2013 crisis overhauled mentality of companies, says Infocredit survey
The impact of the 2013 financial crisis on Cyprus companies, as well as on the economy in general, has been marked by a rapid fall in the rate of bounced cheques and the rise in liquidations, all benchmarks of a contracting economy, according to an analysis commissioned by the Infocredit Group.
The study demonstrates how the mentalities and tactics of companies have changed over the past six years. This is evident from the significant decrease in the Number of Bounced Cheques (down to 1,542 in 2015 from 4,753 in 2012), as well as from the rise in the Number of Voluntary Liquidations, which show a gradual increase over the last six years, reaching a peak in 2015. It is worth noting that the drop in the Value and Number of Bounced Cheques is likely to be attributable to uncertainty and market reluctance to accepting cheques as a means of payment (ref: Infocredit Group analysis).
Furthermore, the Number of New Registrations as well as the Number of Additional Registrations of Business Names and Partnerships has increased, despite the drop in the Total Number of Registered Companies since 2014. A decline was also observed in the Number of Additional Registrations of Overseas Companies.
From 2010 up to 2013 there was a steady increase of 14.7% in the number of registered companies.
Since the events of 2013 there has been a change in the trend and a decrease of 7.5% in 2014 and 9.5% in 2015. The peak in new registrations of companies appeared in 2011 with new additions of 19,538 companies to the Registrar’s Archive.
Even though 2013 was the lowest year, there have been 10,847 new registrations and since then, the number of new registrations of companies showed a steady increase of 3% and 0.9% for 2014 and 2015, respectively.
2014 was the peak year with regard to the Number of Dissolved/Written-off Companies and during the first two months of 2016, 7,196 companies have already been dissolved/written-off. In addition, 2015 marked the highest Number of Voluntary Liquidations over this six year period.
The survey concluded that the higher the number of years the company is in operation, the lower the risk involved when trading with the specific company.
Also, 2011 marked the lowest number of additional registrations in Business Names & Partnerships (1,402). Since 2013 we have seen a steady increase of 12.2% and 10.8% for 2014 and 2015 respectively.
Additionally, 2015 marked the highest number of new registrations with a total of 1,829 entities being registered.
Even though the number of new registrations of Overseas Companies has decreased considerably in the last 15 years, the numbers show a minor increase from 2010 until 2012, reaching 94 additional registrations and then drop again in 2013 to 77. In 2015 the number of new registrations dropped even further to a record low of only 71 new registrations.
The majority of companies registered at the Registrar of Companies and Official Receiver have been in operation for more than ten years.
Also, more than 30% of registered companies have been in operation for more than 25 years.