Business - Knowledge

As part of our regular LFR on the Money series, Evette Orams, Managing Director of commercial finance broker Hilton-Baird Financial Solutions, gives her thoughts on the new Business Bank and how SMEs can secure the funding to achieve their objectives in the coming months.

Plans for a new Business Bank have attracted significant attention since being announced by Business Secretary Vince Cable at the Liberal Democrats’ annual conference last month, and understandably so.

With official figures suggesting traditional finance, in the shape of overdrafts and bank loans, remains hard to obtain, it should come as no surprise that this latest attempt by the Government to stimulate the flow of credit has been such a talking point.

Modeled on the KfW banks in Germany and the Small Business Administration in the US, it has the potential to leverage up to £10 billion to provide the funding that so many urgently need to progress and drive the stuttering economy forward. Yet with refined details unlikely to be unveiled until December’s Autumn Statement and the bank itself expected to take anywhere between 12 and 18 months to become fully operational, it fails to address today’s pressing issues.

Immediate concern

Although it is encouraging to see the Government has a long-term strategy to tackle the funding challenge, it’s difficult to escape the fact that businesses need tangible help right now.

The Funding for Lending Scheme, which was introduced in August 2012, was of course launched to provide this very support. However early indications are far from positive, with bank lending to businesses falling by £1.2 billion in August. Meanwhile, according to the Bank of England’s latest Credit Conditions Survey, demand fell during the third quarter of 2012. According to the report, this was due to a range of factors, “in particular a lack of merger and acquisition activity and capital investment, as firms have remained cautious given the current economic environment and uncertainty relating to the euro area”.

Confidence in the banks and the Government’s different lending schemes clearly remains low. The problem with these initiatives is that, irrespective of the name they are given, they all appear to only offer the same solution to SMEs’ wide-ranging challenges: overdrafts and loans. These products are far too inflexible in nature and therefore fail to provide the targeted cash flow support many businesses need at present.

Assessing all options

One product that does provide valuable support, but sadly remains comparatively under the radar, is asset based finance.

According to the Asset Based Finance Association, its members advanced £16 billion through a variety of tailored facilities during the second quarter of 2012 alone. And with almost 43,000 businesses as clients, it is gaining recognition as a leading funding solution.

Its premise is quite simple. With significant levels of cash being tied up in the value of assets ranging from debtors, stock and plant and machinery, funders advance cash against the value of these assets to get cash flowing. Depending on the business’s requirements and objectives, this funding can then be reinvested into paying suppliers, securing new business, meeting day-to-day commitments or even funding mergers and acquisitions.

The key strength of asset based finance is its flexibility. While an invoice discounting facility will be at its core, whereby up to 90% of an invoice’s value is released within just 24 hours of an invoice being raised to overcome the challenges of trading on credit terms, funding against other assets can be achieved via bolt-on facilities.

In the case of factoring, a dedicated sales ledger management service can be provided to remove the burden of chasing customers for payment. Additionally, all facilities can include credit protection in order to safeguard the business against the risk of debtor insolvency and protracted default.

Although the Government flirted with asset based finance by extending its Enterprise Finance Guarantee to include a top-up guarantee on invoice finance facilities, it is surprising that it has not done more to promote what is often the ideal cash flow solution for businesses of all sizes that trade on credit terms.

Real help

While companies continue to contend with a variety of cash flow pressures, the largest of those appears to be access to finance.

The UK’s SMEs in particular are integral to the nation’s economic recovery. However, it is clear that recovery cannot easily be achieved until businesses have access to the much needed funding which they have been starved of over the past few years. It is therefore important that they are aware that there is more to business finance than an overdraft or bank loan.

This direction ultimately needs to come from the very top. While traditional funding of course has its place, the Government needs to take the lead by raising awareness of other, and at times more suitable and timely, funding solutions.


Evette Orams is Managing Director of Hilton-Baird Financial Solutions, which is part of the Hilton-Baird Group of companies. As an independent commercial finance broker, Hilton-Baird’s aim is to clearly identify their clients’ business requirements and introduce them to relevant providers.

Hilton-Baird Financial Solutions was voted Asset Based Finance Broker of the Year 2009 & 2010 at the Business Moneyfacts Awards and UK Asset Based Finance Broker of the Year 2012 at the ACQ Global Awards, demonstrating its reputation and the trust its clients place in its service.

