business, bankruptcy | A leading debt collection firm warns: – Everything points to a wave of bankruptcies

business, bankruptcy |  A leading debt collection firm warns: – Everything points to a wave of bankruptcies

(The newspaper online) According to Intrum (see below), the number of corporate debt collection cases has increased by 20 percent in the past year. The debt collection company believes this points to more bankruptcies through 2023.

New numbers for 2022 indicate that businesses are having a tougher time now than they have been in a long time. This is because a high price increase results in poor purchasing power for most people and higher business costs. Corporate purchase prices have risen, and labor costs are expected to increase further in 2023.

– If we look at the past year, the growth in collection cases for companies has gradually increased over the year and collection amounts have also gone up somewhat, says senior analyst Morten Traste at Intrum Skandinavia in a press release.

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Ongoing payment problems

Trasti believes everything points to permanent payment problems. Companies across all kinds of industries are now seeing an increase in debt collections in 2022 compared to 2021.

At the end of 2022, according to Intrum, there were more debt collection cases than at the beginning of the Corona pandemic just three years ago.

There is no indication that the problems will abate anytime soon, says Trusty.

– The increase in debt collection cases is too broad for any industry to escape, and this is a cause for concern. Companies experienced a significant and gradual increase in costs over the course of the year. This applies to both purchase prices, but also in terms of labor costs, most of which are expected to increase in 2023.

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– This, together with the weakening of purchasing power from consumers, means that we believe that there will be a wave of bankruptcies during the year, and this is a grim prediction.

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Four consecutive quarters with an increment

The senior analyst also points to recent bankruptcy statistics from Statistics Norway. There is an increase in the number of bankruptcies in Norway for the fourth consecutive quarter compared to the previous year. It must be said that this growth, however, is coming from a low level.

What worries Trusty about the increase, however, is that there is no clear way out of the crisis.

There is no easy way out of these difficult circumstances. During the pandemic, public support packages have provided good support, but there is no indication that this is on the horizon. When households are also less able to afford it, demand falls. In his letter, he says that this will make it difficult for most companies to increase their sales revenue.

There is also an increase in the number of debt collection cases among individuals. However, the level here is much lower than it was before the pandemic. Intrum states that there were a total of 13 percent more debt collection cases among private customers at the end of 2022 compared to the beginning of the year. Collection amounts increased by 17 percent in the period.

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Low unemployment and savings finance

When companies cut costs and employees, more people are likely to have payment problems. But it is not completely black.

– This will take time, so for the time being, it’s low unemployment and money saved during the pandemic that keeps defaults among individuals, Trasti concludes.

Intrum is Europe’s largest credit management and collections company with operations in 25 countries, including Norway. Lindorff and Intrum Justitia merged in June 2017 and became Intrum.

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Dalila Awolowo

Dalila Awolowo

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