Incorporation errors are much more dangerous for Austrian companies than the Corona crisis. More than 17 percent of company bankruptcies last year were due to early mistakes, according to a current study Credit Protection Association KSV1870. The most common foundational mistakes are lack of industry knowledge, lack of any qualification as an entrepreneur or insufficient stock. On the other hand, the direct effects of the pandemic are only responsible for about 14 percent of all corporate bankruptcies in the past twelve months.
Poor cost structure is often a driver
KSV 1870 filed for bankruptcy about 1,300 Austrian companies last year. Compared to 2019, bankruptcies are down 60 percent, but that’s more of a cause for concern than joy. “In the long term, this can cause more serious problems than is the case today,” explains Karl-Heinz Götze, Head of Insolvency Division KSV1870.
The company’s management is often responsible for bankruptcy. Constitutive errors aside, bankruptcies on mainly operational grounds had a 39 percent share. In addition to sales and financing problems, this also includes organizational errors such as poor cost structure, insufficient control or errors in selecting and managing personnel. With a six percent share, strategic mistakes such as inadequate or late reactions to market changes are less common.
The pandemic will soon have a real impact
Goetz warns that the pandemic will still have a real impact on companies. The corona factor is expected to increase from the moment the government aid money ends. Going forward at the latest, companies that are currently artificially held must face the financial reality, “says the expert. Not many companies will soon be able to handle their mountain of debt. As a result, there is a risk of complete liquidation in many of them. Places.It is particularly problematic that companies often wait a long time before restructuring.At a later stage, they may not even be able to cover their court costs.