The significant increase in work from home caused by the coronavirus pandemic can be liquidating for many suppliers and service providers. A study by the international credit insurance company Atradius shows that the risk of bad debts due to the widespread use of home offices has increased not only among office owners, but also in other related fields. You will need fewer lunches in restaurants, printer paper or formal wear.
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Most employees praise the home office and surveys show that many companies plan to continue to use work from home more often even after the end of the coronavirus crisis.
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“Few companies are likely to return to their original conception of the work process after the end of the coronavirus pandemic,” said Markéta Stržínková, director of the Atradius branch for the Czech Republic. According to her, the past months have shown that working from home is more advantageous and often more efficient for companies and employees. She added a significant drop in labor productivity, which many employers feared, with few exceptions.
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On the one hand, favorable developments carry risks for industry and services directly dependent on the large number of commuters. These are mainly owners and lessors of office space. Many companies have found in recent months that using a home office will not require the use of offices for as many employees as before.
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However, rental savings will be lacking for investors who are dependent on rental income. Investors have become accustomed to attractive returns from the real estate market in the Czech Republic, which, however, will not be repeated. The final impact will vary depending on the location, but it can be assumed that some office owners will be seriously at risk of insolvency.
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According to the insurance company, permanently empty offices would cause a dramatic drop in sales of canteen and restaurant operators in administrative districts, mainly because they would sell significantly fewer lunches in the long run. “In the current scenario of epidemic development, the risk of insolvency and bankruptcy increases significantly in a relatively short time. At the same time, many owners of the restaurant are already financially exhausted and the new restrictions for them are liquidation, “Stržínková pointed out.
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The analysis of the Atradius insurance company also showed that problems are also accumulating in the paper industry. Working from home significantly speeds up the digitization of processes in which paper was still used. The focus on paper packaging to replace plastics, as well as the growing interest in packaging for online shipments, promises some hope for manufacturers.
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In addition, the demand for formal wear is declining. In Germany, for example, Atradius rates the textile industry as one of the most vulnerable sectors in which insolvency may quickly emerge. Gross value added in this sector is expected to fall by 13 percent year on year this year.
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On the contrary, the ICT industry will benefit from the ever-expanding work from home, which is one of the few to experience an increase in sales of laptops, mobile phones, fixed telecommunications equipment, software, or data transmission solutions. Among the winners of the crisis will also be companies that offer products and services for households, as many home workplaces need to be repaired and retrofitted to work from home.
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