23 April 2015

PaperlinX - are you affected?

On April 1, PaperlinX's well publicised challenges culminated in the UK business appointing Deloitte as Administrators. With immediate effect, over 690 of the 1200 staff were made redundant and around 14 out of 20 sites closed. These steps were drastic, but not totally unpredicted.

The industry will adapt, with remaining merchants taking up the slack, and early signs are that this is already happening - our paper contacts advise that there is a lot of paper "in the system", many printers started to decrease reliance on PaperlinX once their problems came to light, and it's not the busiest time of year (fortunately).

Nevertheless, there are a number of areas where some problems may arise:

Credit Availability: Business previously placed through PaperlinX now has to be absorbed across fewer remaining operators.  With credit insurance limits remaining tight, merchants may struggle to accept higher levels of business from existing  customers.

Cashflow: We are aware that PaperlinX was slow to collect debts, with credit sometimes extending to 75 days, beyond their stated terms.  In the short term, those debts are now being collected by a third party, with interest being applied to amounts not paid which are beyond agreed credit terms.

More generally, there may be paper price implications. We would not expect these to necessarily cause problems except where printers have agreed prices to supply customers and are bearing the risk on paper price changes.

Generally, the first area to examine, should our members be experiencing difficulties, are the terms and conditions governing the commercial relationship with PaperlinX.  

Beyond this, for any specific issues, please contact your Regional Director, and don't forget that our Legal team may be able to advise on your options.