The business’ affiliations to the leading financial industrial bodies, the Asset Based Finance Association (ABFA), the Finance and Leasing Association (FLA) and the National Association of Commercial Finance Brokers (NACFB), ensures it maintains the highest level of standards for its clients.

Find out more about how asset based finance can help your business at www.hiltonbaird.co.uk/FS

In his latest article for Large Format Review, Signtec's Peter French explains why the maths doesn’t always add up for him when it comes to recycling...

“So, I turned up at the domestic waste site the other day with an old window frame with the glass windows still in place.  Looking at the signs on the recycling, I had a choice of either glass or wood -’ not both - so I asked the supervisor where I should put it. His reply astounded me:  "Put it in either, it all goes for landfill."

I know I have banged on out this before, but I still don't get the reason why there seems so much hysteria towards sustainable print.  If our obsession continues, we risk putting our whole industry into the recycling bin. Let me explain...

At present we have machine manufacturers chomping at the bit to tell us how green their printers are and how we will save the planet by buying one.  At the same time, manufacturers are telling trade customers what they should or shouldn’t buy in the way of print and substrates.  (I would imagine the conversation goes roughly along the lines of: "You don't want to buy that type of print because it kills dolphins...  luckily, we have a solution that won't...")

This is potentially so dangerous for our industry.  Manufacturers are trying to sway the buyers into using this type of solvent or that type of UV or latex on the basis that it has some kind of eco-tag.  For smaller businesses with an old - and highly reliable - solvent printer, this is the wake-up call.  Soon your mainstream customer could be demanding that you can demonstrate your e-credentials.

Now obviously every other sector of the UK is doing its bit to protect the environment and help all our businesses remain sustainable.  That’s surely a given?  Err, actually no.

Let’s look at what we have done so far. We now ship over 470 million tonnes of domestic and industrial waste to China. This means we don't have to do anything with it and we can knock that off the UK emissions tally (although I do question who -– if anyone –- counts the emissions of the huge ships trolling backwards and forwards to China brimming with waste?)

Electrical goods are another good example of how the UK has reduced its emissions. Yes, you've guessed it, we export it all over the world where it’s put in huge piles and ripped apart with bare hands for the raw materials. Another example of how we have reduced our emissions.

Here is a good example of how eco-friendly printer manufacturers are. I can buy today from the likes of PC World a desktop printer for £32.00. This comes with a set of cartridges worth £19.00, meaning that the printer has a value to me of £13.00. If this goes wrong in 6 months - as in my experience they often do - what do you think happens to it?  Yep, I'll dump it and buy a new one.  Is this sustainable manufacturing?  I think not.  Surely it would be better to sell a more robust kit for more money and reduce the waste problem?

50 years ago, manufacturing was the mainstay of British industry, yet now we get other countries to manufacture the raw materials and then we import them clean’.  Again, who is counting the ecological cost of this incessant importing of goods?

There are many other every day changes that have impacted our environment.  For example:

• Supermarkets stay open 24 hours a day wasting huge amounts of electricity to light the stores and car parks and for what reason?  Perhaps, to sell the odd packet of cornflakes to one or two insomniacs?  Yet still, there are calls to increase opening hours on Sundays.
• Dartford River Crossing creates the biggest man-made traffic jam in Europe twice a day and needlessly wastes huge amount of fossil fuels as cars and lorries wait to pay at the booths.
• There are calls for a third runway at Heathrow so we can have more planes in and out as global air traffic continues to increase. We are trying to attract businessmen from developing countries to the UK – possibly (presumably?) to buy more waste material and to sell us more raw goods - thus reducing our emissions further.

£16 billion is the current cost to the UK taxpayer in benefits. If we are to reduce this, we need to create more jobs, not restrict and inhibit existing businesses by overburdening bureaucracy and frightening away customers with eco-scares about our processes and materials.

I want to see this campaign led by the people on the ground: sign makers, large format printers and general printers. I really don't want this to become led by the manufacturers - many of whose main aim in life is to sell you a new machine.

Can we have some perspective on this whole issue? We all have a responsibility for the future environment and print has a part to play. But it’s not just about buying new eco-kit – it’s a much bigger picture. If I buy a new low footprint machine, how do I know that it was built according to sustainable standards? How long will it take for me to balance the eco-cost of shipping it all the way from the other side of the world where many machines are made?

