We are in a very exposed period
Firstly, the growth phase of the economic cycle is coming to an end, when many Czech companies are struggling with external wage increases and the associated decline in profitability, while the expected structural problems in the substantial automotive sector are already being concretised.
A more significant problem is trade wars, the effects of which are yet to come. The real implications of Brexit are yet to be seen, and overall tensions and political risks are rising.
All of these are very serious, but taken together they cannot match the risks associated with covid-19.
While the weakening of the crown is a band-aid for exporters, it is problematic for many importers. Lowering interest rates may help bridge the period of slack demand and also partially offset high wages, but the risk of restricting bank financing is growing.
Receivables insurance, which covers the risk of customer default, including insolvency, is thus becoming increasingly important. It incorporates elements of full credit management:
- creditworthiness assessment and subsequent monitoring of the customer,
- debt collection
- and, in the final phase, the subsequent payment by the insurer.
If you are interested in more information, please contact us! We recommend reading the article in the appendix.