Yup, it continues to dominate the news: Bankruptcies are still on the rise, and it makes sense: After things started to open up again post-pandemic and CERB payments ceased, businesses have had to deal with the ensuing financial whiplash, compounded by a comparatively slow trickle of customers returning to the life offline.
Add rising interest rates and inflation into the mix, and it’s a recipe for a massive surge in year-over-year bankruptcies and insolvencies.
The Office of the Superintendent of Bankruptcy has reported that the number of bankruptcies filed by Canadian companies in 2022 increased 35% as government financial support provided during the pandemic were removed.
On top of this, the Canadian Federation of Independent Business (CFIB) said that only half of the 97,000 small and medium-sized businesses that make up its membership have seen their sales return to pre-pandemic levels. According to the federal regulator, there were 3,402 business insolvencies last year, up 37.2% from 2,480 in 2021.
Sectors that saw some of the biggest increases in insolvencies were transportation and warehousing, up 52.1 % in 2022, as well as the construction industry, up 40.7 %. The biggest rise in bankruptcies in 2022 occurred in Canada’s accommodations and food services sector.
Unfortunately, when a business files for bankruptcy, any outstanding debts are usually left unpaid.
But here’s the good news:
Did you know that you can protect your business with Credit Insurance?
Credit insurance is protection from a buyer’s financial inability to meet their trade receivable obligations due to:
- Chapter 7/Chapter 11
- Refusal to accept goods
- C.C.A.A. (Canadian creditor protection)
- Non-payment (past due accounts)
Credit insurance can also be used as a financial tool:
- Asset security: secures the value of your largest asset, accounts receivable
- Cash flow protection: stabilizes cash flow in the event of an unforeseen credit loss
- Political risk protection: protects against political risk in 160 countries
- Risk management: a tool for financial executives to hedge commercial and political risks beyond their control
Curious about credit insurance? Contact one of our dedicated professionals today for a consultation.