A helping hand
Print-service-providers (PSPs) are constantly being told that one of the most effective ways of ensuring they are delivering the highest possible quality work is to invest in the latest technology. Whether this is printing machinery or finishing solutions, this can indeed make all the difference to output.
However, given the upheaval of the last few years, large-scale investment is simply not an affordable option for many PSPs, which have had to cut costs to help stay afloat. This is where financing can be an extremely effective option, allowing you to invest without having to break too far into your savings.
Here, we explore some of the financing options available to PSPs and look at how this can help them access the kit they need to remain competitive and successful.
Clear vision
First up, Compass Business Finance is an independent finance company that specialises in the print industry. Working with funders from across the market, as well as lending from its own funds, Compass offers a range of effective financing options to PSPs.
“At the beginning of the year, businesses were being extremely cautious in their decision making, with many choosing to delay investment plans due to the uncertainty in the market and economy,” says Compass director David Bunker, adding: “Energy price hikes, paper and substrate costs, and the war in Ukraine have all given businesses good reason to watch, wait and exercise greater caution in their decision making.
Compass Business Finance director David Bunker says a total asset-based lending approach can deliver significant benefits to customers
“However, most printers have a clear vision for the future and what they want to achieve, so it’s not surprising that we’re now seeing an increase in the requirement for funding across the sector. Businesses are re-evaluating their needs and actively seeking funding for investment and/or cashflow purposes, whilst also looking to remain lean and adaptable to changing economic conditions.
“Despite a growing appetite for investment, there are still supply chain issues and longer than normal wait times on receiving new equipment.”
Where businesses have been adversely affected by the pandemic and have a weaker set of accounts for the past couple of years, Bunker says that for the right business case, there are still some good funding options available, as well as support via government schemes such as the Recovery Loan Scheme (RLS).
Bunker goes on to say that most businesses are having to look at the way they manage their cashflow, explaining that Compass is having conversations with customers around how they restructure their outgoings, looking at options for refinancing existing agreements or for restructuring elements of their business.
“Whilst the appetite from traditional banks and lenders to provide unsecured loans and overdrafts has decreased, there are non-bank lenders, like ourselves who work with our customers to structure unique and sometimes complex funding solutions to help them achieve their required outcomes,” Bunker says.
“In taking a total asset-based lending (ABL) approach, we can deliver significant benefits to our customers. We recently provided a substantial ABL solution to a printing company providing a blend of invoice finance, asset finance and a term loan to help them meet their strategic objectives in a sustainable and innovative way.”
Future productivity
Another business that provides financing to PSPs is Close Brothers Asset Finance, which runs a print division specifically for the print industry. Paul Philbrick, joint managing director of the print division at Close Brothers, says while printers may traditionally use their banks for funds, this is not always the best way for companies to access the tailored funds that they require.
Paul Philbrick, joint managing director of the print division at Close Brothers, says flexibility should be the core attribute of any financing arrangement
“Like most expensive capital purchases, the return on that expenditure can take place over a lifetime,” Philbrick says, adding: “Financing enables the business, within reason, to match the profit generated from the purchase with the monthly outgoings, leaving cash flow intact.
Financing enables the business, within reason, to match the profit generated from the purchase with the monthly outgoings, leaving cash flow intact”
“That is why affordability is so important; the business can make the capital purchase choice taking into account future productivity and asset depreciation, and not simply on overall cost.
“In addition, there can be tax benefits enabling companies to take advantage of capital allowances and corporation tax benefits because the interest element of the payment can be tax deductible.
“At Close Brothers Asset Finance we have a national network of specialist print and packaging relationship managers, and the benefit of working with us is our understanding of the assets; our empathy with the various difficulties that running a business can encounter, plus our long-standing commitment to the print and packaging sectors.”
