In the past year, a total of 9,215 new companies were registered in Latvia from October last year to October this year, while 10,407 companies were closed, which means that the number of companies registered in Latvia decreased by 1,192 during per year, according to information collected by the open data platform “Okredo”.
The largest number of companies closed in the last year was recorded in the transport, processing industry, services and agriculture sectors.
Comparing the situation on a half-yearly basis, the decrease in the number of enterprises has become faster: in the last six months, from May to October of this year, 5,313 enterprises were closed in Latvia, which is 4.3% more than in the half-year previous – from November 2021 to 2022 for April (5,094 enterprises). In the period since the beginning of last year, the highest number of businesses closed in a month was recorded in March of last year, when 2,792 businesses closed their operations.
In percentage terms, the largest number of companies closed in the last year from November 2021 to October 2022 was in the transport and storage sector: 462 companies were closed, equal to 14.89% of the total number of companies closed in the period in question. This is followed by the manufacturing industry (10.89%), professional, scientific and technical service enterprises (9.67%), agricultural, forestry and fishing enterprises (9.25%), wholesale and retail trade ; car and motorcycle repair companies (7.7%).
Furthermore, a significant number of information and communication service providers (4.83% of the total number of companies closed during the last year), as well as accommodation and catering companies (4.29%) closed their operations in the last year.
“Under the current conditions, the company can be closed for many reasons. Falling sales, high prices of raw materials, transportation and energy, and rising other costs create instability in the market. The biggest risk is the sudden closure of a company for its partners, other companies.During difficult economic conditions, any business owner should pay more attention to monitoring the business situation of his partners.It is true that not all companies do this, so he can end up in a situation in which the closed company owes them something,” says Gerda Jurkoniene, head of the data platform “Okredo”.
The fact that the economic situation is difficult is also illustrated by the survey conducted by “Okredo” in August among Latvian and Lithuanian businessmen, which showed that 67% of companies have recently experienced late payments. Additionally, customers and partners of these companies cited the current geopolitical and economic situation as the most frequent reason for delays.
“The deterioration in the financial situation of the partners can be evidenced by the change of owners of the company, changes in the management structure and number of employees, as well as current financial data, claims of creditors and tax liabilities. Most of these information is freely and publicly available in various open data resources.There are several tools available in the market that allow you to evaluate and monitor the status of your partners’ activity and its changes.Only such monitoring allows us to react quickly enough, adjusting the terms of cooperation or reevaluating cooperation with the specific partner as a whole. The Okredo data platform also has tools to make sure that the partners’ business is doing well,” he says.
The open data platform “Okredo”, operating in Latvia, Lithuania and Estonia, provides up-to-date data from business registers, tax administration and labor institutions, judicial administrations, as well as jointly offers auditing of company financial statements and other useful business data.
At the same time, “Okredo” also serves as a credit risk assessment tool and offers credit risk assessments, data monitoring services, helping small and medium enterprises to reduce business risks and increase sales by using open data in business management.
