It’s in the nature of an entrepreneur – you just want to fight for your company. You have this strong feeling of survival; it is natural to use all means to overcome difficulties. In some cases, you might even try to misinform your colleagues and creditors to get some time needed to recover. At least, that’s a common threat.
"Sometimes creditors feel that a bankruptcy petition filed by a client company comes as a surprise. The fact is, however, that such surprises are rare for companies monitoring their clients through ratings. In 2020 in Finland, more than 70% of companies that filed a bankruptcy petition had a low rating (Asiakastieto’s Rating Alfa rating is B or C) even before the petition was filed", Jukka Ruuska, CEO of Asiakastieto says.
Big bankruptcy wave unlikely in Finland
According to Asiakastieto’s recent study* covering the financial statements of 28 000 limited liability companies, the turnover of a median company decreased, and the operating profit plummeted in almost all branches of industry in Finland in 2020. At the same time, however, solvency has strengthened in most industries. According to Asiakastieto’s analysis, a massive wave of bankruptcies does not appear likely on the basis of the financial statements data currently available, although some of the temporary restrictions on bankruptcy will end on the 31st of January.
"In the big picture, the situation looks relatively stable based on our data, but of course the situations vary a lot from company to company and industry to industry. For example, in the restaurant and catering business sector, the median company’s turnover decreased by about 14 percent and the operating profit by as much as 44 percent. The decline was almost as sharp in the accommodation and education sectors as well. The beginning of 2021 is likely to show more strongly the direction of how much the number of bankruptcies in these areas will grow", Jukka Ruuska, CEO of Enento Group reflects.
*The study reviewed the financial statements of 28,000 companies for financial years ended April 2020 or later. The comparison was made with key figures calculated from the 2019 financial statements of the same companies.
Bankruptcies decreased in all Nordic countries
Statistics compiled by Enento Group (Asiakastieto being part of it) tell that bankruptcies decreased in all Nordic countries in 2020. In Finland, 1 862 companies were declared bankrupt, which is 6 percent less than in the previous year. In Denmark, bankruptcies decreased by 34 percent, in Norway by 18 percent and in Sweden by 3 percent.
"Country- and region-specific restrictions, on the one hand, and the effectiveness of support packages, on the other, have had a major impact on how different industries have survived a difficult year. Of the Nordic countries, Sweden was the only one which did not completely close, for example, shopping centres, restaurants or bars at any stage. We know that in all countries, restaurants and the accommodation business have been in the greatest difficulties. The companies that were the fastest in organising the selling of takeout items, are likely to survive best", Jukka Ruuska says.