PUBLISHING
A Marvel-lous way to manage a demanding payroll
Company: Marvel Bookbinding & Printfinishing Pty Ltd
Product: Factoring

Specific business needs
• Payroll
• Cashflow to support cyclical business
• Strong banking relationship
• Emergency cash injection

When Marvel Bookbinding & Printfinishing recently ran into cashflow difficulties it turned to its bank for help.

However, its bank was not prepared to help it through its crisis and, on a recommendation, Marvel switched to St.George Bank and undertook a new factoring facility with Scottish Pacific Business Finance.

Marvel is a company that employs 95 people and enjoys an annual turnover of about $7 million to $8 million.

Its client base consists mainly of commercial printers who send their "flat sheet" prints to Marvel to be trimmed, folded, collated and bound. Typical large jobs include calendars, school diaries and company annual reports.

Marvel’s service is highly labour-intensive, requiring the employment of a significant number of factory floor staff. These staff-members are all weekly wage earners.

Marvel has been in the business for about 18 years. The bulk of its major clients have been with Marvel for a good 10 years. Nearly all these clients enjoy payment terms of 60 to 90 days. Some are on 30 days, but very few.

"Obviously we’d love them all to be on 30 days", says Administration Manager Lea Robinson, "but they are all used to the existing arrangement that has been long-established within the printing industry, and they’re not about to start changing their ways now."

Marvel’s cashflow problems arise from two sources. Not only do they need to fund a seven-day payroll while waiting anything up to three months for payment, they also have to deal with the cyclical nature of their major jobs.

Calendars, diaries and annual reports are only required in concentrated lumps. This is what led Marvel to decide to manage their cashflow through a factoring facility in the first place. But as we know, the bank was not prepared to help it through its crisis.

"When I first started here, the company was in very bad shape," says Leanne. "It desperately needed to increase its existing factoring facility with the bank in order to revive the company’s fortunes.

"The difference between our original provider and Scottish was glaringly apparent in the area of customer service. Whereas our previous bank didn’t want to know us, Scottish could not have been more helpful."

Scottish Pacific Business Finance provides Marvel with an 80 per cent facility. Marvel sends the payroll invoices to Scottish who in turn deposits 80 per cent of their value into Marvel’s bank account. Marvel then draws down on this facility until such time as the debtors pay.

The facility gave Marvel the time it needed to turn the business around and the company posted record sales and profit for October and November 2003.

"We are extremely happy with Scottish Pacific," says Lea.

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