SMEs do not settle their debts

The existing arrangements for the repayment of obligations in installments, whether it is the Independent Authority for Public Revenue (AADE) arrangements or the out-of-court mechanism, are proving to be ineffective for a large portion of small and medium-sized enterprises. 

This situation poses risks both for businesses facing bankruptcy and for the economy, which up against the threat of yet another cycle of high private debt.

According to a survey carried out by consulting company Netrino on behalf of the Athens Chamber of Commerce (BEA) and the BEA Center for Research Studies and Mediation, 87.03% of businesses have debts, with the highest percentages (91.36%) recorded among service sector companies.

Most businesses have debts to the tax office and social security funds, which of course causes a hole in government revenues and creates further problems in the insurance system. More specifically, 64.32% of businesses have debts to pension funds, 62.16% to the tax office, 42.16% to banks or debt management companies, 15.14% to suppliers, 11.89% to energy, telecommunications and water supply companies, while 4.86% also owe municipal fees.

More than one in two companies, specifically 56%, have not reached a settlement for their debts. However, even those that have gone through some kind of arrangement are not consistent or are consistent with great difficulty. In particular, only 15.12% declare that they can cover the regulated obligations without a problem, while 17.44% pay the installments, but want a longer arrangement – i.e. more installments. One in four companies with regulated debts declares that they are unable to cope even after a haircut on their debts, while 37.21% report that they are having difficulty and have to renegotiate the terms of the settlement.

Capital companies (SA, EPE and IKE) and service providers have the largest debts. However, it is businesses dealing with commerce that have the greatest inability to cover their dues.