Stefan Wojciechowski, the former head of newspapers and magazines at the National Federation of Retail Newsagents, has returned to the industry with a new service aimed at taking the strain off newsagents struggling to finance their paper rounds.

The service, called Localink, is a direct debit scheme for independent newsagents and small businesses. It was set up after research last summer by Wojciechowski showed newsagents were having to personally finance their home news delivery (HND) rounds to the tune of a collective £50m because although wholesalers demanded payment weekly, customers using HND took an average of five to six weeks to pay for their newspapers and magazines.

"I spent five years working closely with newspaper publishers on new HND orders," said Wojciechowski. "Even though we knew there was an HND service in an area willing to take on new HND orders, a third of all new orders generated were never started because the newsagent refused to take them on. The main driver of this and an issue that is rarely put forward by newsagents was the unspoken overbearing weight of HND debt."

Localink would safeguard the future of HND, he said. "Unless things change, the demise of HND will accelerate towards extinction. I have experienced first-hand a huge number of newsagent closures, not because customers didn't shop there but because cashflow had dried up due to HND. Direct debit will provide financial predictability and provide a steady cash flow on which businesses can plan ahead."

Localink will operate separately from a retailer's HND system, he said, making new invoice payments less contentious and easing debt risk for wholesalers.

Wojciechowski left the NFRN last July after eight years with the body. His exit prompted members to come forward and express their concern over the future of the federation. A number of key figures have since left, including general manager Paul Chambers.

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