The recent data taken from Monitor Sądowy i Gospodarczy show that the number of bankruptcies in February this year is similar, or even equal to that in February 2013. Official data state that there were 72 companies, when compared with 76 in last February, however, you must take into account the number of decisions changing the arrangement bankruptcy into liquidation bankruptcy, which have already been included in the statistics. It is clearly visible that the fairly good export situation and increasing internal demand, thank to which we noted a decrease in the number of bankruptcies in January, had a too short effect to stabilize situation of entrepreneurs in many sectors. Companies that had been contending for a long time with the maintenance of financial liquidity fell into debts due to financial gridlocks resulting from ineffective debt collection. Some of them did not manage to emerge victorious from this hard test.
At least some of those companies could have avoided their fate if they had decided to introduce systemic solution to manage their receivables on time.
Entrepreneurs, however, very often tend to get erroneously convicted that if they have already face financial difficulties, the only thing they can count on is a bit of luck. In fact, bad financial result, debts towards state institutions in many cases blight the chances to get working capital facility that could use for their current cooperation. A bank credit, however, is only one of the available financing options.
A company may use factoring services even when facing difficult situation, e.g. the commonly available form of reverse factoring. This solution required the customer who is in arrears with its supplier applies to the factor for financing. Thanks to that, it may get missing cash for the purchase of raw materials or goods and continue its operation uninterrupted.
Inevitably, while assessing the risk, the factor focuses rather on the analysis of the risk of transaction itself, not only on the stiff criteria concerning an assessment of the enterprise condition, which is taken into account by a bank when making a credit decision. Correctly used factoring may be treated as a universal risk management tool in a company. During recession, it will help entrepreneurs to mitigate the consequences of payment jams. By exchanging the receivable into cash, it allows to maintain financial liquidity. In turn, during economic boom when the sales grown, as at present, it may be used to acquire funds for investment purposes.
Published on: 14 November 2016