Business failures in France at their lowest for 35 years

Business failures fell 21% in the third quarter year on year. This is a very clear improvement compared to the period before the Covid-19 pandemic.

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These are the figures of the firm Altares on business failures, published Tuesday, October 12. The receivership of a company is a procedure which makes it possible to settle the debts or the possible liquidation of the assets of a company in difficulty. With 5,300 procedures recorded between July and September, the number of business recovery is twice lower than its pre-Covid-19 level.

Almost all branches of activity seem to be resisting. What makes say to the boss of the studies of Altares, Thierry Millon, that “the rules governing trade are gradually being reestablished as the ‘whatever the cost’ put in place by the state at the start of the pandemic ends”. Very small businesses (VSEs) are the least affected. On the other hand, small and medium-sized enterprises (SMEs) with ten to twenty employees show warning signs, mainly in the building industry.

Tensions are growing with the difficulties of sourcing raw materials. There are also recruitment difficulties. Despite the high unemployment rate in France, the companies concerned cannot find the workforce, which slows down their activity because they cannot respond to all the sites that are restarted.

In addition, to fulfill orders and ensure work, companies need cash to operate at full capacity. This is called the working capital requirement. However, the reduced activity during the crisis emptied the treasuries. Today the cash registers are practically empty when it is necessary to buy materials. SMEs find it difficult to manage this scissor effect. But if we stay at the global level, insolvencies decrease significantly, which would try to prove that the gradual extinction of state aid does not increase the difficulties for companies.

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