Grim bankruptcy figures in 2023
The number of bankruptcies increased 26% on the previous year.
The Asiakastieto company has released gloomy figures about the number of bankruptcies in Finland. The company’s latest figures show that a total of 2,700 companies were filed into bankruptcy in Finland in 2023. This was 26% more than the previous year.
The company’s bankruptcy expert considers last year’s figures historically severe.
“Bankruptcies are a normal part of a functioning market economy, but it’s quite clear that last year was exceptionally grim. During the financial crisis in 2009, just over 2,200 Finnish companies were filed into bankruptcy, which was until last year the highest level this century. Now that’s been topped by almost five hundred bankruptcies,” Product Owner Jaakko Nors says.
He says that the combined turnover of the companies filed into bankruptcy is almost €2bn. They employed more than 8,000 people.
“These changes have an impact on the national economy: they haven’t been replaced by a large number of start-ups or big employers who could make up the tax shortfall,” Nors says.
Construction leads figures
The construction sector was in the news for negative reasons throughout the end of last year. Fresh data show that even larger companies in the sector are facing difficulties, including listed ones.
Asiakastieto says that last year was characterized by bankruptcies hitting large companies in a country full of small ones. The Asiakastieto database shows that 299 companies with a turnover of at least €1m in the last reported year were filed into bankruptcy. In 2022, only 190 bankruptcy filings were made in that size category.
“Construction companies form the bulk of the largest bankruptcies. They’ve evidently had difficulties in adjusting their business to higher costs and reduced demand. In other sectors, bankruptcies of companies with turnover of over ten million euros are extremely rare,” Nors says.
Other payment defaults on the rise
In addition to bankruptcies, payment default entries increased significantly last year. Asiakastieto made around 224,000 payment default entries in its database. There are now 44,300 businesses with payment default entries, or 13% more than a year ago.
“Companies struggle for too long and don’t apply for corporate reorganization in time. I think a closer dialogue between creditors and debtors would help solve debtor companies’ problems better. I hope that last year also taught companies to keep a close enough eye on their clients’ and supply chain’s situation so their payment difficulties don’t come as a surprise and endanger companies’ futures,” Nors says.
Long payment terms increase difficulties
Tiina Toivonen, Legal Affairs Manager at Suomen Yrittäjät, the Finnish SME association, has previously raised the issue of the negative effects of long payment terms on companies.
“One in four bankruptcies stems from companies’ contractual partners not paying their invoices on time. However, business owners still have to pay their bills, such as payroll, taxes, rents and production costs, on time,” Toivonen commented in November.
“Some long payment terms are a consequence of us having a Payment Term Act which is not obeyed. A payment term of over 30 days can only be used between businesses if both parties consent to it.”
A study conducted by Suomen Yrittäjät found that over half of SMEs said they had encountered breaches of the Act. The payment terms are often dictated by large companies which force acceptance of long, favourable payment terms.
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