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Increase in debt collection involiving small businesses

Small and medium-sized enterprises are struggling to pay their bills. In the first four months of the year, our figures show an increase in debt collection involving businesses – a 40 per cent increase compared with last year. Kredinor is Norway’s largest debt collection company measured in the number of cases, and these figures are therefore a good indicator of trends in the Norwegian economy.

“The Norwegian economy managed well through the pandemic. Government subsidy schemes, combined with an upturn for Norwegian industries such as oil, fisheries and technology, allowed the country to emerge from the pandemic with the lowest unemployment rate in 15 years. At the same time, our latest debt collection figures show a worrying trend. While the debt collection volume for private individuals fell by just over 5 per cent in the first quarter compared with last year, there has been an increase of over 40 per cent for businesses. In other words, businesses are finding it harder to pay their bills to a greater extent than private individuals,” says CEO of Kredinor, Klaus-Anders Nysteen.

Nysteen points to higher electricity bills as one of the explanations, while increased economic activity and more trade may also be reasons for the increase in debt collection. Nysteen acknowledges that there has been a lack of follow-up of small and medium-sized enterprises from the debt collection industry.

“Higher electricity bills and other fixed costs have skyrocketed recently, and businesses have only received limited support from the government. Part of the challenge is that small businesses do not have dedicated resources for effective financial monitoring. Over 50 per cent of Norwegian companies have 1–4 employees. This group has been treated unfairly by our industry. We must acknowledge that we have not been good enough at following up these businesses with sufficient help and support,” says Nysteen.

According to Nysteen, Kredinor will now increase its focus on following up small businesses. He sees this prioritisation as an important part of the work of the recently merged Kredinor and SpareBank 1-owned Modhi.

“We want to improve our customer follow-up so that we can be a better sparring partner for business leaders who end up in difficult financial conditions. We believe the merger with Modhi will strengthen our opportunities to provide better follow-up for small businesses. In connection with the reorganisation of Kredinor, a foundation was also established which, among other things, will be able to provide help and support to SME companies,” says Nysteen.

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