Crisis at debt-ridden online print firm. Ian Carrotte: 'Don’t delay as this has all the hallmarks of a firm about to collapse'

Jo Francis in the trade magazine Print Week has exposed a shocking case of ‘taking with one hand and taking with the other.’ The journalist has reported on the sharp practice employed by online printing company HelloPrint based in the Netherlands who has asked suppliers to accepted deferred or reduced payment. That would normally be accepted in difficult times as they were fronting up to a cash flow problem but as the comments section in the article reveals they have already been paid by the customers.

So wrong

One comment read: “So wrong in many ways, taking the money upfront then not paying their suppliers the full amount. If their suppliers accept this then they are fools. Firmly believe if you purchase from a supplier you pay them or don't continue in business.”

Jo Francis reported: “Printweek has learned that the company has asked suppliers to support it by either accepting a percentage – understood to be less than 50% – of what they’re currently owed, or a deferred payment of the total amount owed plus interest, to be paid over five years.”

Owe millions

Tellingly she also wrote: “The Netherlands-headquartered print aggregator does not have any production facilities of its own. Instead, it works with a network of print suppliers across Europe, where it is active in eight countries.”

Ian Carrotte of ICSM Credit said: “This is a classic case of taking with one hand and taking with the other. They are asking their suppliers to give them interest free loans while at the same time continuing to expect them to accept their orders. It means their business model is bust and those printers and other suppliers could well see nothing for their sacrifice if the firm goes into administration.”

Print Week reported HelloPrint co-founder and CEO Hans Scheffer as saying that the Covid-19 pandemic had resulted in a “dramatic drop-off in business.”

He said: “From the second week of March we saw severe impact on our revenues, particularly in the southern countries, in Italy and Spain, and later on in the more Nordic countries, we saw a big, big decline in revenues of up to 80%. Almost no company can survive that for a sustained period of time. We started to think how can we survive this crisis? Without taking strong measures, there is no future.”

Jo Francis said the firm, which had been on a run rate to achieve sales of €65m (£58.4m) prior to the pandemic, had also come up with a plan to attract new financing.

Payment plans offered

“But that plan can’t survive without asking our partners if they are also willing to contribute. That’s the reason we have offered our partners a payment plan. One of the options is that we pay the full amount, with interest, over a couple of years. That’s the most honest and realistic plan we could come up with,” Scheffer added.

Printweek understands that creditors are currently owed around €8m. Ian Carrotte said the company was in effect insolvent and should not trade knowing it could not pay its debts.

“We can make allowances for the Covid-19 crisis but this is insane,” he said. “With that amount of debt they can only trade their way of difficultly by expecting suppliers to work for free or nearly free. That is not a business model. All suppliers must press them for payment now or they may not see a penny. Any supplier to HelloPrint in this situation can use our debt-collection service which has a high success rate across Europe. Don’t delay as this has all the hallmarks of a firm about to collapse.”

Jo Francis for Print Week noted: “The firm has around 190 employees, with many currently furloughed. Scheffer and co-founder Rene van Dijk set up HelloPrint in 2013.  The company claims that its platform offers ‘the largest print and merchandise catalogue in the world’ with more than 10m product combinations. Via its API partner firms can create their own e-commerce storefronts. Prior to the virus crisis, HelloPrint had over 680,000 customers, and generated more than 500,000 orders per year. Before setting up HelloPrint, Scheffer founded Flyerzone and Drukland before selling them to Grafenia company Printing.com. One of HelloPrint's private equity investors also has a stake in Onlineprinters, the owner of Solopress.”

ICSM Credit

ICSM Credit has more than four decades of experience as a credit intelligence group whose members gain inside information about firms in trouble allowing them to avoid bad debts and rogue traders. To join costs less than a tank of fuel - while at the moment there's a special free temporary membership offer during the Covid-19 crisis which gives access to free legal letters. ICSM also has an effective debt collecting service which has a global reach - ask for details from Paul.

For details about ICSM Credit call 0844 854 1850 or visit the website www.icsmcredit.com or email Ian at Ian.carrotte@icsmcredit.com on how to subscribe and to join the UK’s credit intelligence network to avoid bad debts and late payers. Follow ICSM Credit on FaceBook, Twitter and YouTube and Ian Carrotte on LinkedIn.

To keep up to date subscribe to the FREE ICSM Credit Newsletter to hear all the latest insolvency news and to see who has gone out of business click on the orange panel on the top left of the home page of the website www.icsmcredit.com or send an email to Ian.carrotte@icsmcredit.com

For details for the work of the journalist Harry Mottram visit www.harrymottram.co.uk