Average Company Bankruptcies Worldwide.
Below is a review of the webinar on "International Accounts Receivable Risk Management" organized by the Aegean Young Businessmen Association (EGİAD).
A 25-30% increase in average corporate bankruptcies is expected worldwide, Mr. Baris Pakis;
Coface is providing €4 billion in security guarantees to Turkish companies.
Based on the fact that 80% of companies worldwide face unpaid receivables, EGİAD organized an ’International Accounts Receivable Risk Management“ webinar to provide its members with a roadmap for securing their trade receivables.
EGİAD brought together its members with Coface Türkiye, which was selected for the 4th time as 'The Best Trade Credit Insurance Company in Türkiye' in the IFM's selections, where companies that make a significant difference and create added value among international financial institutions are chosen. In the webinar, where Coface Insurance General Manager Ali Gençtürk was the guest speaker, the changing risks in each country and the scope of trade credit insurance were discussed.
World trade volume contracted by 4.3 percent.
In his opening speech at the meeting, EGİAD Board Chairman Mustafa Aslan stated that Credit Insurance supports companies' cash flow by securing both domestic and export receivables. Aslan reminded attendees that the coronavirus pandemic has reached its peak again and the damage it has caused to the economy has deeply affected tens of thousands of SMEs in Türkiye, saying, “It is crucial to create a roadmap for SMEs in the business world during this challenging period. The supply-demand balance, paralyzed by the global impact of the pandemic, will lead to revolutionary changes in the business models of tens of thousands of companies in Türkiye, as it has in the world. To overcome this process with minimal damage, it is of great importance to secure cash flow, to guarantee employee health, and to make maximum use of credit and support. An increase in average company bankruptcies is expected worldwide. The pandemic shock may be felt even more severely in emerging economies. Considering the estimate of a 4.3% contraction in world trade volume in 2020, developing serious strategies is essential.’ In this context, Aslan noted that taking steps regarding a company's receivables is quite important in terms of risk management, saying, ”Receivables are actually a factor that directly affects the health of cash flow. When we look at the balance sheet, we see many different classifications related to receivables. The main focus of the classification is the risk of delayed payments and unpaid invoices. Trade receivables insurance protects companies against unpaid invoices both domestically and internationally. Trade receivables insurance offers are available to companies of all sizes, from SMEs to multinational corporations. I especially recommend that our members who have not previously encountered this service carefully examine it. I think we are at the right time to take steps such as restructuring, creating departments like finance and human resources and ensuring truly corporate governance, using secure trade tools like trade receivables insurance, paying more attention to inventory and cost management, and having a presence in the digital environment.“.
Coface Insurance General Manager Ali Gençtürk began his speech by stating that we are going through a period where secure trade and the concept of risk have gained more importance, especially globally. He noted that as a company managing trade receivables risk, the services provided to Turkish companies regarding both export and domestic receivables are solution-oriented.
Coface provides €4 billion in guarantees to Turkish buyers.
Gençtürk emphasized that Coface maintains a presence in 100 countries, either directly or through business partners, and provides support to customers in more than 200 countries. He highlighted that Türkiye ranks 11th in premium production, placing it in a good position. Gençtürk stressed that Coface has provided €4 billion in guarantees to Turkish buyers, indicating a significant financial support.
Türkiye managed the Covid process well.
Ali Gençtürk, General Manager of Coface Insurance, stated that Türkiye managed the Covid process well compared to Europe with early measures and support, and emphasized that similar support must continue in 2021. Gençtürk also drew attention to the importance of Turkish exporters receiving support and urged company managements to be cautious.
Bankruptcy rates are high among American companies.
Coface Turkey General Manager Ali Gençtürk stated that, assuming there is no second wave of Covid, Asia Pacific countries will experience a faster recovery process. However, looking at the global situation, he noted that some companies have failed to manage this transition well and have reached the point of bankruptcy, adding, “In 2021, these bankruptcies will increase, hovering around 25-30 percent. When we look at weekly bankruptcy rates, America is experiencing a high rate. There are also serious deteriorations in the UK, Portugal, and Italy.’.
The Risk for Small Businesses: Non-Collectionable Accounts Receivable
Coface Turkey General Manager Ali Gençtürk emphasized that during the pandemic, the biggest risk worldwide, especially for small companies, was uncollectible receivables. He stated that extensions of payment terms and the subsequent increase in bankruptcy rates made trade credit insurance even more indispensable for companies to protect their receivables, adding, "Demanding cash payments carries a greater risk than ever before of losing buyers, both in the domestic market and in exports.".
Gençtürk noted that even in Coface's best-case scenario, companies' credit risks will increase worldwide, adding, "The pandemic shock, in particular, may be felt even more severely in emerging economies. Considering the prediction of a 4.3% contraction in world trade volume in 2020, I would like to point out that another issue to be highlighted is dependence on a single buyer. The most important strategic change for these firms should be to increase the number of reliable buyers by anticipating possible supply chain disruptions."“
You must make the right and quick decision.
Gençtürk continued: “Considering developments worldwide, we recommend that SMEs improve their ability to make accurate and rapid decisions. Another important point is that the company structure should be compatible with and meet the requirements of technological transformation in today's world. We can say that now is the right time to take steps such as restructuring, establishing departments like finance and human resources, ensuring truly corporate governance, utilizing secure trading tools like trade credit insurance, paying more attention to inventory and cost management, and establishing a digital presence.”
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Appendix 1: International Accounts Receivable Risk Management
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Ebru Dön Keskin
Press Advisor
Aegean Young Businessmen Association
Tel: 02324223000
Mobile: 05301773977
Email: ebru.keskin@egiad.org.tr