Sustainability is not just about the end product.  It’s the whole process from the manufacturers and large corporate customers to the small printer struggling to stay on the right side of the eco-argument with diminishing revenues.

I can understand manufacturers being concerned, but the last thing I want to see is manufacturers telling customers what they should buy, in terms of print, for the good of the planet.  This would be disastrous for the industry, especially small businesses that won't be able to find the investment to re-engineer.

At the forthcoming EcoPrint Show in September, I will be looking to the manufacturers not just to see whether their equipment produces sustainable product, but whether the manufacturer is doing everything it can to reduce its own footprint in manufacture and transportation.  If manufacturers don't take their part seriously, then I might start to get a little annoyed...””

About Peter French: Peter has been working in the sign industry for 9 years having spent a lifetime in IT. Specialising in kick-starting businesses, Peter worked in many diverse business sectors.  For most of the time at Signtec he has been at the forefront of large format printing with both solvent and UV technologies.                                   

Océ USA has launched a new Buyers Guide focusing on large format inkjet printing solutions.  In the document - which is free of charge - Océ outlines options available and helps potential customers determine which inkjet printing solution is the right choice for their business.

Topics covered include an overview of the three main print technologies used in inkjet printers (aqueous, solvent and UV) and an outline of the considerations a business should make when selecting a wide format inkjet printer.

Key questions are answered, including:

• What factors should you consider when buying an inkjet printer?
• Do you really need wide format colour printing capabilities?
• What degree of quality should your inkjet printer produce?
• What are the benefits of using a wide format inkjet printer?

To download the Océ Wide Format Inkjet Printer Buyer's Guide, please visit www.oceusa.com/IJPrinterGuideNB

 

 

Large Format Review's man on the ground - Signtec's Peter French – discusses the spiralling costs of maintenance contracts and questions whether there really are any alternative options open to print shops...

"When buying a large piece of printing equipment, it is easy to overlook the cost of machine maintenance for the second and subsequent years.  Handing over a massive cheque for the purchase of the printer itself is hard enough.  However, when the first anniversary arrives, there can be another heart stopping moment when you open the letter that advises you of the maintenance costs for the next 12 months.

Now, I know that many of you are astute and budget for such things, but - in these times of austerity - it’s very hard to squirrel away money for something you’ll need next year when you are struggling to pay the PAYE and taxes for this financial period.

When I asked our machine supplier for the cost of maintenance, the first figure he uttered rocked me back on my heels.   The parts and labour warranty cost more than 10% of the printer’s original purchase price - and I'd only had the machine a year!

Now, I know that for peace of mind, continuity of business and many other good reasons, this is the right way to go, but it chokes you a bit to hand over another eight grand.

There were other options available from the manufacturer: parts-only or labour-only contracts.  If I knew what was likely to go wrong - i.e. whether it was going to be cheap or an expensive part or whether the fix would require lots of labour – these could be possible options. However, on the basis that I’ve not yet acquired the ability to see into the future, these options are extremely risky and could risk putting me out of business altogether if I made the wrong choice.

I was told by the manufacturer that: "Some parts of the machine would cost £10,000 to replace".  So, were I to opt for a labour-only contract, I don’t think that – having forked out ten grand for a new gyro-stabilised self-latching grommet – I’d be much comforted by the knowledge that the £120 fitting cost would be covered by my labour-only contract.

Another word of warning: Most maintenance contracts on printers don’t include the heads, which happen to be one of the most expensive parts.  If the contract does, it may limit replacements to 2 heads per year or similar.  When we blew a main board a while ago, it took out the light-magenta head with it.  It wasn’t carelessness or poor management, just bad luck.  Had we had previous issues with print heads that year, it would potentially have cost us dear under any new warranty.

This leads me to believe that the only possible alternative to the almost unaffordable gold-plated fully comprehensive safety net has to be the parts only contract.

Or is it?

Having done further research, I’ve discovered that there are such products as machine insurance. Here you pay a monthly premium for insurance cover with a mandatory excess payable for each claim. Strangely enough, the policies I've looked at include damage or failure of the heads.

Unfortunately, with these contracts, you still need to ask the manufacturer - or another third party - to send an engineer and this is where the problems start.  Manufacturers aren't in the habit of employing engineers on the off-chance that you might call them and nor are they likely to store racks of spare parts in case you need them. I'm afraid, that the manufacturer or third party engineers will treat you as low priority; after all, they have their "contract" customers to look after first...

