During the last year, a total of 9,215 new companies were registered in Latvia from October of last year to October of this year, while 10,407 companies were closed, which means that the number of companies registered in Latvia decreased by 1,192 during the year, according to the information gathered by the open data platform “Okredo”.
The largest number of closed companies in the last year was registered in the transport, processing industry, services, as well as agriculture sectors.
Comparing the situation on a half-year basis, the decrease in the number of companies has become faster: during the last six months, from May to October of this year, 5,313 companies were closed in Latvia, which is 4.3% more than in the previous half-year period – from November 2021 to 2022 for April (5,094 companies). In the period since the beginning of last year, the most number of closed companies within one month was registered in March of last year, when 2,792 companies closed their operations.
In percentage terms, the largest number of closed companies during the last year from November 2021 to October 2022 was in the transport and storage sector – 462 companies were closed, which is 14.89% of the total number of closed companies in the relevant period. It is followed by manufacturing industry (10.89%), professional, scientific and technical service companies (9.67%), agricultural, forestry and fishing companies (9.25%), and wholesale, retail trade; automobile and motorcycle repair companies (7.7%).
Also, a significant number of information and communication service providers (4.83% of the total number of closed companies during the last year), as well as accommodation and catering companies (4.29%) have closed their operations in the last year.
“Under the current conditions, the company can be closed for many reasons. Falling sales, high prices of raw materials, transportation and energy, and rising other costs create instability in the market. The biggest risk is the sudden closure of a company for its partners – other companies. During challenging economic conditions, any entrepreneur should pay more attention to monitoring the business situation of his partners. It is true that not all companies do this, so it can end up in a situation where the closed company owes them something,” says Gerda Jurkoniene, manager of the data platform “Okredo”.
The fact that the economic situation is difficult is also illustrated by the survey of Latvian and Lithuanian businessmen conducted by “Okredo” in August, which showed that 67% of companies have encountered payment delays recently. In addition, clients and partners of these companies have cited the current geopolitical and economic situation as the most frequent reason for delays.
“The deterioration of the partners’ financial situation can be evidenced by the change of company owners, changes in the management structure and the number of employees, as well as current financial data, creditor applications and tax debts. Most of this information is freely and publicly available in various open data resources. There are several tools available on the market that allow you to evaluate and monitor the state of your partners’ business and changes in it. Only such monitoring allows us to react quite quickly, adjusting the conditions of cooperation or reassessing the cooperation with the specific partner as a whole. The Okredo data platform also has tools available to make sure that the partners’ business is doing well,” she says.
The open data platform “Okredo”, which operates in Latvia, Lithuania and Estonia, provides up-to-date data from company registers, tax administration and labor institutions, court administrations, as well as jointly offers to review company financial statements and other useful business data.
At the same time, “Okredo” also acts as a credit risk assessment tool and offers credit risk ratings, data monitoring services, helping small and medium-sized companies to reduce business risks and increase sales by using open data in business management.