For the analysis, CRIF examined almost 3 million companies in Germany in relation to their creditworthiness and financial strength. This included, among other things, information from balance sheets and profit and loss accounts, sales figures, payment experiences and negative court information. According to the analysis, the number of financially weak companies increased by 15.6% in November 2022 compared to March 2022. Accordingly, 301,516 companies or 10% of companies in Germany currently have an increased risk of insolvency.
“High energy costs, ongoing supply chain problems and inflation are causing problems for many companies. In addition, consumers, who have less disposable income due to high energy prices and inflation are also reluctant to spend. The resulting loss of purchasing power also weighs on companies,” according to CRIF Germany Managing Director, Dr. Frank Schlein, commenting on the current situation.
Energy-intensive sectors in particular are currently at risk of insolvency. In addition to the frequently mentioned bakeries, this also includes the ceramics and glass industries, paper manufacturers and the transport and logistics industries. Skilled trades are also particularly at risk of insolvency due to the energy crisis. This includes companies from the catering sector, beverage production, hairdressing salons, as well as gardeners and landscapers. In these sectors, there have already been significant increases in corporate insolvencies in 2022.
“We are currently predicting a total of 14,500 company insolvencies in 2022. That is an increase of 3.6% compared to the same period last year,” added Dr. Schlein. The information service provider CRIF also expects more insolvencies in 2023. The forecast currently assumes 17,000 company insolvencies in 2023 – an increase of 17.2% compared to 2022.
Share of companies at risk of insolvency increases by 15.6%
A look at the regional distribution of companies with a high risk of non-payment or insolvency reveals major differences. In absolute figures, North Rhine-Westphalia (65,360), Bavaria (37,063), Baden-Württemberg (33,675) and Lower Saxony (26,278) top the statistics of the federal states with the most financially weak companies. In Bremen (2,998) and Saarland (3,002) there are comparatively few companies with an increased risk of insolvency.
In terms of company density, the highest risk of insolvency currently comes from companies in Saxony-Anhalt. Currently, 18.1% of the companies there are in financial difficulty and are therefore threatened with insolvency. But also in Berlin (14.8%), Saxony (14.5%) and Bremen (14.4%), there are significantly more companies threatened with insolvency than the national average. In percentage terms, there is a lower risk from companies in Bavaria. Here, only 6.5% of the companies are considered to be financially weak.
The number of companies at risk of insolvency has increased in 15 federal states since March 2022. The strongest is in Bremen with an increase of 41.4%. There were also significantly more companies at risk of insolvency in Berlin (up 30.3%), Thuringia (up 26.4%) and in Hamburg (up 23%).
In practice, there are typical patterns of behavior that indicate a precarious situation for companies at an early stage, for example, if poor payment behavior, a change in ordering behavior or frequent changes in management, bank details or company name occur. However, other indicators include when payments are delayed due to unjustified complaints, verbal promises are broken, or copies of invoices are frequently requested. In addition, the affected companies can no longer afford new purchases and use outdated production facilities. Evidence of financial difficulties is also provided by the consumption of equity over the years or the repeated increase in credit lines (use of borrowed capital).
For the analysis, CRIF evaluated a large amount of information on the financial situation of companies, which provides information about solvency. This includes, among other things, information from balance sheets and profit and loss accounts, employee and sales figures or payment experiences. In addition, existing negative court information is included in the analysis. According to the current evaluation, 301,516 companies in Germany were considered to be financially weak in November 2022 (reference date: November 11, 2022). In other words, 10% of the more than 3 million companies examined by CRIF as part of the solvency study are overindebted and therefore at risk of insolvency. The affected companies have a current creditworthiness index in the range of between 4.5 and 6.0.
