End of state aid
Government support was phased out in early 2022 and we have seen a sharp increase in the number of debt collection cases since then. As a result, we are also seeing a rise in the number of bankruptcies and other forms of insolvency, such as suspension of payments and the new WHOA (Homologation Underhand Arrangement Act).
Indicators of increase in bankruptcies
In itself, it is not surprising that the number of bankruptcies is rising, as they have been extremely low for the past few years. So basically, you could say we are returning to normal. Despite this rise, we are still far below the level before the COVID-19 crisis. It remains to be seen whether it will tip over to above a normal level. A number of indicators do seem to push the number of bankruptcies up further:
- Problems within the entire supply chain, especially the supply of products from Asia and especially China.
- Rising commodity prices of energy, wood and metal, among others.
- Shortage of staff.
- Rising interest rates and massive inflation.
- War between Ukraine and Russia and sanctions against Russia.
Forecast for the coming months
Recently, the Chamber of Commerce indicated that hundreds of thousands of companies would be in trouble. Credit insurers also indicate that many more bankruptcies are on the way. The coming months will show whether the number of bankruptcies will return to normal levels or whether the aforementioned indicators will lead to an explosion in bankruptcies.
In any case, it is advisable for entrepreneurs to be alert and closely monitor the creditworthiness of your buyers. If your buyer does go bankrupt, then a credit insurance serve as a safety net and ensure the continuity of your business.
