One in four businesses could face serious cash flow problems in 2021

Despite state aid, “the lack of liquidity could quickly be felt,” warns credit insurer Euler Hermes.

Despite massive state aid, one in four businesses could have serious cash flow problems in 2021, according to a study by credit insurer Euler Hermes. That is to say that these companies would lack liquidity to guarantee the proper functioning of their activity. This is true in France, but also in several countries of the euro zone. But for a business, cash is the sinews of war.

With the re-containment, certain sectors are particularly weakened: namely textiles and clothing, so-called “non-essential», Transport services, car dealerships, hotels and restaurants and leisure activities. Euler Hermes estimates that these sectors could suffer operating losses in 2020 of -15% to -20% on average in the euro zone, compared to their pre-crisis level.

« Faced with these losses, if state support is not extended beyond the first half of 2021 or if companies are reluctant to borrow again, the lack of liquidity could quickly be felt. We thus estimate that in the euro zone, in France and in Germany, one in four companies could be in a situation of cash flow crisis next year, that is to say in lack of liquidity to guarantee the proper functioning of the business. ‘activity », Warns Ana Boata, director of macroeconomic research at Euler Hermes, in a press release.

The cumulative turnover of non-financial companies exposed to this treasury risk amounts to 20% of the total turnover in the euro area. In France, this percentage rises to 22%, which represents nearly 860 billion euros of exposed turnover, according to the credit insurer. According to his forecasts, the recovery in the first half of 2021 should be weaker than that of spring 2020, because of a more cautious easing of containment measures to avoid a third epidemic wave. Consequently, Euler Hermes believes that in France, “fiscal policy will have to do more to avoid a wave of layoffs and bankruptcies».

EMP extended until June 30, 2021

To support the cash flow of companies in all sectors, the French State has set up, with banking organizations, a State guaranteed loan scheme (PGE) in which it provides its guarantee for loans requested by companies. The government has budgeted a maximum of 300 billion euros, and as of October 30, more than 124 billion euros have been granted to just over 600,000 companies. since the announcement of the curfew in mid-October.

The deferral of repayment of these guaranteed loans may be extended from one to two years after agreement with the banks, an extension which was negotiated with Brussels because it could have been assimilated to an undue competitive advantage.