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German crisis threatens Polish companies

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An increasing number of companies, relevant to the German economy, are facing financial problems. Last year, losses due to insolvency were 48% higher than in the same period of previous years. As experts from PMR Restrukturyzacje S.A. warn, the German crisis may negatively affect Polish companies.

Losses caused insolvency of companies in Germany, the sectors of production, trade, construction, finance and transport were particularly affected. However, company problems from these sectors translate into a slowdown in the development of other companies – not only German ones. The resulting domino effect affects exporters – suppliers and contractors – and can easily harm their financial stability. The first effects are already visible in Poland.

Polish companies endangered

Germany, due to its close proximity and the size of its economy, is for many Polish companies the most important business partner and sales market for their products. Therefore, domestic entrepreneurs should carefully observe the situation in Germany and react to the changes in due time.

– Poles must prepare for a lack of payments – says Maciej Roch Pietrzak, proxy at PMR Restrukturyzacje SA – Companies in the country should prepare for restructuring activities, because they can expect that some of their German contractors will not be able to settle payments on time. For some, this means loss of liquidity and the collapse of business, he explains.

The first effects of the German slowdown are already visible here. Official data from the Central Statistical Office and Ministry of Development indicate that the growth dynamics of sales to Germany have recently slowed down significantly (from +11.4% in 2015 to only +1.7% at the end of October 2016). However, the number of applications submitted by Polish entrepreneurs to recover unpaid receivables from German contractors has increased.

Late payments cause companies to collapse

Late payments to Polish entrepreneurs can contribute significantly to their rapid collapse. Indeed, as the 'European Payments Report 2016' shows, lack of liquidity is increasingly cited as the main cause of bankruptcy. 70 per cent of respondents admit that their financial problems are caused by difficulties in collecting debts from debtors. This translates into delays in payment to employees, which in the long term results in delays in payment for the company's core obligations, as well as redundancies.

Losing contractors and employees in a short time, on the other hand, contributes to the collapse of a company. And as the analysis conducted by PMR Restrukturyzacje SA shows, even one fifth of companies may be in such a situation. companies currently operating on the Polish market market.

“With such low unemployment, entrepreneurs in Poland cannot afford to lose employees,” explains Małgorzata Anisimowicz, president and CEO of restructuring advisor PMR Restrukturyzacje SA "Maintaining liquidity is becoming critical for the functioning of enterprises in this situation, and preparation for even a potential crisis is necessary," adds Małgorzata Anisimowicz.
The material appeared on manager24.co.uk:

19 January 2017:
" German crisis will threaten Polish companies
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