Debts of Polish companies are growing faster than pandemic

As a result of the pandemic, the rate at which companies’ past-due debts are accruing has increased by a third. The problem of financial arrears concerns almost the entire economy. However, it affects trade, industry and construction to the greatest extent.

The latest data from BIG InfoMonitor shows that Polish companies’ past-due debts amount to PLN 38.5 billion. This means an increase by 12 percent (PLN 4.1 billion) within a year.

The rate of growth of Polish companies’ past-due debts has increased. In the first half of the year since the outbreak of the coronavirus (March-September 2020), they accrued PLN 1.2 billion. Before the pandemic, companies’ past-due liabilities grew at a rate of no more than 9 percent per year.

Companies’ past-due debts are increasing

The problem of unpaid receivables towards banks and contractors concerns 5.7 percent of Polish business entities. Their number increased by 1 percent over the year – to 324,000.

This is less than at the beginning of the COVID-19 era, when during the first six months less than 6 thousand companies that did not pay their liabilities on time accrued.

Interestingly, the percentage of unreliable payers in the economy has decreased. Previously, it was 5.9 percent. However, the improvement is a result of a larger reference base, i.e. an increase in the number of newly registered entities.

– Past-due business debts are not spreading rapidly. However, the problems of companies which have already failed to pay someone are growing. That is why the risk of cooperation with entities that have financial problems is higher than before the outbreak of COVID-19 – says Sławomir Grzelczak, president of BIG InfoMonitor.

Of the 18 economic sectors analyzed, only education improved. In the remaining sectors, companies’ past-due debts increased. This affected companies operating in the area to the greatest extent:

• manufacturing and supplying energy, gas, hot water (134 percent),
• real estate services (29 percent),
• construction and agriculture (16 percent each),
• industry (15 percent).

Receivables of companies in the scientific and technical activities sector, which includes Polish law firms and accounting firms, rose by 10 percent.

Industries with the largest financial arrears

However, the most indebted industries remain (in PLN billion):

• trade – 8.9,
• industry – 6.86,
• construction – 6.11.

These three sectors definitely stand out from the rest. Together they are responsible for more than half of the financial arrears.

The highest probability of finding a contractor who does not pay on time occurs in transport. In this industry 8.9 percent of companies have problems with past-due liabilities. The second place is occupied by sewage and waste management (8.3 percent). Mining completes the infamous podium (8.1 percent).