Even though repayment of state-guaranteed loans (PGE) has been extended until 2026, the cash flow tensions experienced by some companies are a cause for concern... With the risk of increased illiquidity among economic players in their sights. All the more so as measures to reduce France's deficit, geopolitical tensions against the backdrop of a slowing global economy, and the growing environmental challenge, are making the situation even more acute.
The clouds are gathering
The year 2024 therefore promises to be a difficult one for many French companies, impacted by inflation which, while slowing, still persists. Even if, on the whole, economic players are proving adaptable and resilient in the face of vagaries, certain categories of company are more vulnerable: VSEs remain structurally very fragile, and tensions within SMEs, prey to the triptych of inflation, raw materials and energy, remain high.
Many organizations already feel threatened in the short term. Many are trying to further optimize their expenses and costs, particularly those related to energy. Others are postponing investments that are essential to their development, thereby further jeopardizing the long-term viability of their business. Against this backdrop, French growth forecasts for 2024 were recently revised downwards to 1%. Some of France's most important trading partners, such as Germany, officially entered recession last year.
Corporate illiquidity, a major risk
Repayment of annual debt servicing remains a major concern for company directors. Debt restructuring is becoming a necessity in sectors where margins are shrinking. The sharp increase in safeguard procedures over the first two months of 2024 is no stranger to this situation: 247 new procedures were recorded, compared with 218 in January and February 2023; the increase is +13.3% and concerns large SMEs.
As part of preventive risk management in credit management, it is therefore essential to monitor the level of indebtedness of third parties. This monitoring should enable risk management operatives to better qualify their customer portfolio, anticipating any risk of illiquidity in their business relationships. The use of a debt indicator is part of this logic. This tool should materialize the company's vision via 4 markers: level of net debt in relation to shareholders' equity; repayment capacity; increase or absence of liquidity risk linked to annual debt servicing repayments; dynamism of gross operating margin in relation to the business sector.
A worrying decline in entrepreneurial dynamism
For France in 2023, Ellisphere's Entrepreneurial Dynamism Index (the ratio between business start-ups and closures) calculated for commercial companies is 1.4, compared with 1.6 in 2022, and 1.7 in 2021. Entrepreneurial dynamism has thus been flagging for the past two years, implying less renewal in the population of commercial companies in France. Ellisphere's forecasts for 2024 confirm a continuation of this downward trend, with an index of 1.3 at the end of the year, bringing us back to the level of... 2019.
This weakening of entrepreneurial dynamism conceals another, more worrying reality. 192,000 commercial enterprises disappeared in 2023. Of these, 22.3% were the result of compulsory liquidation, the worst result since 2015.
At the same time, the number of business start-ups will fall by -5.7% in 2023, although this result needs to be qualified in view of the particularly high number of start-ups in 2021 and 2022. Over the last two years, the decline in the Entrepreneurial Dynamism Index has therefore been essentially due to the very significant increase in the number of businesses closing down.
Focus on Île-de-France
In 2023, the trend in the Paris region will follow that of France as a whole, with a drop in the number of business start-ups accompanied by a significant increase in the number of business closures, resulting in an entrepreneurial dynamism index of 1.4, as in France as a whole. For 2024, Ellisphere forecasts a further deterioration in the index, to 1.3 business creations for 1 business disappearance.
The results for the first two months of the year shed light on this trend, with +42.9% more insolvency proceedings (opening of receivership, direct judicial liquidation and safeguard proceedings) in January 2024 than in January 2023, representing 1,409 entities concerned. In February, the region recorded a +34.4% increase in the number of insolvency proceedings opened, i.e. 1,396 companies. The proportion of direct judicial liquidations out of all these procedures remains extremely high, at 81.2% in January and 80.46% in February.
In Île-de-France, the business sectors most affected by insolvency proceedings at the start of 2024 are Construction & Public Works, Textiles, Clothing & Leather, and Consumer and Business Services. In the first two months of the year, 12 companies with sales in excess of 10 million euros were the subject of an insolvency procedure; this trend raises questions.
