The crisis generated by the COVID-19 pandemic has made entrepreneurs more cautious: about 50% of them check their customers’ payment incidents, lawsuits, or insolvency statuses, at least once every 2 months, according to data from KeysFin analysts.
Over 70% of local entrepreneurs used to check on their business partners once every 6 months or longer, and most people did not know what key information to look for to identify potential problems KeysFin, a company active in the local business information market, finds. Entrepreneurs take into account the data available online, without a thorough analysis, often limiting themselves to a simple Google search and basic information such as turnover, net operating result, or the number of employees. Although Romanian entrepreneurs do not constantly scrutinize their business partners, the cash flow crisis generated by the COVID-19 pandemic has led more and more of them to pay more attention to the financial behavior of customers and suppliers, analysts say. Thus, if at the beginning of the pandemic few Romanian entrepreneurs made such checks, especially in the case of concluding a new business partnership, after a difficult year, entrepreneurs became more cautious, so that 50% of them check payment incidents, lawsuits, or checking for insolvency notifications of their customers at least once every 2 months.
New entrepreneurs, the most affected by the lack of information
Approximately 763,000 non-financial companies reported their financial results in 2019, of which 704,000 were micro-enterprises. Even if the number of non-financial micro-enterprises increased compared to 2018 when there were 676,000, their share in total remained at 92% and almost 25% of them (189,000) had zero turnovers in 2019. Micro-enterprises represent the category of companies that record the most outstanding payments, totaling 43%, while large and small companies each had 20%l, and medium-sized companies recorded only 17% of total outstanding payments in 2019, according to the annual KeysFin study “Business conditions in Romania”.
KeysFin has also launched an application on this topic: KeysFinder is designed to provide access to information such as a series of indicators on solvency, liquidity, profitability, or details of insolvency proceedings and lawsuits, which complement the general data about the entities economic growth in Romania.
Translated from Romanian by Service For Life S.R.L.