Credit is out there for firms that can prove their strong position

Her company, in light engineering, was financially sound and she had known the bank manger for years, so even with the credit crunch she was optimistic of support. She was wrong. When she asked about alternatives, the manger gloomily proposed: You could always sell your jewellery, love.

Marcus told this story at a recent Vision in Print seminar. Members of the audience responded with stories of banks withdrawing overdraft facilities and, alarmingly, the reduction in advances lent on invoice discounting from a typical 80-85% to 60-65%.

It was clear, though, that few delegates had appreciated the scale of the change in world finance and the consequences for their own print and packaging businesses. In this column, I want to discuss some solutions to those challenges.
First, you need to consider how you can release cash out of the company, through both financial and operational changes, and I shall return to some of these in a later column.

For now, though, I will concentrate on external sources of finance. Lenders have suddenly become extremely risk-averse – they only want to lend against known assets or guaranteed cashflows. They do not make quick decisions – so start now, not when you are in trouble.

The stories that emerged showed the danger of being too open with the banks. It is better to take advice first from credible brokers and recognised financial advisers. The banks trust their input, while they will trust yours less. Make sure you prepare your case fully and carefully and spread your risk with different lenders.

There are still a wide range of services of external finance and, in general terms, commercial credit is hard to get hold of. But, above all, lenders are only interested in profitable businesses with a strong positive cashflow. If that is not you, then think how it could be.

Richard Gray is commercial director of the BPIF and a director of Vision in Print. Contact him at richard.gray@visioninprint.com

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