15 Feb What Happens when Printing Companies go Bust, and how to Protect Yourself
What would you do if your printer was placed in administration, liquidation or receivership? How would you cope? What would it cost you?
It is a sad fact of business life at present that printing companies are collapsing at a fast rate. And aside from the tragedy of direct loss of livelihood for those involved, if you have a printing job placed at the moment, it’s important to consider the headache and financial loss their failure may have on your own business.
There is a glimmer of hope in that Print Week recently reported that the rate of collapse was slowing. Still, according to Webmart’s credit insurance company, print has the fourth highest rate of failure of any industry, so it’s important to understand the risks involved and what you can do to protect yourselves against those risks.
The Quagmire of Liquidation – what it may mean for you.
In the unfortunate event of a collapse there are many issues to think about:
1. Did you pay upfront for some or all of the job – if so, it is likely you will stand in the queue with the other creditors and get a few pence in the pound, eventually, if there are sufficient funds to pay out when the process is completed. You may have to repay a second printer for that job.
2. If you have a quality issue or a minor dispute over a credit note, an official administrator may not know or care and just demand payment. Their role is to maximise the money coming in for the banks and other creditors.
3. If you have supplied paper, then proving that this paper belongs to you and not the printer can take time and, at best, delay your job. It is also likely that until you have settled all your outstanding invoices with the failed printer the insolvency practitioner may not release any of your materials. That is their best bargaining chip, distressing your materials until you pay in full; possession is nine tenths of the law!
4. Next, you may have the cost of moving that paper to another supplier and re-negotiating a price with them. At this point you are disadvantaged in two ways, the second printer knows you are in trouble and that they were not your first choice – be prepared to pay more. You are not dealing with the best set of cards.
5. If your print job is time critical for an event or a media campaign or to be inserted into another publication or mailed, you may miss that booking and be forced to pay a cancellation fee or the media cost in full with no benefit to you. Or you may have to pay the cost of printing and finishing on overtime to hit the original schedule again, all of which will add to your bill.
6. Finally, dealing with the insolvency people is not easy. If you get to the factory, the simple things are no longer working. There may not be a fork lift truck driver. Things you take for granted like packing materials may not be there, so packing a carton is difficult as there may be neither cartons nor tape to seal them so take them with you!
Treat your Suppliers like your Customers!
Many of you will credit check your customers to reduce the risk of a bad debt. If you apply the same risk management to your suppliers it can reduce the risk of increased costs should they fail. Customers that don’t pay and suppliers who fail are two sides of the same coin.
There are many credit-worthy suppliers out there in the form of printing companies, print managers and other printing services companies. However, in these difficult trading conditions, it pays to do your homework first and make sure you choose a supplier in a sound financial position.
As in most things, prevention is far preferable to finding a cure!