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French cleaning firms in crisis3rd of July 2014
As French correspondent Christian Bouzols explains, over 600 of the country’s cleaning companies are officially in financial difficulty.
More than 600 cleaning companies in France were declared ‘en situation de défaillance’ (in a situation of default) in 2013 for not having honoured their payment obligations. The rate of suspension of payments in the cleaning sector is higher than the national average because cleaning companies are more fragile than most, and recent start-ups in the sector are the most at risk.
The rate of suspension of payments varies from one region to the other within the range of 0.9 to 3.3 per cent. A company is ‘en situation de défaillance’ when it has suspended its payments. This happens when it is no longer able to meet its liabilities with its liquid assets. A legal process is then initiated which can lead to the company being put on the road to recovery or being liquidated.
Legally, a declared situation of default is not to be confused with a business closure or a suspension of business activities. The number of declared situations of default amounts to about eight per cent of the number of business closures in France.
In the cleaning sector there were 657 declared situations of default in 2013, as compared to 608 in 2012 and 565 in 2011. This implies a dramatic increase of 16 per cent in just two years. Therefore 1,830 companies have been in default of payment these past three years.
However, the rate of suspension of payments has remained stable between 2011 and 2013. This means that the growth in the number of companies declared to be in a situation of default (+16 per cent from 2011 to 2013) in the cleaning sector is proportional to the increase in the number of all companies - an increase which has been promoted by new regulations for company formation such as the institution of the ‘auto-entrepreneur’ status. This has made the task of starting up companies easier but has also made them more vulnerable.
This sharp increase in company formation means that start-ups are far more numerous than before. In fact companies less than two years old represent almost half of all the cleaning companies in France. These companies are inevitably more fragile than established companies and more at risk of being in default of payment.
A survey by the French federation of cleaning companies shows that the proportion of non-payment situations is the lowest in Auvergne (0.9 per cent) and the highest in Haute-Normandie (3.3 per cent). In the Ile-de-France region - which is the most populated and includes Paris - is 2.4 per cent on average.