Of companies which fall behind with their social security contributions, one in seven fails (*)
The company reports overdue debts to the NSSO (National Social Security Office) at the end of the financial year in its recently filed annual accounts (item 9076). This may indicate serious financial difficulties, especially if the company in question also shows liquidity problems. This is often followed by a summons from the NSSO.
Please note that this information is based on recent annual accounts and thus reflects the state of overdue debts as of the closing date of the financial year.
(*) Source: Companyweb: results based on our own study into causes of bankruptcies.
A business is liquid if it can meet its short-term payment obligations; if not, it is illiquid.
A liquidity of > 1 is considered very good
(= in theory, this business can pay its short-term liabilities if it realises its current assets).
The way this ratio has changed in recent years is highly significant.
If liquidity falls steadily, this means things are getting increasingly worse, and will end up being unsustainable.
How liquid and profitable a business is gives a good idea of how well it is doing.
| Liquidity | Profitability |
|---|
| + | - |
| + | Healthy | Chronically sick |
| - | Temporarily sick | Dying |
(**)
(**) Source: Handbook "Financial analysis process" by Hubert Ooghe and Charles Van Wymeersch (Intersentia)
Six out of ten of all businesses which fail move their registered offices in the last six months before they do so.
(*)
Moving their registered offices so often in such a short time could mean they are trying to get away from their creditors, certainly if there are other warning signs too, like RSZ summonses and serious liquidity problems.
(*) Source: Companyweb: results based on our own study into causes of bankruptcies.
A private limited liability company (SRL/BV) is a company structure in which the persons running the firm are key.
Often changes in management may indicate a lack of continuity.
