Facilitate collection procedures to support business activity in an uncertain environment

With a predictable rebound in activity from the first half of 2022, the end of the health crisis should be synonymous with opportunity for the French economy, with an expected growth of 3.6% *.

However, Europe’s entry into an armed conflict last February plunged companies into a new era of uncertainty. A context that limits their exercise and which could lead to cash flow difficulties for some.

The effects of the war are well known. It affects market uncertainty and leads to a shift in risk appetite as sanctions and counter-sanctions imposed on Russia and European states drive up inflation and material shortages.

Until then, French companies had managed to absorb the rising prices of energy and raw materials. From now on, their financial capabilities clash with the repayment imperatives of the bank aid and state-guaranteed loans (PGEs) that have been granted to them.

With a 7-10% increase in business failures over the past 12 months **, we are already seeing the first consequences. And these numbers are expected to increase by next September.

Furthermore, it is necessary to address this future crisis by going beyond the financial mechanisms that oblige companies over time. The measures to be taken must facilitate the transfer of liquidity between companies to strengthen their cash flow and revive the economy. The containment of the effects of the crisis will lead to the simplification of the credit recovery support procedures. This choice will create the conditions for a virtuous dialogue between the actors of economic life, recognizing the centrality of their intermediaries, experts in financial mediation.

Provide tailored support for companies affected in the face of international uncertainty

Uncontrolled inflation, zero growth and full employment… It is in this increasingly limited context that 700,000 VSEs, SMEs and ETIs will soon have to pay the aid received in the context of Covid-19 ***. However, their order book struggles to fill when many commodities remain inaccessible or see their prices skyrocket. This additional cost adds to the incompressible expenses of companies.

Some sectors are particularly affected, such as construction, transport, logistics, digital or the wood industry, which are affected by this situation and are experiencing delivery delays. Many additional costs that affect their margins and the amount of their services.

Alone, they represent almost 50% of the opening of insolvency proceedings. The economic slowdown is seriously degrading their creditworthiness and that of their customers. A situation that denotes the need for the support of experts able to identify the short-term problems of these companies by recreating the link with their creditors.

Simplify debt collection procedures to stem business failures

In this context, the evolution of the order book must remain at the center of the manager’s concerns. The stakes are high. It will allow you to keep your company in business while safeguarding jobs. But how do you plan when its growth targets are slowed by the lengthening of payment terms for sometimes insolvent creditors?

To date, the complexity of the administrative procedures relating to collection binds businesses. By consuming time and energy, it can also prove fruitless and break dialogue with creditors to the point of deporting the file from an amicable solution to the legal dispute.

Simplifying the use of private entities acting as intermediaries between the debtor company and its creditor will facilitate the resolution of complex and contained situations. Some digital tools already offer the means to go beyond the formality of the too often rigid collection procedures by adapting their usage framework to the parties involved.

This flexibility will make the company’s activity in search of sustainable and sustainable liquidity over time, to better address the uncertainty generated by international events.

Making the relationship with financial mediation more flexible to restore confidence in economic activity

When difficulties arise, financial mediation experts become true partners of business leaders. If the use of these specialists can be slowed down by the psychological burden associated with a collection situation, their support goes beyond the difficulties of paying off debts.

Evaluating client performance, balancing contractual commitments, negotiating payment terms … Their knowledge of the markets helps give contractors greater visibility into their cash flow to help them anticipate any period of complexity.

In a limited environment and in a reduction of development opportunities, it seems more than necessary to support entrepreneurial activity. This will require a relaxation of the rules of access to financial mediation organizations to facilitate the recovery of the markets and ensure renewed confidence in the French economy.

* Collective, Economic Forecasts – Macroeconomic Projections, Banque de France, March 2022

** Intrum France data at the end of March 2022

*** Coronavirus COVID-19: business support – State guaranteed loan, Update, Ministry of Economy, Finance and Relaunch, December 31, 2021

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