Trade credit terms tightening after Geon collapse

Leading the charge to reduced terms is Geon’s press supplier Heidelberg Australia and New Zealand, which is tightening its trading terms to 30 days, after what it says is careful consideration of the changes in the graphic arts industry, particularly the recent collapses of Geon and Vega.

Heidelberg is the country’s biggest offset press supplier by far, is a major finishing solutions supplier, is Kodak’s number one plates reseller, and has a growing consumables business. It is also now a Ricoh reseller.

Its new managing director Richard Timson sent a letter to all his customers, which in one way or another is most of the local printing industry, introducing the new terms and explaining why the company has made the move. He says the response has been positive.

Timson told Australian Printer, “I can say I have been really pleased with the positive response that I have received through calls, emails and in person. Everybody appears to understand the need for our industry to get our financial ship in order.”

Timson says, “It is a decision that we were required to make and I hope everyone understands.”

Heidelberg’s move has won the support of other industry suppliers, although many are unsure of how successful such a move would be, as in effect printers are being asked to pay for a month’s supply with no income.

Dave Lewis, director and general manager sheetfed presses KBA Australasia told Australian Printer, “We normally ask for 30 days but we are comfortable to give our customers 60 days but if they go past that, then we start chasing them. It has hurt our industry in the past, so the principal of is a good thing.”

Adrian Fleming, managing director, Kodak ANZ told Australian Printer, “I think this is a good move by Heidelberg, but it will not be easy. I am sure that there are many companies under financial stress right now that may be out of terms. Coming into terms puts extra cash stress on these businesses which will cause some pain.”

Kodak has a prepress and consumables agreement with Heidelberg, Fleming says, “Kodak has always maintained a very tight control over our trading accounts, and the minimal impact of bad debt in the last several years is a testament to this. Our standard terms are already around 30 days and we don’t plan on changing this.”

Sturt Eastwood, general manager commercial division, FujiFilm told Australian Printer, “We are active in monitoring credit and we have a good balance in our risk and return.”

The paper suppliers, who were the biggest creditors of Geon, with around $5m owed between BJ Ball, KW Doggett and Spicers are also quietly backing the move to reduced terms.

Trade credit has been a core aspect of Australian print for as long as anyone can remember, however the risks are significant to large and small suppliers alike. At the last count Geon owed more than $15m to more than 200 print trade creditors, none of whom is likely to see any of their money, unless they were insured.

The advent of the web-to-print business model is providing an alternative to printers, as it can require an upfront payment before the job is produced.

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