Credit crackdown places pressure on printers

Bad debts and increased insolvencies force insurance companies to tighten the rules for print companies to gain credit insurance.

As the number of insolvencies grows in printing businesses throughout Australia and New Zealand, there has never been a harder time for companies to gain insurance, according to Kirk Cheesman, (pictured) managing director of specialist credit insurance broker, NCI.

"Insurers have been hit hard with credit insurance claims and their hunger for trade credit insurance in the printing industry has decreased," he said.

He believes that historically printing is one of the worst industries for credit insurance claims, up there with building and hardware, electrical wholesale and steel and construction. “In the past 10 years, NCI has dealt with over $38 million dollars worth of claims made in the paper and printing industry,” he said.

To be successful in achieving credit insurance, businesses must now undergo an extensive review, including credit limit needs, along with the terms and conditions of policy. 

Cheesman admitted that it will be harder for printing companies to get insurance than in the past and that printers who are willing to work with their supplier (and their insurer) in supplying up to date company information will assist in maintaining credit limit levels.

“The current environment has heightened the need for printers to show their financial information,” he said. “Insurers are implementing risk management strategies as there needs to be a review of printers that have good capital and financing behind them, and those who don’t.” 
 
According to Simon Doggett, managing director of K.W. Doggett Fine Paper, credit insurance has provided suppliers such as himself with a level of comfort over the last few years, but credit insurance has lost its significance with recent limit reductions across the printing customer base.

“In recent years, companies have been able to hide behind credit insurance and have foregone the business principle of ‘credit ratings’ to achieve growth. In the current climate a company’s credit rating must be considered in relation to the service package a supplier offers,” he said.

“Without credit insurance, we need to become closer to our customers to ensure the supply and credit is financially viable. It’s a nervous time and we hope customers will work with us and understand the pressures we face.”

Cheesman does not see things improving anytime soon, but predicts that business will adjust to the frenzied economic climate.

“I am hopeful that towards the end of the year things will stabilise,” he said.