The plague of business failures
With the law on terms of payment, very small businesses will perhaps have a little more luck. They would benefit from a faster inflow of cash and perhaps even from additional borrowing capacity with banks. In the meantime, very small enterprises (VSEs) have the highest number of failures.
In the second quarter of the year, 2,833 failures were recorded by the Inforisk firm. They are up 6% compared to the same period last year. Most of these failures are concentrated at the level of VSEs, i.e. 98.8% versus 1.1% for SMEs and 0.1% for large corporations, VSEs are weakened by the long payment periods, which constitute the first source of mortality. “Long payment terms represent the leading mortality factor for companies (in more than 40% of cases). Tackling excessive payment terms means aiming to reduce this factor”, says Amine Diouri, director of studies and communication at Inforisk, who adds that “the law on payment terms is barely effective. It will be necessary to wait between one and two years to see an effect on the overall payment terms, particularly for VSEs which experienced customer delays of more than 240 days in 2021”.
Alongside these deadlines, VSEs face other problems: they often have a single client, their capital is poorly structured, and they suffer from weak financial robustness. For VSEs, the challenge is to stay alive, manage to diversify their portfolio… and perhaps also move to the SME stage before becoming large corporations, except that so far very few VSEs have managed to meet this challenge. During this first half of the year, VSEs juggled between rising inflation, the price of raw materials, the impact of the rise in the key rate, and other problems.
“The macroeconomic context is still complicated for companies, with a very moderate GDP growth, inflation, rise in interest rates impacting companies on their financial charges, and financial difficulties of the end consumers”, explains Diouri. These failures are mainly to be found in the retail sector, which represents 33% of the total. Then come the real estate and construction sectors with respectively 20% and 15% of companies in hardship.
Khadija MASMOUDI
