First, the good news. There are some print businesses having their best-ever year. Unfortunately, they're the companies we don't tend to hear much about. It hardly seems appropriate to be leaping around saying how great things are when companies are collapsing and thousands are losing their jobs.

　　For the most part, though, companies are in a state best described as ‘survival mode' - battening down the hatches as they attempt to weather the economic storm. This consists of an assortment of financial strategies, according to Richmond Capital Partners chief executive Paul Holohan. "Everything has to be considered if you're in survival mode. And that means teamwork," he explains.

　　Holohan cites one example where a company bought in £6,000 worth of a specialist synthetic paper in anticipation of a customer order, but the job was put on hold, so they're now sitting on this very expensive stock. If everyone within the firm had been aware of the need to conserve cash and scrutinise expenditure, this could have been avoided.

　　Holohan also recommends that companies look carefully at ordering patterns and adjust timings to their advantage where possible. By taking delivery at the beginning of a month, rather than near the end, a purchaser effectively gains an extra month of credit.

　　Hidden savings

　　When thinking about stock, be aware of what's sitting around unused. "If it was suitcases of money in the warehouse, they'd be onto it like a shot. Because it's paper on pallets, people just walk by it every day," says Holohan, who recommends adopting a "creative selling" approach to turn those pallets of surplus paper back into cash.

　　Cash management is the single most critical factor for anyone running a business and it's vital to be absolutely on top of it, advises Daniel Smith, a partner at Grant Thornton. "By micromanaging your cashflow daily for the next four weeks, then weekly for a further eight weeks, you can create a rolling 13-week cashflow plan so you have complete visibility ahead."

　　This visibility is invaluable in identifying any likely shortfall at an early stage. "It's a hell of a discipline, but that's what you have to do. It helps you make the right business decisions," Smith adds. He notes that some payments, such as wages, are not moveable, but "most other things can be". Landlords, for instance, would rather be flexible about deferring rent than facing a bankrupt tenant and an empty building. 

　　Holohan reports that some companies have successfully negotiated deferred tax payments, although a lack of consistency in the marketplace means this could depend on the attitude of your local tax office. "The government said it would allow some leeway on this and a £50,000 tax bill could represent the difference between surviving and going under," he adds.

　　Many printing companies use bank overdrafts for working capital. The Credit Crunch has highlighted the need to under--stand the pros and, in particular, the cons  of this finance tool.

　　"People forget that overdrafts are repayable on demand," says Holohan. "At the moment, banks are unilaterally changing overdraft terms without discussion. They are sending letters out saying ‘your overdraft is extended, but the rate is now 5%'. They are asking for personal guarantees or the facility will be withdrawn."

　　Other options

　　He adds: "People might want to consider switching to structured finance, instead of an overdraft, for peace of mind. That way, so long as you carry on making the payments, they can't do anything to you."

　　Further protection is garnered from maintaining a healthy cashflow. This means avoiding bad debt. But, in the current climate, previously healthy clients can rapidly become sickly. "Managing risk and exposure means you always need to study the form. Don't take anything on trust," says Ian Carrotte, managing director at credit-checking specialist ICSM. "Use your trading experience with customers. Get to know them. You can see if they're struggling. Being aware of a customer's situation may well stop you from releasing a job that could put you out of business."

　　Carrotte suggests that company directors should scrutinise their company's top 10 accounts and be aware of what they owe the business. "What would happen if that suddenly went tomorrow? Have you looked at them properly? Some people have head-in-the-sand syndrome and think it can't possibly happen to them," he says.

　　In some circumstances it may be necessary to agree payment plans with debtors in order to avoid the worst possible outcome: not being paid at all.

　　Carrotte cites a recent example involving a bill for £100,000 that the debtor has agreed to pay off in chunks. "But it could knock the creditor for six, because of course they've already parted with their cash."

　　Use all available information sources: be they the services of specialist providers like ICSM; reading the business pages and relevant trade titles; or keeping track of pointers like share prices and stock exchange announcements. It all helps when it comes to avoiding unpleasant surprises.

　　Another cashflow-enhancing option is to reschedule payments on plant and machinery or refinance it to release value. Such deals can generate significant sums in relation to an asset's trade value. However, Holohan says that values are likely to be marked down "to a realisable value".

　　"Reschedule or restructure when you're strong, not when you've just had a bad debt or a quiet period," advises Paul Coggins, chief executive at Print Finance. "People tend to come to us after they've already had four months of bad trading - and we can still help - but it would be better to deal with it before everyone's backs are to the wall. Get yourself in shape while people still like the look of you. At the same time, you are pro-actively demonstrating that you are managing the situation."

　　The cautious attitude being adopted by both lenders and lendees is evident in recent figures from the Finance and Leasing Association (FLA), which found that asset finance provided to SMEs for capital investment fell by a quarter in the third quarter of 2008 compared with the previous year. Overall asset finance fell by 19%.

　　The pool of lenders active in the print sector has diminished considerably since things became much tougher for print and for the economy in general. "Companies can be guilty of living in the past," notes Simon France, head of sales for the print division at HSBC Equipment Finance. "It was easy to arrange finance a year or two ago. It's much harder to arrange the same sort of deal today."

　　More for less?

　　The processes involved in arranging deals have become elongated and finance providers are likely to be asking for far more information. This leads back to the much-echoed point that being on top of company finances is absolutely essential. "If you know you're not going to meet a credit purchase or credit payment of any sort, start negotiating now for something that might happen in the future," says France. "People wait for it to hit before admitting there's a problem. They don't want to appear weak or to open a can of worms, but the consequences of delay are worse now. Plan and prepare for meetings with banks and finance companies in a more professional way. Be organised and be prepared to discuss difficult subjects."

　　Grant Thornton's Smith also recommends that directors ask themselves the tricky questions before the bank does.

　　"If income drops by 10%, how will you balance cash? Will you take out employees, or ask everyone to take a 10%

　　pay cut?" Holohan notes that owners with a liquidity problem asking for bank support need to put a hold on their own dividends and bonuses too if they want to be looked upon favourably.

　　As France also points out, some companies will now be having problems for the very first time and won't have any previous experience of negotiating with creditors, making things potentially even harder to deal with. Forewarned is forearmed and planning ahead always stands businesses in good stead. Carrotte concludes: "Even now, most of the problems faced by the printing industry are avoidable."