FHW-GSEVEE: Significant increase in overdue debts for energy bills in most SMEs

“Overdue debts for energy bills are showing a significant increase, which indicates the difficult situation in which a particularly high number of small and medium-sized enterprises have found themselves, due to the excessive increase in energy costs.”

This is one of the main findings of the semi-annual economic climate bulletin of small and very small enterprises of GSEVEE which records significant effects on the operation of small and very small enterprises from the price increases.

It is noted that the survey is the first for 2022 conducted by the Small Business Institute of GSEVEE on a semi-annual basis since May 2009. Telephone interviews were conducted by MARC SA in a nationwide sample of 802 micro and small enterprises (0-49 people staff), from February 15 to March 4, 2022. It is noted that the vast majority of telephone interviews were conducted before the start of the Russo-Ukrainian war. Therefore, reading the findings on business future expectations and / or estimates presented in this bulletin should take this parameter into account.

According to the survey data, 77.3% of small and very small enterprises stated that the price increases have greatly and / or significantly affected the demand, compared to 22.1% who stated that they have affected the demand a little and / or not at all.

In addition, 77.5% of small and very small enterprises stated that the price increases have greatly and / or significantly affected the operation of their business, compared to 21.6% who stated that it has affected it little and / or not at all.

In terms of operating costs, the increase of which has negatively affected the activity of small and very small enterprises, these are the following:

– an increase in energy bills for 61.5% of businesses,

– the increase in the cost of supply of raw materials and goods for 26.9% of enterprises,

– an increase in vehicle fuel costs for 4.7% of businesses,

– the increase of the cost of supply of equipment and machinery for 0.6% of the enterprises.

The analysis of the individual data of the research for the second half of 2021 revealed the following:

– energy costs increased on average for small and micro enterprises by 89.8%,

– the cost of supply of raw materials and goods increased by an average of 48.2%,

– vehicle fuel costs increased by an average of 70.3%,

– the cost of supplying equipment and machinery increased by an average of 35%.

Regarding the measures that small and very small enterprises consider to be the most appropriate to deal with the consequences of price increases, the research findings showed that the two most important are:

the reduction of excise duties on energy and fuel (62.1%), and

the reduction of VAT (57.5%).

In addition, the individual data show that the companies that have been most negatively affected are observed in trade (80.9%) and the smaller companies (83.2% of companies with an annual turnover of up to 50,000 euros and 81.4% business without staff).

Price increase

For the first half of 2022, corporate estimates corresponded to a significant increase in the number of those who said they would increase their prices. Specifically, 48.9% of companies estimated that they would increase their prices, compared to only 4.4% who said they would reduce them and 43.6% who said they would keep them stable.

The highest concentrations of companies that said they would increase their prices in the first half of 2022 were observed in commercial enterprises (61.5%) and manufacturing enterprises (56%). In addition, 31.8% of companies operating in the service sector said they would raise prices in the first half of 2022.

Meters

Regarding the measures that small and very small enterprises consider to be the most appropriate to deal with the consequences of price increases, the following findings emerged from the research findings:

• 62.1% consider the reduction of excise taxes on energy and fuel,

• 57.5% reduction in VAT,

• 25.7% further reduction of taxation,

• 15.5% business subsidy to cover additional energy costs,

• 15.2% the further reduction of insurance contributions,

• 5.5% the application of stricter competition rules.

Liabilities / Debts

IME GSEVEE characterizes as worrying the findings of the research on the situation of the obligations of small and very small enterprises and their ability to cope with them.

“Overdue debts for energy bills show a significant increase, which indicates the difficult situation in which a particularly high number of small and medium-sized enterprises have found themselves, due to the excessive increase in energy costs, as noted in the survey.

In relation to the estimates for the first half of 2022, the findings form the following picture:

• 21.1% stated that they will not be able to meet their obligations for energy bills.

• 20% stated that they will not be able to meet their obligations to the tax authorities.

• 19.8% stated that they will not be able to meet their obligations to the former OAEE.

• 17.6% stated that they will not be able to meet their obligations to suppliers.

• 14.7% stated that they will not be able to meet their obligations to the former IKA. It is noted that of the companies that have staff (65.3% of all companies) the percentage of companies that stated that they will not be able to meet their obligations to the former IKA corresponds to 22.5%.

• 13.5% stated that they will not be able to meet their rent obligations. It is noted that of the companies that have rent (67.7% of all businesses) the percentage of companies that stated that they will not be able to meet the payment of rent corresponds to 19.6%

• 10.2% stated that they will not be able to meet their banking obligations. It is noted that of the companies that have bank loans (49.9% of all companies), the percentage of companies that stated that they will not be able to meet their bank obligations corresponds to 20.5%

Finally, it should be noted that the above data on the assessments of small and micro enterprises in terms of the ability to meet their future obligations, have not taken into account the negative effects of the Russo-Ukrainian war, as the vast majority of research was conducted before the start of the war.

In terms of data on overdue debts in the second half of 2021, in almost all categories of liabilities there is an increase in the number of companies.

Almost 1 in 2 companies (47.3%) seem to have overdue debts in at least 1 of the 8 categories of liabilities monitored by FHW GSEVEE. Particularly:

– 1 in 4 companies (25.7%) stated that they have overdue debts to the former OAEE (23.8% in the first half of 2021),

– more than 1 in 5 companies (22.2%) stated that they have overdue debts on energy bills (15.2% in the first half of 2021),

– more than 1 in 5 companies (21.7%) stated that they have overdue debts to suppliers (20.1% in the first half of 2021),

– 14.8% stated that they have overdue rent debts (14.3% in the first half of 2021),

– 13.8% stated that they have overdue debts in other accounts (water, telephony, etc.) (13.1% in the first half of 2021),

– 13.5% stated that they have overdue bank debts (15.4% in the first half of 2021),

– 12.1% stated that they have overdue debts to the former IKA (10.2% in the first half of 2021).

Growth trends are also recorded in the degree of over-indebtedness of small and very small enterprises, as in the second half of 2021 the companies with overdue debts in 2 of the 8 categories of liabilities of the research of FHW GSEVEE corresponded to 9.9% of enterprises, compared to 7, 7% in the first half of 2021 and 7.2% in the last pre-pandemic half.

In addition, small and micro enterprises with overdue debts in at least 3 of the 8 categories of liabilities in the second half of 2021 amounted to 24.2%, compared to 22.3% in the first half of 2021 and 17.8% which was the last six months before the pandemic.

It is also noted that 32.4% of small and very small enterprises have overdue debts in at least one category of liabilities to the State (tax or insurance funds), while almost 1 in 5 (19.2%) also have overdue tax and insurance debts.