Why is it that the staffing industry takes the first hits in times of crisis? The answer is quite simple. Flexible workers are almost always the first to be sent home in tough economic times. So in the hard(st) hit sectors - such as the hospitality, events and retail (physical shops) sectors - this happened en masse. Thanks to the NOW scheme, among others, payroll companies, secondment and temporary employment agencies were able to cushion the initial blow. Nevertheless, the loss of turnover hurts. Moreover, the question is how long these companies will last. And - however hard - at some point the amount received from the NOW scheme must be repaid.
Fewer jobs, more bankruptcies
In addition, the period of uncertainty is far from over. The current partial lockdown - with the same sectors being hit hardest - is once again weakening a large group of companies. Anyone looking at the bankruptcy figures - only a small increase in percentage terms - may think: it is not too bad. But almost all experts agree that a tidal wave of bankruptcies will still follow in late 2020, early 2021.
Temporary employment agencies in particular are going to be directly affected by this. If you have to write off accounts receivable in addition to declining staffing hours and decreasing margins, the profitability and perhaps even the continuity of the business will come under pressure. The figures speak for themselves in this regard. In the second quarter of 2020, there were 322,000 fewer jobs than a quarter earlier, a decrease of 3%. Some 40% of that was accounted for by the staffing industry. The number of jobs at employment agencies fell by 130,000 from the first to the second quarter, a decline of 17%. Such a large drop is unprecedented, the Central Bureau of Statistics (CBS) calculated.
6 reasons to take out credit insurance
The staffing industry is the thermometer for the Dutch economy. That thermometer is slowly creeping towards feverish temperatures. And so it is important to brace yourself for what is to come. A number of companies in the flex industry already have credit insurance, but a larger number do not yet. At this time, it makes sense to consider credit insurance. There are several reasons for doing so:
- Companies that can no longer get supplier credit from other parties go 'shopping' and then often end up with uninsured companies. With all the risks involved.
- The corona crisis shows that even the financial situation of very healthy companies can suddenly deteriorate drastically. A credit check and monitoring of buyers' creditworthiness is therefore essential.
- The number of debt collection cases is already rising sharply. This is definitely going to lead to an increase in bankruptcies.
- The loss of a key customer could jeopardise the continuity of your own business.
- A credit insurer has more control over a buyer because a credit insurer often provides cover for several suppliers.
- With credit insurance, it is easier to get wider debtor financing.
In short: now is the time to arrange credit insurance. Premiums are already rising, but are certainly still acceptable. In addition, credit insurers - partly because of state support - still offer ample cover on buyers. We cannot say it often enough: it would therefore be unwise to wait until the first major buyer goes bankrupt.
Learn more about credit insurance
Interested in learning more about credit insurance? On our recently expanded and updated page on credit insurance we list the benefits, roadmap and (unjustified) prejudices for you. You can also contact one of our specialists for a free, no-obligation quote comparison from different insurers.
