According to Intrum (see below), the number of debt collection cases for companies has increased by 20 per cent in the past year. The debt collection company believes this indicates more bankruptcies during 2023.
Fresh figures for 2022 indicate that companies are having a tougher time now than in a long time. This is because the high price increase gives weaker purchasing power for most people and higher costs for businesses. The purchase prices for the companies have increased, and labor costs are expected to increase further in 2023.
– If we look at last year, the growth in collection cases for companies increased gradually throughout the year, and the collection amounts have also become somewhat higher, says chief analyst Morten Trasti at Intrum Skandinavia in a press release.
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Persistent payment problems
Trasti believes that everything points to permanent payment problems. And there are companies in all types of industries that are now experiencing an increase in debt collection cases in 2022 compared to 2021.
At the end of 2022, according to Intrum, there were more debt collection cases than at the start of the corona pandemic just three years ago.
Trasti says there is no indication that the problems will abate anytime soon.
– The increase in debt collection cases is so broad that no industry escapes, and this is cause for concern. The companies have had a large and gradual increase in costs throughout the year. This applies both in terms of purchase prices, but also labor costs, which most expect will increase in 2023.
– This, combined with weaker purchasing power from consumers, means that we believe there will be a wave of bankruptcies during the year, is the gloomy prediction.
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Four quarters in a row with an increase
The chief analyst also refers to the recent bankruptcy statistics of Statistics Norway. Here there is an increase in the number of bankruptcies in Norway for the fourth quarter in a row compared to the previous year. It must be said that this growth, however, comes from a low level.
But what alarms Trasti about the increase is that there is no obvious way out of the crisis.
– There is no easy way out of these tough conditions. During the pandemic, public support packages provided good support, but there is nothing to indicate that this is in sight. When households are also less able to afford it, demand falls. This will make it difficult for most companies to increase their sales revenue, he says in the message.
There is also growth in the number of debt collection cases among private individuals. Here, however, the level is significantly lower than what was the case before the pandemic. Intrum states that there are a total of 13 per cent more debt collection cases among private customers towards the end of 2022 than at the beginning of the year. The collection amounts have increased by 17 per cent in the period.
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Low unemployment and saved funds
When companies cut costs and staff, more private individuals will probably have payment problems. But it’s not completely black.
– This will take time, so for now it is low unemployment and funds saved during the pandemic that keep defaults among private individuals down, concludes Trasti.
Intrum is Europe’s largest credit management and collection company with operations in 25 countries, including Norway. Lindorff and Intrum Justitia merged in June 2017 and became Intrum.
