COVID Auswirkung auf das Forderungsmanagement

What effects does COVID have on debt management?

The sparrows have been whistling from the rooftops since early summer: the wave of bankruptcies in the Swiss economy is set to roll in. Above all, the credit insurer Euler Hermes made the press sit up and take notice with its bad news (the wave of bankruptcies is rolling in soon | The Swiss debt collection agencies were already rubbing their hands together because they could have had a lot of work to do. But so far this wave of bankruptcies has not occurred and debt collection agencies are still waiting for the additional cases to be processed. What reasons are there that Corona has not caused more bankruptcies?

Milan Milic: The time for debt collection agencies will come

As the saying goes: “Postponed is not canceled!”. This saying has been heard more and more frequently in various debt collection agencies over the past few months. The credit insurer Euler anticipated a dramatic increase in bankruptcies in Switzerland of 17 percent, and worldwide they even expected a 35 percent increase. However, if you look at the related statistics, you notice that even the opposite is the case – bankruptcies fell. In 2020, 3,811 companies went bankrupt in Switzerland. Compared to the previous year, this represents a decline in insolvencies of 19 percent. Switzerland – corporate insolvencies 2020 | Statista How can that be?

State aid mask the situation

During the pandemic, of course, the Swiss state intervened to help companies in need in various ways. This is also the reason that collection agencies are still waiting for an increase in orders. The wave of bankruptcies is simply being delayed. But like a dam, water accumulates and develops additional strength. The same is happening with the economic turmoil in Switzerland. As soon as even the thinnest microcracks appear on this dam, the wave of bankruptcies spreads. To date, no solutions have been presented that suggest that business problems will be resolved. All previous measures ensure that problems are postponed. However, when the dirt is swept under the carpet, it doesn’t go anywhere. As a debt collection agency, we draw the attention of our clients to this particular situation.

Professional advice to debt collection agencies

The economic situation in which the Swiss find themselves, and in fact almost the entire world economy, has never been observed before. Today, customers usually contact us only after they have problems with payment. Meanwhile, the services provided by debt collection agencies are increasingly shifting towards prevention and counseling of clients. It seems obvious to almost all participants in economic activity that a wave of bankruptcies is approaching, so smart and forward-thinking companies are now preparing for it. As soon as government aid is cut due to lack of subsidies, the deferred bankruptcies will be rescheduled. This bending wave can very quickly develop into a domino effect, as healthy companies are “carried away” too. In the economy, everything is interconnected, as we had to endure in 2008, at the height of the subprime crisis in the United States. Suddenly, all over the world, there was a problem that Americans could no longer pay off their mortgages. However, at the moment we are not talking about America at all, but rather about economic ties within Switzerland.

How can companies prepare?

Professional and reputable debt collection agencies will indicate that both the B2B and B2C sectors will be affected. When companies stumble and become insolvent, individuals are affected shortly or even later. Both private and corporate solvency are being severely tested. Although every economic figure knows what awaits us, you keep dancing until the music stops playing. Nothing else is possible. However, it is possible to adapt wisely to this situation and ease the financial pressure at least a little.

Milan Milic: These are the questions you should ask yourself as an entrepreneur

From now on it is important to examine the business partners even more closely. The more money there is, the more precise the research has to be. Which sector do you work in? How will this industry be affected after state aid expires? How has the company fared so far? Does it stand for stability or have there been a number of managerial changes, etc.?

Getting as highest prepayment as possible is of course be the safest way to get your money. Since this is not always possible, depending on order volume and industry, these prepayment rates should be increased significantly. Always remember: liquidity will dominate over the next few months and years. Always make sure you can pay your own bills and try to act as independently as possible.

Collection agencies for professional debt management

Professional debt management ensures that you always build up a flow of liquidity. As is well known, time is money in business and reputable debt collection companies make sure that time does not pass uselessly. It is advisable to hire experienced debt collection agencies for the near future, as they ensure a close-knit communication network that encourages debtors to quickly settle the outstanding bills. It should of course be noted that a professional approach is expressed above all in the fact that the employees of the debt collection agencies communicate carefully and on an equal footing with the customers. Only through an empathetic and understanding approach can the debtor’s motivation to settle the invoice be upheld.

With this in mind, I wish you all the best for the months to come.

Your Milan Milic

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