US leader in bankruptcies
Because what do recent figures from credit insurer Atradius show? Nowhere else is the number of companies going bankrupt rising as fast as in the US. North America (3.2 %) has overtaken Western Europe (2.7 %) in the rankings in the first half of 2019. And this is mainly due to the trade war. Products made in China are becoming more expensive to buy, hitting the US economy hard. In fact, Atradius expects the number of bankruptcies in the US to rise by another 2 per cent next year.
The already fragile retail sector is hit, as well as the steel and agriculture sectors. Consumers are also more expensive. This comes at the cost of impacting Trump's tax cut, which in turn puts a large number of jobs at risk. With which comes pressure on the so good unemployment figures that Trump regularly boasts about...
Far from my bedside show? Definitely not!
A far cry, you think? Let China and the US duke it out? You couldn't be more wrong... Because the number of bankruptcies has also risen in Western countries for the first time since the credit crunch in 2009. This has partly to do with all the Brexit woes (in the UK, the number of bankruptcies rose by 8.9% in the first half of 2019), but certainly also with the battle that the US and China are fighting with each other.
Not surprisingly, Philips came out with a profit warning in mid-October, largely the direct result of the trade war. The Dutch multinational manufactures medical equipment for the US partly in China and equipment for China partly in the US; so it is in the middle of the boxing ring and is taking some heavy blows from both fighters.
Philips is certainly no exception, experts expect. Basically, all companies exporting and importing will (start to) be affected by the trade war to a greater or lesser extent. This is because the tariffs not only lead to disruptions in the world trade system, but also create ever-increasing uncertainty. Companies dare to take fewer risks, which is bad for global economic growth. No one is immune to this latent virus, including your company.
This is how you can protect yourself
What can you do to prevent the virus from taking over your business? First of all, of course, it is hoped that a trade deal will be reached between the two countries. That is the best-case scenario, but you have no direct influence on that.
What you can do yourself, however, is to monitor your debtors and prospects closely by obtaining financial information from external information agencies. In addition, credit insurers offer the most valuable information, as they provide coverage for 90% of your outstanding balance in case of (suspected) insolvency, in addition to the latest and most reliable information. So you still have security in these uncertain times. The experts at Xolv advise and support you.