There is also the question of the cost of parts.  I understand that any company that holds a store of parts needs to resell at a price that allows them to recover the cost of warehousing, staffing and associated costs.  I am, nonetheless, staggered by the mark-up we are expected to pay on some items.  I have spent some of my spare hours searching for alternate suppliers and have come up with the following examples:

• Cooling Fan:  Manufacturers price £487.28; Price for same unit from UK supplier £109.00
• Encoder Strip: Manufacturers price £461.89; Price for same item from Canada £90.00 + £27.00 postage

I know I haven't got a maintenance contract, so I'm not considered an important customer but, come on, I don't expect to be punished for buying the machine and I do use the manufacturers engineers who, incidentally also come at a high price.

I always knew that large format printing was not for the faint hearted, but I didn't really understand how expensive it could get. In the past two years - and mercifully thanks to a great piece of kit - we haven't had too many issues, but they don't usually get resolved for less than two grand.

So what is the solution?  To be honest, I don’t really know.   It’s hard to recommend any particular route as there are so many variables associated with each individual business.  However, in general, I would definitely consider the following:

• Prior to purchasing any machines, always ask the manufacturer for the cost of typical replacement parts such as motors, fans and lamps up front as these will be required at some time.
• Look for parts you can source and fit yourself - such as fans and lamps.  Most machines are a clever collection of third party components married to custom circuit boards and encompassed in a nice shiny box.
• Try and push for some commitment from the manufacturer over price increases in the cost of maintenance over a lifespan of, for e.g. 5 years, to protect you from unforeseen costs.
• Finally, make sure you understand what your chosen maintenance option will cost and what it can provide. When you have customers expecting products delivered in 48 hours and the machine fails, what are you going to do?  Look at all the options available to you and weigh up the consequences of failure in advance."

About Peter French: Peter has been working in the sign industry for 9 years having spent a lifetime in IT. Specialising in kick-starting businesses, Peter worked in many diverse business sectors.  For most of the time at Signtec he has been at the forefront of large format printing with both solvent and UV technologies.

Marcus Timson, co-founder of the EcoPrint Show, has penned a response to Peter French's article questioning just how a business does go 'green' whilst remaining profitable.  He says:

"I read with interest Peter French’s well-written opinion piece about his experience in selling sustainable print.   It inspired me to write a few things down, hopefully to both encourage him – and others like him – not to lose hope and also to encourage the sign industry to attend the upcoming EcoPrint Show to find some answers to the questions he was posing.

I completely agree with Peter that in order for sustainability to work properly, buyers are in need of education. And I don’t mean to be patronising to print buyers, but they are not paid to think about the overall value of what they are buying. They are in jobs that are focused on them achieving the lowest possible price.

I agree that we should, where possible, buy locally. This is not because I am against competition, but because it makes sense on a number of levels. I hate it when I hear from Peter that he is losing out to businesses in China. These businesses will almost certainly not be producing sustainable print and the energy wasted to get the product out to the UK is very wrong indeed.

It’s a tough one this, and I think tougher for smaller businesses. I can see that Peter is - on the one hand - keen to take a sustainable path forward but - on the other - wondering what the value might be for him and his business. Will it be worth the investment?

Many small businesses sense that this ‘mega-trend’ towards a more eco-friendly society is something propagated by larger corporates and it isn’t necessarily reaching a local level. To some extent, depending on where you are located in the world, he is right.  Sustainability is still primarily a leadership issue. The main-stream is not yet demanding sustainable print. Or at least, they are not prepared to pay more for it.

But it’s a fact that the world’s leading brands and retailers are ‘greening’ their supply chains. For example, Wal-Mart is forcing its suppliers to align with their pledges towards sustainability. This in turn is forcing Unilever and Procter & Gamble to change how they produce their products from tier one manufacturing through to tier two and three – and this most certainly includes the print that they buy. So a leadership issue it is and clearly Peter is one of those leaders as he’s rightly asking questions such as those he has poses in his article.

My opinion is that the shift is still occurring and it is the top 15% that are embracing it and integrating it. It doesn’t matter how big your business is, it is the kind of person and the kind of vision that you have. I don’t personally profess to know the answers for Peter but I’m confident that the EcoPrint Show will.

