unable to assess how easy it would be to sell on such assets or to whom. "All of which is present and thriving in the rest of print machinery market," he points out.

X1’s Lance echoes this. "Years ago, you could buy a litho press for £200,000 and 10 years later sell it for £200,000, but not now. The value just isn’t there," he says.

Dodsworth argues that lease agreements often offer the ability to upgrade. However, Bunker says that rapid depreciation and technological obsolescence have meant it is difficult to get a stable foothold in the funding of digital kit.

Assessing the deal
It’s a point Paul Holohan, chief executive of Richmond Capital Partners agrees with: "It is important the buyer realises their responsibility for setting depreciation levels, which should be at a higher figure than for traditional print kit. If you still want to go ahead, then look into the normal issues of finance including the actual costs and any hidden costs in the agreement. Consider if it is better to lease."

While many digital kit suppliers are understandably active in trying to secure finance for customers, there is a long way to go before the cashflow for all those that require it becomes available. Bunker claims that more secondhand suppliers and more co-operation from the manufacturers is one way of promoting this, but Canon’s Dodsworth remains cautious. "You must ask yourself, will things go back to how they were this time several years ago? And the answer is it will be difficult for that to happen. Lending has proved more difficult but those businesses that have ridden the recession and have come out stronger will be in a better position."

TOP FIVE Finance tips

1. Accounts that are kept in good order and a strong recent trading history will help your chances of securing investment
2. Firms that have successfully implemented a digital print operation and have demonstrated growth, are more likely to continue to secure finance
3. Working with a digital supplier through the life-cycle of your investment will help ensure the best chance of finalising finance. It will also allow you to upgrade as new technology becomes available
4. To choose the right equipment requires having a clear strategy of which markets are to be targeted and with what services
5. Try to choose equipment that will not depreciate too quickly. Banks will want the security of knowing they can recover their investment if the company goes bust and the machine needs to be sold