Agencies that buy out and recover debts are expecting a fat year. Already now the biggest players in the sector say that since the beginning of the year, orders to solve corporate debts have risen by up to 50% against last year.
For example, Creditreform executive Cyril Mores said that his company recorded a 54% growth in the volume of corporate claims dealt with in February. “However, claims are harder to recover. Companies are often waiting for money and creditors have to be patient. And if they do not have sufficient financial resources, they often run into trouble themselves,” he added.
Demand for selling claims is rising as well. Executive at the Czech branch of Coface, Radek Laštovička, estimates that demand for his company’s services rose by a quarter. “Most customers are foreign firms recovering debts from Czech entrepreneurs,” he said.
Debt collection agencies agree that most orders are coming from sectors that have been experiencing debt payment problems for a long time – transport, construction, and now also trade in steel. This is also where the biggest increase has been registered this year.
But more orders are also coming from financial institutions. “We have recorded a significant increase in demand for mandate debt recovery, especially with insurance companies and creditors who own one or two claims,” said Martin Novák of Profidebt.
Laštovička said his company is now getting more orders to deal with corporate loans from banks. “This concerns for instance unpaid operating loans and company cards,” he added. Banks are not very willing to talk about unpaid loans. Raiffeisenbank spokesman Tomáš Kofroň says that selling or passing unpaid bank loans to debt collection agencies is a common practice. “In the area of consumer loans, we have been cooperating with debt collection agencies for a long time. Now also in corporate loans, but the increase is not that dramatic. We started providing any-purpose loans to businesses only last year,” he said. Raiffeisenbank now empowers debt collection agencies to recover small any-purpose business loans up to CZK 3 million and overdrafts provided to businesses, he added.
Debt collection agencies also say there is an increasing demand for dealing with claims on households. “Demand for recovering debts from consumers was rising already last year, and we registered more tenders of consumer loans providers also in the first months of 2009,” said Cyril Mores.
Businesses have been announcing since the beginning of the year that payment discipline has been deteriorating. As a result, many companies are experiencing secondary insolvency problems. The Confederation of Industry of the Czech Republic said that the volume of overdue claims grew by 50% at the beginning of the year.
