Cover for Bad Debt Losses - Euler Hermes Kreditversicherungs-AG

We are talking about millions
– and the future of your company
There is a lot of money at stake
German companies grant credit to their
customers to the tune of some 300 billion
Euros every year – by supplying goods and
services without receiving immediate
payment for them. This means that industry,
commerce and the service sector advance to
their customers an amount equal to the
entire short-term credit lines granted by the
banks!
The problem: these outstanding debts are
risk capital in the most literal meaning of the
word. Because if the debtor becomes insol -
vent, the creditor is often left empty-handed.
To see how often this happens, you only
have to read the business papers – hardly
a week goes by without a story about a company
failure, and big household names are
involved as often as not.
Suppliers and service providers of all types
are left with unpaid invoices on their books –
but often also with considerable costs which
they have already incurred for materials
and work on the order they have already
completed. That threatens their liquidity.
So it is no surprise when many healthy companies
are forced into knock-on insolvencies
as a result of bad debts.
Company failures in Germany and abroad
most important trading partners in 2012*
France
USA
Germany
United Kingdom
Italy
Netherlands
64.400
45.900
30.300
29.600
14.160
7.550
* Euler Hermes Deutschland AG estimate
Source: National statistics offices, Euler Hermes; As per 12/2011
The German economy is set to slam on the
brakes in 2012 after the previous year’s
strong growth. After GDP rose by 3.0 percent
in 2011, a plus of only 0.8 percent is on the
cards for 2012. Whereas the number of corporate
insolvencies in 2011 probably went
down by a further 4.7 percent in 2011 to
30,500, the end of this positive trend is on the
horizon in view of flagging growth impulses
in 2012. Euler Hermes estimates that the
downward trend in business failures will
stall with minus 0.3 percent and come virtually
to a standstill at 30,300. The absolute
numbers still stand at a historical high, as
can be seen by taking a look at the figures for
the second half of the Nineties, when the
average annual figure was 26,000 insolvencies.
Insolvency does not stop at borders
The problem is not confined to Germany.
At the beginning of 2012, the threat of the
sovereign debt crisis in the Eurozone and the
massive uncertainty among investors and
consumers hangs over the entire global
economy. Euler Hermes’ prognosis foresees
a marked slowdown in global economic
expansion, with an overall expectation of
global GDP growth of 2.7 percent after a plus
of 3.0 percent one year before. The storm
clouds on the horizon for the global economy
Your company – a lender
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