Rise in global insolvencies for fourth consecutive year
Monday, 13th January 2020 12:36

Economists are predicting a continued upward trend in global insolvencies for 2020 for the fourth consecutive year.

Trade credit insurer, Euler Hermes, suggests that this is a combination of a ‘lower for longer’ economic activity (most notably in advanced counties and the industrial sector) coupled with the effects of trade disputes and political uncertainties, which will keep global companies under pressure. Profit margins in many counties will be limited due to price competition and overall higher salaries, say experts. Insolvency ‘hotspots’ include construction in Asia, energy and retail in North America and retail and services in Western Europe.

Asia will see the biggest rise in insolvencies at +8%, followed closely by China at +10% and India at +11%. In Western Europe, where economic growth has fallen below the historical threshold and which often results in fewer insolvencies, will see an increase in financial instability and business failures across most of its countries with Germany at 3%, Italy at +4% and Spain +5%. The UK is projected at +3%.

It is predicted that four out of five counties will post a rise in insolvencies in 2020, with Brazil and France being key exceptions.

These predictions call for more due diligence into who your business is working with to avoid being part of the collateral damage when a business does fail. Analysts agree that keeping a closer eye on your customer’s stability is key to avoiding risk. An annual subscription to identeco’s Business Support Toolkit (a one-off annual fee of £79.95) will give you comprehensive insights into a company’s financial health and trading history as well as account monitoring which will alert you to any changes in financial stability. Other tools included for a subscriber include director and shareholder structures, the ability to download filed documents, any detrimental data, days sales outstanding information, new business entrants, acquisition targets and marketing and prospecting lists. For a free trial, click here.