Responsibility lies with business too
Hardly anyone saw this corona crisis coming. Even when China declared a lockdown, we thought it would 'blow over' here. Let alone that we could see through the economic impact. By now we know better. COVID-19 has been defining our lives for months, having a huge impact on our health, social contacts and the economy. The hospitality, travel/transport and retail sectors are particularly hard hit. For supermarkets, garden centres, construction markets and food suppliers, on the other hand, this period is turning out well; they see their sales rise (sharply).
The government quickly invoked a comprehensive support package to support business, among other things. Rightly so, but in my view there is also a great responsibility on the business community itself. It is particularly important that the entire business chain supports and helps each other to get through this crisis. Certainly the smaller suppliers need extra time and extra air to survive.
Lack of flexibility among wealthy people
Unfortunately, we have recently found that a number of parties sees this very differently. Right now, they are adopting a less flexible attitude: they extend payment deadlines, cancel orders already placed and impose absurd conditions on new orders. Or they pay later, while still deducting payment discounts. Among them are located definitely also companies that last year hefty dividendand (sometimes even billions!) paid out to shareholders. Right now, it would be good if such parties paid their suppliers faster. And if the suppliers who are capital powerful give some more credit to buyers who are struggling.
Fortunately, we also see plenty of good examples of solidarity and flexibility. Think of property owners who reduce or even waive the rent for hospitality entrepreneurs for a few months. Or breweries or other suppliers offering them support. They have got it right. It is namely of importance that all companies in the business chain do not go for their own luck, but trying to keep the whole chain alive and running. Because if one link falls out, the whole chain no longer functions. And then all parties in that chain have a problem.
What do credit insurers do?
The credit insurance industry also contributes to reducing economic losses. This is evident from the following examples alone:
- Credit insurers have given insured suppliers more leeway to honour payment deferrals to buyers.
- Credit insurers take an extremely cautious approach to collection measures.
- Coverage on customers will be maintained for as long as possible, provided the relevant customers are willing to provide recent financial information.
- New cover on buyers is (still) being provided and new credit insurance is also (still) being taken out.
- For the foreseeable future, the Dutch government will provide state aid to credit insurers, allowing them to maintain coverage with the Dutch government's guarantee, for both Dutch and foreign buyers.
An important condition regarding the above points remains that buyers should be transparent in providing recent financial information. And that they should reach reasonable agreements with suppliers and customers on order acceptance, reasonable payment terms and delivery terms.
Thoughts on credit insurers outdated
The notion, widely held in many cases, that credit insurers only cover the good risks and withdraw their umbrella when it starts raining, is in my view echt, but then really, obsolete. Based on good disclosure, insurers can often still maintain cover on struggling businesses. Not providing financial data to credit insurers when things are bad may seem logical, but it certainly is not. It is precisely by not providing data that credit insurers are more likely to reduce or withdraw limits.
My conclusion: with the support of the government, banks, credit insurers and solidarity across the business community, the economy can be kept going and we will this crisis overcome. Just as we won other crises by doing it with each other. Hopefully everyone will soon realise that.
Paul van Uden
Managing director Xolv
