Paper and forest products industry growth engine: cut through your cash flow logjam!

The European paper and forest products industries are experiencing a logjam in recent years. According to Cepi (the Confederation of European Paper Industries), the industries face ‘adverse macro-economic trends, long-lasting destocking along the supply chain throughout the year and the heavy impact on the industry of high energy and manufacturing costs.’ [1]

10 insights on paper and pulp from Cepi

Pulp fiction? Nope, the Cepi preliminary report reveals numerous depressing trends. We’ll highlight some of the main paper industry statistics from Cepi member countries for you here:

• 12.8% – YoY decrease in the production of paper and board
• 6.9% – YoY decrease in the utilisation of paper for recycling
• 4.8% – YoY increase of European market pulp production
• 15.3% – YoY apparent decrease in consumption of paper and board
• 3.7% – Yoy decrease in sanitary and household paper consumption / 4.4% – YoY decrease in the output of sanitary and household paper
• 27.5% – YoY decrease in the demand for graphic paper / 24.6% – YoY decrease in the production of graphic paper grades
• 9.1%  – YoY decrease in production of packaging grades of paper and board
• 15.4% – YoY decrease of total deliveries of paper and board 
• 36.7% – percentage of exports to other European countries by Cepi countries
• 6.2% – YoY decrease in the production of pulp

The European pulp and paper industry is dealing with overcapacity. This issue arises when production capacity surpasses demand, leading to inefficiencies and higher costs. Contributing factors include economic challenges like high inflation and energy costs, and reduced demand for recycled paper. This overcapacity has resulted in plant closures and financial stress across the sector. [2]

Paper and forest products businesses can avoid folding under pressure

Mitigating with product

So, the current climate and demand for paper and forest goods and supplies is anything but rosy. But, there are mitigation steps to relieve some pressure for producers and suppliers. 

To address these issues, companies can diversify their product lines, streamline operations to cut costs, and explore alternative revenue streams like biofuels. These strategies can help balance production and demand, making the industry more resilient.

Using B2B BNPL to enhance transactions

Beyond those actions, which take time to set up and implement, another solution is offering a B2B Buy Now, Pay Later (BNPL) solution like AREA42’s TermsTech. 

By offering flexible payment terms to customers, paper and forest product merchants and marketplaces create a better transactional environment for their buyers and sellers. Buyers get relief by being able to pay later while sellers benefit by getting paid upon delivery. This improves cash flow for both sides and creates a competitive edge for producers and suppliers who offer BNPL to their customers.

Terms.Tech takes care of the nitty gritty for B2B businesses in paper and forest products industries, e.g. conducting a rigorous risk assessment, providing a scalable risk model, determining the length of payment terms, and taking responsibility for payment collections (including pursuing late payments). This means TermsTech not only helps cash flow, but also de-stresses a company’s financial mindset.

Contact our BNPL experts

Let’s create long-term customer value together! Contact us today to find out how TermsTech can benefit your operation.

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Sources

1 – Preliminary Statistics 2023: European Pulp & Paper Industry; published by CEPI.

2 – How to Navigate the Overcapacity Issue in the European Pulp and Paper Industry, by ResourceWise