Press release: Amounts owed by companies are growing rapidly
The latest statistical data of Creditinfo Eesti AS representing the payment behavior of companies in Estonia display that the amounts owed to both to the state and to business partners grew rapidly in the second half of 2016, increasing by 49% and 36% respectively, reaching a record high of the past four years.
The sums owed by companies to the state, i.e. tax arrears, amounted to a total of approximately 51.8 million euros. The increase in tax arrears was characteristic of almost all sectors, having tripled in real estate, followed by the construction sector (75%) and administrative and assistance services. The median value of tax arrears increased to 2,915 euros, which is the highest over the last five years.
Payment defaults, i.e., the amounts owed by companies to one another, also rose sharply, having reached 73.7 million euros. The largest growth of payment defaults could be seen in the agriculture, forestry and fishing sector (by 3.4 times), mining and processing industry (78%) and the construction sector (48%). The median value of payment defaults was 1,000 euros.
At the same time, the number of companies in debt did not change much. In the second half of 2016, there were almost as many companies with payment defaults as one year before, which is 2,843 i.e. 3.4% of actively operating enterprises. The share of companies in tax arrears increased to 6.1%, which stands for 5,097 actively operating companies being in debt to the state.
The largest numbers of firms owing to their partners could be found in the accommodation and catering sector (6.7%), construction (6.3%) and the transportation and warehousing sector (5.5%).
As of the beginning of 2017, the share of high credit risk companies in Estonia was 12.9%, which is the highest over the last three years. In the atmosphere of intense competition, this indicator can generally be considered good if it stays between 12% and 15%, but the trend is rather alarming in the current context of decline in companies’ profits.
The statistics of companies’ payment behavior is based on Creditinfo Credit Register and the data provided by the Estonian Tax and Customs Board. The sample consists of 83,947 companies actively operating in Estonia. The goal of the payment behavior statistics of Creditinfo is to monitor corporate credit rating methods and (where necessary) to regulate it in order to provide decision-makers with reliable crediting-related information.
Creditinfo Eesti AS (former name – Krediidiinfo AS) is the largest and the most experienced company of the credit information sector in Estonia. Its focuses on decreasing financial risks of Estonian companies. Creditinfo regularly compiles bankruptcy surveys, reports on financial results, payment discipline and credit policies of Estonian businesses.
Alar Jäger, deputy director of Creditinfo Eesti AS
Telephone: 665 9643