Many bankruptcies could be avoided with early intervention

The number of bankruptcies and debt adjustments on the rise

The number of bankruptcies in January–June 2023 increased by 21.3% compared to the previous year. Compared to the previous year, this year has also seen an increase in the number of debt restructuring. However, declaring bankruptcy or debt restructuring are not the right solution for all businesses. Some entrepreneurs opt for debt adjustment instead. Sole traders can apply for debt adjustment for the debts of their business as well as for the debts of their private household. The number of applications for debt adjustment for private individuals has increased from the previous year. So far, the number of debt adjustments for sole traders has been small, but the number of applications is expected to grow in the future. The changes in legislation in recent years have made it easier for sole traders to be granted debt adjustment.

Entrepreneurs seeking help from the Yrittäjän talousapu counselling service

The current situation also shows in the Yrittäjän talousapu counselling service, which has received more contacts compared to the same time period in the previous year. By the end of July, the service had received approximately 2,200 contacts. Some of the entrepreneurs who contacted the service enquired about closing their business or filing for bankruptcy. The service has been able to meet the increased demand, and in more than half of the cases, counselling over the telephone has been sufficient. If an entrepreneur needs more help, the counselling service can refer them to the services they require. Regional Yrittäjän talousapu support services, for example, operate in many parts of the country, offering entrepreneurs face-to-face support.

Many bankruptcies could be avoided

By acting early enough, it is possible to prevent a business from going bankrupt: “Entrepreneurs can also rectify the difficult financial situation of their business through lighter measures than debt restructuring and debt adjustment. These lighter measures can suffice if they are implemented early enough. It is possible to make payment arrangements, implement cost-saving measures, or improve marketing, for example. During the counselling session with the Yrittäjän talousapu counselling service, entrepreneurs can discuss their situation with an expert and get guidance on what to do next. The earlier you contact us, the better chances you have to fix the situation and save your business,” says Jari Leskinen, Development Manager in charge of the Yrittäjän talousapu counselling service at the TE Customer Service Centre.

Efforts to improve finance skills

The previous government made efforts to improve the situation of entrepreneurs by making several changes to the laws governing debt restructuring and debt adjustment. The new government’s programme aims to make Finland the world’s most financially literate nation. The government’s programme also includes plans to improve the teaching of finance skills and entrepreneurship education at all levels of education. The Yrittäjän talousapu counselling service lobbies for improving entrepreneurs’ finance skills as part of the EU-wide Early Warning Europe network.

Yrittäjän talousapu service is available

• in Finnish Mon–Fri from 9 a.m. to 4.15 p.m., tel. 0295 024 880 (local network/mobile call charge)
• in Swedish Thu from 9 a.m. to 4.15 p.m., tel. 0295 024 881 (local network/mobile call charge)
• in English Mon–Fri from 9 a.m. to 4.15 p.m., tel. 0295 024 882 (local network/mobile call charge)
• yrittajantalousapu.fi

The Yrittäjän talousapu counselling service is coordinated by the TE Customer Service Centre jointly run by the Centre for Economic Development, Transport and the Environment and the TE Office (Employment and Economic Development Office), under the Ministry of Economic Affairs and Employment of Finland. The service is being developed as part of the EU-wide Early Warning Europe system.

Data on the number of bankruptcies, debt restructurings and debt adjustment:

• Konkurssien määrä viidenneksen kasvussa vuoden ensimmäisellä puoliskolla (konkurssiasiamies.fi) (in Finnish)
• Number of debt restructurings of private persons increased by 39.3 per cent in January to June 2023 from the previous year (stat.fi)