The EcoPrint Show has been developed specifically to address these issues.  It will incorporate sessions from a number of sustainability experts across the globe within consumer companies and retailers, as well as real life case studies from print companies that have made and continue to make a great amount of value and profit from a sustainable print model. They will certainly provide some inspiration and guidance for him if he wants to know more and perhaps learn from their experiences.

All I can say to Peter is that he is certainly asking the right questions. At present, some buyers don’t get it.  Yet.  But when the shift occurs and they have to buy sustainably, they will drop Chinese print like a hot potato. Because they will not want the negative PR of buying toxic, unsustainable product that has no value.

As I write this, I hear that Toshiba has dropped its controversial ‘National No Print Day’ due to pressure from people (like me) who rightly say that print is actually the most sustainable media of all when it is done properly.

So, as the world becomes more conscious of the environment and business is more concerned about continuing to create value, Peter’s business will be positioned well, if he makes at least the kind of inquisitive questions about sustainability he is asking now. It’s a step by step process, and not one he has to suddenly achieve in a small space. But educating your customers is key. They will place a value on your expertise and some, not all, will end up becoming the cornerstones of your business well into the future.

Peter, I hope to see you in Berlin 26-27 September 2012 www.ecoprintshow.com and good luck to you!"

Europe’s printers are concerned that confusion over standards for sustainable printing is preventing print’s eco-message from getting through to buyers, according to a white paper published today by sustainable print exhibition, EcoPrint 2012.

The Print Sustainability Standards and Communication white paper, produced by Print and Media Certification Ltd (PMC), is based on a survey of European printers where just 7.3% of respondents said they believed print is effectively communicating its message about sustainability.

The paper also found that smaller printers are being discouraged from taking the first steps to sustainability because of the perceived cost of adopting standards, and the difficulty in determining why and how to make that first leap towards, for them at least, a very high bar.

According to the paper, print needs to start work now on developing simple and effective ways to communicate the sustainability of the whole print process to buyers. Accessible standards focussing on the entire printing process and recognising the value of those taking the first steps as well as those with the highest standards is the natural place to begin.

Marcus Timson, Director, EcoPrint said, “It’s obvious that a lack of clarity when it comes to sustainability is holding us back. If the industry is to ensure its enduring relevance for the future then it must open up an accessible and frank debate on print’s current strengths and admit where there’s room for improvement – if we clarify the discussion internally, together, then it will be easier to communicate to external audiences.”

Print Sustainability Standards and Communication is available to download free for those who register to attend EcoPrint 2012 in Berlin on 26/27 September. It also features three exclusive case studies from a certified printer (Erler+Pless, Hamburg), the designer and owner of the POPAI UK & Ireland standard and a specialist green printer (Addison Design).

The white paper is sponsored by INX Digital, whose president Ken Kisner said, “The research reveals some interesting insights and goes some way to confirming our feeling that confusion over the definition of sustainable print is in part responsible for the industry’s general inertia. Perhaps EcoPrint’s biggest contribution will be as a platform for enabling this discussion between the industry’s leaders to take place. In that respect, it’s a discussion that almost no-one can afford to be left out of.”

The full paper analyses the results of the survey in detail, uncovering revealing insights such as:

• The top three standards which were most quoted as useful for printers seeking to be more environmentally sustainable were ISO 14001, FSC/PEFC and carbon footprints. 56% indicated ISO14001 as useful, 49.2% FSC/PEFC, and 32.6% carbon footprinting.
• When asked if a new standard focussed on providing print buyers with information regarding sustainable innovation would be a positive thing 45.2% agreed, 36.3% said maybe and only 18.5% didn’t agree.
• 50.4% were certified to an environmental standard, and a variety of reasons were cited for not being certified: 40.5% thought it too costly and time consuming, 31% didn’t see it as necessary as customers did not require it, and a further 27% saw no need at all.

The paper’s author, Jon Stack, Director and founder of PMC said, “The results of the survey undertaken make it clear that print is not getting its sustainable message across to print buyers and consumers of printed and other media. This is partly due to the wide range and nature of the standards adopted, but also that many small companies in the sector, which make up a large proportion of the industry, believe that it is costly and difficult to reach the standards set, and so are deterred from changing their business practices. The challenge for the owners and developers of standards, those who implement them, and the industry in general, is to communicate the good news about print’s sustainability to buyers and consumers in a simple and effective way that focuses on the whole printed product”.

Print Sustainability Standards and Communication can be downloaded by registering on the EcoPrint website: www.ecoprintshow.com/for-visitors