Print companies that benefited from 90 days credit with the failed paper merchanting giant have now come to the end of that period, causing a cashflow squeeze for some companies. Other companies that were on 120 days with Paperlinx potentially face impending issues.

David Bunker, business development director at Close Brothers Asset Finance, said: “I've heard some larger companies have seized the initiative and bought future supply but that's probably the exception to the rule. I think the situation will have an immediate cashflow issue for most SMEs.

“Some of our customers have used refinance to raise some working capital not only to plug the potential cashflow hole but to use for building stock of paper. One option is to raise cash from the value of print or bindery machinery that's free or partly free of finance. The advantage of this type of borrowing is that it's easier to arrange than a comparable overdraft in my view, and not repayable on demand like an overdraft,” Bunker added.

Printers have not necessarily been able to secure equivalent credit lines with other merchants. Some firms have already been forced to ask customers to buy their own paper, or have resorted to using credit cards, according to Paul Eversfield, print specialist at Five Arrows Business Finance.

“It’s a classic credit crunch. Paper merchants are all nervous about bad debt and want to see several months of trading before giving credit,” he said. “In the past, printers would have asked traditional bankers for a temporary or extended overdraft, but that’s no longer available. We are taking unencumbered assets as security and offering a loan against those assets to see people through this period.”

Nick Hood, business risk advisor at Opus Business Services also urged printers to explore alternative funding sources, such as those from so-called ‘challenger’ banks and crowdfunding sites, as well as asset-based lending.

“Those who own and run businesses in the print sector need to recognise that their world has changed irrevocably with the collapse of Paperlinx, which has exposed the soft underbelly of risk to the worried gaze of a whole range of stakeholders,” Hood said.

“They must take urgent action to make their companies stronger and fit enough not just to survive this shock, but to thrive in this changed commercial and financial environment. The only option not available to them is complacency.”