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Sierra Quadrant: Economy to operate with the handbrake on next year
More and more Romanian companies choose to restructure their business within complex projects of optimization of the logistic and financial flows, a sign that the business environment is preparing for a difficult winter and a 2024 full of uncertainties, shows an analysis of Sierra Quadrant.
According to the company’s experts, after 2022 with mixed evolutions – a post-pandemic economic coming back and a growth of inflation receipts, 2023 brought the other side of the coin – a significant drop in sales as volume in many economic sectors and an increase of the financial blockage, due to the lack of trust of the investors in the economic perspectives.
Relevant, from this perspective, are the continuous drop in industrial production for several months and the slowing down of consumption, the main engine of the economy. Moreover, another phenomenon which increased following the discussions about the increase of taxes is disintermediation.
Under these conditions, many companies understood the necessity of restructure of the business, in order to be able to stay active in the business environment.
According to the experts, a restructuring plan well-thought and implemented at the best level means a certain rigour in business, fact which many investors, unfortunately, lack.
According to experts, the restructuring plan is an optimal solution for companies that are on the verge of insolvency, unable to pay their suppliers and business partners.
According to data from the Trade Register, cited in the company's analysis, as of August, 82,261 firms were in difficulty, in various stages of insolvency, struck off, suspended or dissolved, 17,585 more than those registered after the first half of the year.
The number of firms that had suspended their activities in August was 10,139, 5.64% more than in the same period last year, and the number of dissolved firms recorded a new record of the last few years at 25,153, 9.28% more than in the same period in 2022.
The statistics show, at the same time, 42,994 companies were struck off in the first eight months, and 3975 got into insolvency.
‘Most business issues are, as expected, in the area Bucuresti-Ilfov, where there were over 5200 dissolved companies, followed by Cluj, Brasov, Iasi and Constanta counties’ the analysis shows.
The causes of this record number of companies with issues are, on the one hand, related to the effects of inflation, and on the other, related to the weak capitalization of the business environment. Two out of three companies in Romania face financial issues every month, and more than 90% of them have no financial capital to stand a financial blockage longer than two or three months.
"Beyond inflation, the reduction in supplier credit, the limitation of access to credit and the increase in interest rates, the increase in taxes from 1 January will have major effects on sensitive sectors such as construction and trade," the source said.
In the context of fiscal exchanges and uncertainty which tend to become stronger, the economy with develop its activity with the handbrake on next year, say the experts of the company.
In the 25 years of activity, Sierra Quadrant became one of the most important profile companies in Romania, being specialized in complex management and liquidation works, with a high level of difficulty, characterized by large and diversified heritage, through the multitude of legal issues which have to be solved, at the same time with the insolvency procedure: environmental balance sheet, hazardous substances on property, unclear easements and property disputes, etc.