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February 27, 2021

SME insolvencies exceeded the average of all companies in 2012

Coface Romania anticipates that the number of micro-enterprises tat will turn insolvent will increase this year too, at a faster rate of 20 pc.

The number of micro-enterprises that turned insolvent over the last two years increased by 14.5 pc each year, higher than the advance at the level of all companies in the economy, which was under 10 pc, with the share of total insolvencies that went to small firms increasing from 78 pc in 2010 to 85 pc in 2012. “2012 is the first year when the increase rate of insolvency is higher than that of new registrations. Last year, the number of newly registered companies advanced by 2 pc, while the rate of becoming insolvent went up 14 pc. Another novelty brought by 2012 is that more than 50 pc of companies filed for insolvency themselves, until now creditors were seeking the insolvency,” the Country Manager of Coface Romania, Constantin Coman said yesterday in a press conference, quoted by Mediafax. He explained that the firms which turn insolvent have a rate of successfully leaving this procedure of approximately 3 pc, but even in their case creditors recover their money only to a very small extent. In the case of micro-enterprises, the success rate is much smaller. “Large companies have more chances of leaving the insolvency, but this is a lengthy process in which they must come with a very good restructuring plan allowing them to deal with all creditors, not just the banks,” Coman mentioned. Coface anticipates that the number of micro-enterprises that will turn insolvent will increase this year too, at a faster rate of 20 pc. According to Coface data, half the companies targeted by the modifications of the Fiscal Code had losses in 2011, a quarter reported no activity and the rest had profit.Under the Fiscal Code, starting February 1st micro-enterprises cannot opt anymore between the profit tax and the income tax, as they must pay a tax of 3 pc of the incomes they make, if their income is under EUR 65,000, a value that was diminished from EUR 100,000.

According to Coface data, 20 pc of the 400,000 micro-enterprises active in Romania have a high risk of entering insolvency, with an indebtedness rate of 103 pc, which means that about 80,000 firms cannot cope anymore with their debts, given the incomes or assets they have. Moreover, the average time of recovering the money from debtors, in their case, is 153 days, compared to just 52 days in the case of companies that have a low risk of insolvency.Coman explained that, in order to have a good chance of recovery, micro-enterprises must be aware of the situation and have a good risk management policy.At the opposite end are 21 pc of micro-enterprises, with a low risk of becoming insolvent, as they are the only healthy firms with an adequate risk management policy. They have an average turnover of RON 378,000, an indebtedness level of 80 pc and a debt recovery time of 52 days.An average risk is present in 35 pc of micro-enterprises, with a turnover of RON 200,000 and a indebtedness level of 88 pc, while the medium-to-high risk category includes 24 pc of small firms, with a turnover under RON 589,000 and a 96 pc indebtedness rate. “There is a very big difference between micro-enterprises and companies at national scale, small firms have an indebtedness rate of 132 pc, while as a whole the indebtedness is 57 pc,” Coman added. Only one in four micro-enterprises succeeded last year to improve the situation by increasing the turnover and recovering the claims in a shorter time. The activity sectors with a low risk are the extractive industry, metallurgy and the food and drinks sector. A low degree of risk is encountered in IT, the medical and social assistance sectors, and the industry of services provided for companies.

Economic growth of maximum 1 pc this year

Romania will register an increase of its Gross Domestic Product by maximum 1 pc in 2013, as economic conditions will remain difficult, Coface Romania estimates. “In the base scenario for 2013, Coface estimates an economic increase of maximum 1 pc, compared to the previous year. Coface France maintained, in January 2013, the country risk rating for Romania at B, a risk category that indicates an unstable economic and political environment, capable to further affect a history of payments that is already poor,” the Country Manager of Coface Romania, Constantin Coman said, quoted by capital.ro.

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