O Factoid: Close Brothers Asset Finance offers funding on new and used printing, packaging, labelling and ancillary equipment, as well as for businesses looking to merge, acquire or restructure O
As to what PSPs should look for when seeking new financing, Philbrick says it is critical that at a time of economic uncertainty, flexibility should be the core attribute of any financing arrangement. He recommends working with a funder that understands the business and the industry and will work with the PSP through all economic cycles.
Many millions of pounds in financing are available to PSPs in the UK
“For example, at Close Brothers, we offer terms appropriate to the asset’s life, and we can reduce finance payments elsewhere to mitigate an increase in monthly overheads; we can also offer equity release to fund stock, including paper,” he says.
“We know that rate is always a factor; however, a bespoke approach generally offers a finance outcome that is most appropriate. At Close Brothers, every proposal is handled personally; every customer is treated as an individual, and we pride ourselves on providing the best result possible for customers.
“We also pride ourselves on supporting our customers through the whole life of the agreement. Our customers are our best advert and the amount of repeat business we achieve is testament to our continued focus on our customers’ requirements.”
Each of the industry teams at Close Brothers has a local underwriting facility, meaning it can offer fast and tailored underwriting decisions to keep a business moving. It offers funding on new and used printing, packaging, labelling and ancillary equipment, as well as to help a business looking to merge, acquire or restructure.
“We will come and meet you at your premises, spend time learning about your business, understand what your requirements are, and together with you as a business create a proposal that is affordable and in line with your business expectations, and capital purchase,” Philbrick adds.
Secure competitive finance
Elsewhere, CMYUK, a provider of a wide range of wide-format print solutions, is keen to support customers in terms of guidance as to the type of financing on offer to them. Robin East, group commercial director at CMYUK, says financing spreads the cost of purchasing as a manageable overhead, with most digital equipment sales funded through external finance.
“Here at CMYUK, it’s almost 100% finance, however due to the financial assistance packages the government put in place during lockdown our sales increased by 25%,” East explains, adding: “Both the Coronavirus Business Interruption Loan Scheme (CBILS) and RLS offered businesses the lowest cost borrowing backed by the government, and many took advantage to update their plant lists opting for more automation and equipment that offers greater versatility.
“Hire Purchase is the go-to facility for funding hard assets. It spreads the cost of additional or replacement equipment with a monthly budgeted repayment. This type of facility can be offered with a low finance deposit, with VAT Deferrals meaning the full VAT of the investment can be reclaimed from HMRC before it is collected via Direct Debit by the finance company.
“Finance terms can be tailored to meet the required ROI or help provide a monthly repayment that works for a particular investment. Typical finance terms are between 24 -72 months.
“As an extension to the favourable terms previously provided by the government’s RLS scheme, Sheppex Asset Finance can offer CMYUK customers low start repayments and/or seasonal repayments to help navigate the peaks and troughs of business.”
East expands on this to explain more about CMYUK’s relationship with Sheppex, saying CMYUK works closely with the finance specialist to understand each customer’s individual requirements. Sheppex has been providing asset finance to the printing industry and associated trades for over three decades.
Matthew Gilbert, managing director of Sheppex also says both CMYUK and Sheppex have been at the forefront of keeping existing and prospective customers fully updated with all government backed and finance related incentives, and this will continue following the ending of the RLS application process.
“The second half of 2022 will be no different and we will continue to communicate, advise, and keep our clients fully up to date with any financial developments to help them invest,” Gilbert says, adding: “There is also great expectation that during July 2022, a replacement incentive will be announced that will continue to support SMEs and further stimulate investment. We believe this will be called RLS (3) but watch this space!”
East adds: “CMYUK in tandem with Sheppex will continue to support clients purchasing new technology and secure competitive finance for ‘Blue Chip’ customers, and if required, look beyond the balance sheet.”
Financing most certainly offers an effective option for PSPs looking to invest in new kit, but without breaking the bank. However, this comes with a warning, with PSPs advised to look for trusted providers to work with in order to secure the right level of finance with sensible repayment rates.
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