It is indebted for almost PLN 49 million, but it has PLN 115 million to recover. This is one of the few industries with such “proportions”, appearing in the database of the National Debt Register. Speech of companies operating in the car rental, machinery and equipment market. The lease market, which is developing well and is breaking new records, has a hard nut to crack. These are problems with the recovery of receivables from contractors. As a result, companies operating in this segment themselves have trouble settling their obligations and can not fully enjoy the good market conditions.
According to KRD data, the debt of car rental companies as well as machinery and equipment increased almost three-fold in three years. In 2016, it was just over PLN 18 million, today it is nearly PLN 49 million. This amount is distributed to 1223 companies – as many debtors from the rental industry are entered into the KRD.
It’s good, and even better
These data contrast with the intensive growth rate of car rental in Poland. Car rental companies offering short-, medium- and long-term rental enjoy a growing interest in our country. In 2016 and 2017, they increased their profits by 8 per cent, and this trend is still maintained. In particular, long-term rental is great – the industry has finished the previous year with a new record. According to the data of the Polish Vehicle Rental and Leasing Association, the dynamics of long-term rental development in 2018 amounted to over 17.5 per cent. compared to the previous year. This means the highest value in the history of this market.
– The admirable rate of development of the car rental market and much faster than in the case of leasing or credit growth in new car registration results from the fact that small and medium-sized enterprises are more and more willing to choose this way of using cars. It is evident, however, that the industry is difficult to bear its own success, because it does not avoid its debt, and at the same time have huge amounts to recover. This is unfortunately a side effect of market growth. More transactions and their increasing value mean that companies are not always able to estimate the risk of cooperation with clients – says Andrzej Kulik, an expert in the Rzetelna Firma program, whose partner is the National Debt Register, Biuro Informacji Gospodarczej.
Why buy a digger when you can rent
The rental of machinery and equipment is also in good condition. There is a growing demand for rental of construction machinery, and the companies that lease it have problems with providing equipment to all interested parties. It was influenced by the start of structural investments with EU co-financing, where even large enterprises use machinery from the rental company. According to the report of the Spectis research company, “Construction market in Poland 2018-2025”, the value of the domestic construction market in 2018 will exceed PLN 200 billion for the first time in history. This is followed by the popularity of equipment rental. It results from the fact that it is available immediately and ready for use immediately, and companies using it do not have to worry about repairing or replacing broken machines or technical inspections. It is also very important that when winning a tender or accepting orders, the company does not have to invest in the purchase of equipment needed to perform only one contract.
Who does not pay
However, success has a bitter aftertaste. It can be seen that the good times are somewhat dampened by the vigilance of companies in the rental industry. Companies renting vehicles, machinery and equipment have to repay nearly PLN 49 million. Of this PLN 20 million are owed to banks, and PLN 13.2 million to debt collection companies and securitization funds to which the debts of original creditors have been credited. Their debt to trade amounts to PLN 3.9 million, and to insurers almost PLN 3 million. It is also in arrears with the payment of PLN 1.3 million in the construction industry and the same number of telephony and Internet operators.
Interestingly, the rental industry also has to give almost PLN 4.5 million … to itself, i.e. to companies renting vehicles, machinery and equipment.
Wolf’s appetite with paying hiccups
The renting rental market has a strong appetite for further contracts, but it is not always able to consume them safely. Excessive trust in contractors means that the industry itself has problems with enforcing payments and acts as a creditor. The contractors are owed her a substantial amount of PLN 115 million.
Over ¼ (27.8 million zlotys) were not given away by construction companies, and nearly 12 million zlotys by transport and forwarding companies. The rest, or PLN 75 million, is fragmented between other industries, including … rental of vehicles, machinery and equipment.
– So you can see that believing in the economic strength can be disastrous. Therefore, in all market conditions, the principle of limited trust should be applied and the payment credibility of clients should be verified. Even those from their own industry.