Inflation, shortage of skilled workers, Corona pandemic, energy crisis – how difficult will 2022 be? What impact will the current situation have on receivables management? We spoke with Aart-George Broekema, Product Director Corporate & Agencies of Collenda Netherlands, about the situation in his home country.
2022 is already characterised by many uncertainties. Which areas are particularly impacted in the Netherlands?
Aart-George Broekema Many of the problems that we are currently facing in the Netherlands are similar to the problems in Germany. Starting with exploding gas prices, the shortage of skilled workers, to the dangers that are now looming due to inflation. Moreover, the pandemic, which is particularly affecting those people who work in the catering, culture and service sectors. It now depends on how the Dutch government continues to deal with the situation. For example, whether it will extend state aid measures. In addition, the global political climate is unstable especially looking at the difficult situation between Russia and Ukraine. This harbours some imponderables.
That sounds gloomy, how are all these developments reflected in the Dutch economy?
Aart-George Broekema We still expect business insolvencies to increase. Unlike in Germany, where the situation is moderate, an increase of 26% is forecasted for the Dutch market. That is, of course, dramatic. Although earlier forecasts showed a decline of inflation by the end of 2022 and stabilisation in 2023, experts are not that sure anymore. The energy transition, rising Covid 19 figures and many other factors are causing uncertainties. Combined with a shortage of manpower in some sectors and fear of interest increase this will lead to less economic growth.
What are the effects among Dutch citizens?
Aart-George Broekema Here the development has been positive recently. The number of people in the Netherlands with payment problems actually decreased last year. According to the “Kredietbarometer van Nederland”, the numbers dropped from almost 618,000 (end of 2020) to 594,000 (end of September 2021). Some of our customers even indicated that they saw a decline in their outstanding invoices. Currentyl, people are not willing to spend a lot of money, there is less consumption. Due to high inflation, fear of interest rate increases and the insolvency boom, consumer confidence is falling rapidly and is now almost at the same level as at the beginning of the pandemic. This will not speed up the economy and will affect those who do not have a lot of savings. Thus, the number of people with payment problems will probably rise again in 2022.
Some Dutch people got into trouble because of the so-called “child benefit scandal” …
Aart-George Broekema That is correct – an incident that bailiffs are still dealing with today. Between 2013 and 2019, the authorities wrongly accused around26,000 parents of making fraudulent child benefit claims. A mistake in filling out a form left those affected in deep trouble. Some of these people are now facing a huge amount of debts – of €25,000 or more. The scandal was brought to public attention by the press in September 2018. It has since been decided that all wrongly accused parents will receive a first compensation of at least €30,000 depending on their existing debts as a result of this scandal. Some bailiffs who are our clients are also affected. They are working with the government and the SBN (Social Bank Netherlands) to give these debtors access to their debts so that they can also be processed.
Who are the beneficiaries of the difficult economic situation in the Netherlands?
Aart-George Broekema The situation here is also similar to other countries. DIY stores have benefited from the crisis just as much as online retailers or builders’ merchants. Because of the home office regulation, many people have converted their homes into palaces. Software companies have also profited.
How should companies set up their credit management these days? Do you see trends?
Aart-George Broekema Basically, of course, this has to be done individually from company to company. But there are certainly a few points of reference: In credit management, an important lever is certainly the flow of processes. Here, automation can take away a large part of the work and significantly increase efficiency. And: Know your clientele! In particular, the most important customers should be monitored regularly using metrics such as Credit Score, Credit Limits, Payment terms. At the same time, companies need to understand how their customers are affected by current developments in order to be able to react proactively. In the past, yearly checks were sufficient, but with the current market dynamics we see the necessity to shorten these periods to half a year or even 3 months.
… and in debt management?
Aart-George Broekema In debt management, the focus is on fair customer communication. In addition, it should be made as easy as possible for the debtor to settle his or her arrears, i.e. with only a few clicks and as much self-service support as possible. This brings us back to a process that needs to be as intelligent.