35% of SMEs Fear Decline in Financial Security: Manufacturing and Micro-Companies Most Concerned

35 percent of representatives from micro, small, and medium-sized enterprises express concerns about the reduction of their company’s financial security over the next year – according to a study by the National Debt Register “Financial security of SME sector companies”. Such concerns are primarily declared by representatives of the manufacturing industry, and in terms of size – micro-companies. In order to maintain financial stability, SMEs plan to use professional accounting services and check the credibility of contractors. In addition, 4 out of 10 companies will be saving and controlling costs.

According to the latest Central Statistical Office data, there are 2.34 million micro, small and medium-sized business entities in Poland, employing 6.93 million people. Moreover, data from PARP (Polish Agency for Enterprise Development) shows that SMEs generate 45.3 percent of Poland’s GDP. Among representatives of this relevant economic sector, over one-third (35 percent) admit to fearing a deterioration in their organization’s financial security over the next 12 months. A similar proportion (34 percent) doesn’t express such concern, while 31 percent are undecided.

“The most important challenges companies face recently include increasing labor costs, but also production and service costs. This raises justified concerns about the financial situation of companies. And although some organizations offset higher expenditures by raising prices, not all can afford this due to the risk of competitiveness decline.” – says Adam Łącki, CEO of National Debt Register Bureau of Economic Information.

Manufacturers feeling anxious

The greatest concerns about financial security deterioration over the next 12 months are among representatives of manufacturing companies, with 67 percent declaring such fears. Although the situation in the industry is currently better than a year ago, it still hasn’t caught up with economists’ forecasts. According to Central Statistical Office data for July, industrial production increased by 4.9 percent compared to the previous year, but experts predict it should reach 7.3 percent.

The construction sector, with 40 percent indications, is the second most worried about their financial security. One in every three representatives of SMEs in the service and trade industries have concerns, and in the transport industry, it’s one in four.

The smaller the business entity, the more frequently they admit to uncertainty. Among the micro-companies employing fewer than 10 people, 35 percent expressed concern while 30 percent of small firms (employing 10 to 49 people) and 21 percent of medium enterprises (from 50 to 250 employees) did the same.

When taking Poland’s regions into account, companies from the Lublin, Kuyavian-Pomeranian, and Pomeranian voivodeships (54 percent, 47 percent, and 45 percent respectively) are most concerned about their financial security. Conversely, companies from the Lubusz Voivodeship, where only 2 percent have concerns and from the Łódź (14 percent) and Lesser Poland (16 percent) voivodeships declared the greatest tranquility in this aspect.

Professional services as a guarantee of security

When asked which services the company plans to use over the next 12 months to increase its financial security, 2/5 of the respondents indicated professional accounting services. 27 percent will use leasing and the same amount will use legal services, and 1/5 plan to check the financial credibility of contractors and conduct monitoring in this area. Recording debtors in economic information offices, e.g. the National Debt Register, is planned by 12 percent. Meanwhile, 1 in 10 companies intends to take out a loan or use factoring, and 15 percent plan to use debt recovery services.

However, proper management of receivables has a huge impact on the financial stability of a company. Businesses should remind their clients through a reminder system or a professional debt recovery company that they need to settle their payments, thus improving payment discipline among counterparts.

“From our experience in servicing the SME sector, we know that particularly smaller entities are hesitant to use debt recovery services. They are often perceived as expensive, only accessible to large companies. However, our research this year shows that more than 40 percent of entrepreneurs outsource debt recovery due to its effectiveness, with a focus on comprehensive action and time-saving qualities. Also, for one third of SME sector companies, the possibility to charge the debtor with the costs of debt recovery is a major advantage” – explains Jakub Kostecki, CEO of the Kaczmarski Inkasso debt recovery company.

Saving and increasing efficiency

To ensure their financial security, most representatives of SMEs (40 percent) plan to save and reserve funds over the next year. Construction companies (49 percent indications) are the industry leaders in such actions.

In addition to that, a significant group of companies (37 percent) will be constantly monitoring and reducing costs. At the same time, 30 percent of micro, small and medium-sized companies plan to increase spending on investments that improve the efficiency of their operations. Here too, construction companies lead the way with 39 percent indicating performance optimization plans.

Other actions aimed at improving financial security mentioned by 1/5 of businesses include margin increase, cash-only settlements, limiting or changing the assortment or service package, and shortening payment deadlines for contractors.

There are clear differences in the approach of various-sized companies. Medium-sized businesses primarily focus on monitoring and reducing costs (56 percent), while microcompanies first and foremost plan to accumulate financial surplus (40 percent).

The nationwide “Financial Security of SME Sector Companies” survey was commissioned by the National Debt Register Economic Information Office and carried out by TGM Research in August 2024, among a group of 409 micro-, small and medium-sized companies, using the CAWI method. The respondents were decision-makers: top and middle-level management, board, company owners.