Unite and the BPIF tackle the Chancellor on unhelpful banks
Wednesday, 7th January 2009
In a joint letter to the Chancellor, the two industry leaders maintain that printing companies are in desperate need of credit facilities to support them as they battle to survive in the current deteriorating trading climate. Despite this many British Printing Industries Federation (BPIF) member companies and Unite Officials are reporting that recent terms offered by banks have worsened, with firms finding it increasingly difficult to access funding.
The letter highlights cases where lending rates have been increased and where banks begun charging for services that were previously inclusive. Service issues are also emerging with longer delays to get the OK on a loan or an overdraft. A dossier highlighting a number of examples of such cases was enclosed with the joint letter.
Johnson and Burke stress that the biggest threat hanging over businesses right now is cash flow. By virtue of their relatively small size, compared with their suppliers and customers, printing companies usually get paid more slowly for the goods they supply to customers than the rate at which have to pay out for raw materials. Average debtor days, they point out, are currently running at 59.
The letter also reminds the Chancellor that in addition to requiring finance to support day to day operations, printers also need regular injections of loan capital to support necessary investment in new equipment and technologies if they are to remain competitive and meet continuing customer price pressures. They warn that: “If printing companies cannot access to the cash and credit they need, there is a real risk we could see healthy firms going under that would otherwise have every prospect of successfully weathering the storm.”
The next six months are critical, they stress. In a clear challenge to the Chancellor to secure some benefit for business for his bail-out money, they conclude by stating: “If we are to stand any chance of preventing this recession from becoming longer and more painful that necessary, the Government must act urgently to get the banking system working properly again.”