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The investment capacity of businesses is eroding in Belgium

Now that summer 2023 is coming to an end, 80% of the balance sheets 2022 are published in Belgium.

This year 2022 was marked by strong disruptions in supply chains, high inflation and a shortage in the job market. This resulted in strong pressure on margins. In 2023, an overall 10% increase in salary costs continues to put employers under pressure.

An analysis of the 2022 annual accounts shows us overall that SMEs, with up to 99 workers, were able to increase their gross added value between 19% for the smallest (1 to 4 employees) and 11% for those employing between 50 and 99 people. On the other hand, added value only increases from 5 to 3% for large employers of more than 100 people. Inflation is therefore not absorbed in medium and large companies.

With their added value, companies pay their employees. The smaller they are, the greater the increase. Small businesses with 1 to 9 employees see their staff cost increase with 18 to 20% compared with 2021. For larger companies (more than 500 people), the increase is 10.50%.

Employment-related costs have therefore increased at least as much as inflation, or even twice as fast for SMEs.

Then come the cost of financing the debt.

We see that, in comparative terms compared to 2021, this increase is enormous. It is 16% for small SMEs and 47% for companies with more than 1000 people.

The reasons are twofold: the rise in rates and investment imperatives. The ecological transition, new ESG standards, the imperatives of competitiveness and competition are pushing our companies to accelerate their investments. It is necessary, but the pace is demanding and requires us to draw on the margins.

The result is a contrasting development. Companies with up to 50 people have managed to increase their residual margins (after financial charges) by more than 10%. Those with 50 to 100 people are stagnating and the largest are seeing their margins decrease by 22 to 27% depending on the category.

You are going to tell me that there is still room and that ultimately everything is fine. This forgets that it is with this remaining margin that the borrowed capital is repaid.

And the observation is simple. Companies are seeing their repayment obligations increase by 2 to 10% for all categories and up to 16% for the largest, which are under the greatest pressure to invest.

And the result of all this is that the available residual balance decreases by 22 to 30% in a single year for companies with more than 100 people.

We will therefore not be surprised to see that our companies will have to, from 2023, pay particular attention to the smooth running of their commercial cycles. The resulting fluidity of liquidity will be essential to be able to finance their future. A challenge that cannot be met without having commercial information and the analyzes that this service offers.

Written by Trend Business Information

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