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Romanian businessmen have little know-how in the business risk strategy, survey shows

Romania is among the countries of the European Union with the longest and most difficult period of insolvency for companies and one of the main reasons is that many investors have serious loopholes in the field of risk prevention strategies, Sierra Quadrant experts say in an insolvency market study, based on KeysFin data.

If globally, the average period for solving insolvency cases was 2.5 years in 2017, in Romania it is 3.3 years, a situation similar to that in Bulgaria, Greece and Slovakia. At the opposite is Ireland with only 4 months, Finland with 9 months, UK – 1 year and Germany with an average of 1.2 years.

The study also reveals that the number of companies entering insolvency each year has steadily maintained around 7000 firms in 2010-2017, with small fluctuations from year to year.

Thus, if in 2010, about 7050 companies in insolvency were registered, with a total turnover of RON 51.1 billion, in 2016 there were 6901 companies with total turnover of RON 21.4 billion.

National Trade Register Office (ONRC) has announced a total of 9,102 firms and PFAs in insolvency in 2017, up 8.73 percent over the previous year. And the first three months of 2018 brought an increase of 19.31 percent in the number of insolvency cases (2305), compared to the same period last year.

Most companies in insolvency during 2010-2018 are micro-enterprises (94 percent), followed by small firms (4.5 percent), a fact which shows that reduced financial strength is an important component in risk situations.

”There are serious gaps in risk know-how, economic education, in many companies, from the last employee to the financial director or manager,” Ovidiu Neacsu, a bankruptcy expert for more than 20 years says.

According to the Sierra Quadrant study, the profile of the company vulnerable to insolvency is that of a micro-enterprise operating primarily in trade, most often in the Bucharest-Ilfov region, and which is run by a Romanian businessman with an average age of 50 years old.

Overall, more than 90 percent of the investors of the insolvent companies were of Romanian nationality (11,024), followed by Italians (223), Turks (106) and Germans (60).

 

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