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The financial data for 2022 reveals that Finnish companies are doing well

Despite the high inflation and negative economic views presented in the public, both SMEs and listed companies have done overall well in 2022.

For two years now, Accountor has regularly published financial analysis based on real-time financial data from nearly 10 000 companies. The latest analysis shows that many small and medium-sized enterprises (SMEs) have had an excellent year.

"We know that SMEs have grown in 2022 in almost all industries. The increase in turnover this autumn has been more than five percent compared to the previous year. The average price of sales invoices has remained the same, which means that the inflation has not been significantly transferred to prices. On the other hand, both the average price of the purchase invoices has risen, and the turnover growth is at the level of the inflation. These factors do affect the profitability of some companies", says Business Director Petri Karjalainen from Accountor.

"If consumer inflation and high energy costs are not significant for your industry, and at the same time the data tells you that the industry is doing well, you should still trust the data and not the stories in the media."

Laskuvolyymien muutos edelliseen vuoteen nähden

Accountor has a broad view of the Finnish SME sector, as its various software and services are used in the accounting of more than 100 000 Finnish companies and in the payment of salaries of more than 500 000 Finnish employees.

Since April 2020, Accountor has published a monthly real-time data report on the financial situation of companies, as it wanted to be actively involved in promoting the understanding of the financial situation of SMEs after the economic crisis caused by the corona started. Since then, Accountor has distributed the report free of charge not only to authorities and policy makers, but also to economists, the media and other parties who need it. The data is anonymised for the report.

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The industry and size of the company matter in the prevailing inflationary situation

According to Karjalainen, the economy has been doing very well for the past year and a half, but the prosperity is concentrated in certain industries and in the larger company size category.

"Smaller micro-enterprises have grown in terms of euros, but there has not been a significant increase in the number of employees. On the other hand, in companies with more than ten employees, the number of employees has also increased by more than twenty percent."

It is difficult for SMEs to pass on the effect of inflation to consumer prices in the same way as large companies. For example, in the construction industry, a fixed-price contract with supplies may have been agreed already a year ago when the prices were lower.

"Inflation is generated not only by the prices of certain raw materials, but also by energy. However, the importance of electricity, gas and fuels is not great for a typical SME entrepreneur such as a hairdresser or even a construction entrepreneur that sells labour. However, inflation in the SME sector does not significantly affect all companies", says Karjalainen.

”With the help of data, companies can draw conclusions about the state of their own industries and avoid serious business mistakes.”

For consumer-driven companies that are attached to cash transactions, consumer trust is of course important, while the situation of companies operating in the subcontracting chain is largely determined by the actions of large companies in the industry, such as in the engineering and construction industries.

"At the moment, it would seem that consumers are still spending money just like before. In October-November the big electricity bills have not yet affected the purchasing behaviour of consumers. We are now eagerly awaiting the completion of the latest data, which also includes the beginning of December, when there has been a lot of news about the price of electricity and consumers' payment difficulties," says Karjalainen.

Companies that manufacture consumer products that serve companies in the trade sector are currently doing the worst, because the rising prices of their own purchase invoices cannot be passed on to consumer prices in the same proportion.

"At the moment, there is no big wave of bankruptcies in the horizon, but I would anticipate that controlled business closures might increase in the near future," says Karjalainen.

A successful year for listed companies

Olli Lehtonen from consulting company August Associates, who has recently analysed the business figures of Finnish listed companies, says that year 2022 will witness top result in the operating profit of large companies, despite inflation, the war in Europe, and global supply chain challenges.

"The combined turnover of listed companies is predicted to grow by 11 percent this year when Fortum is excluded. Overall, growth exceeds inflation and there will be growth in many different areas."

Those industries that have been able to benefit directly from the increase in world market prices and that are able to transfer the price increase to customer prices have been the most successful.

"Among the successful ones are the forest industry, manufacturers of basic materials, and the electronics industry. The weakest growth has been in listed companies in the construction sector. Their combined turnover has even shrunk. Practically all other industries have been able to grow," says Lehtonen.

"Based on current analyst forecasts, the turnover of listed companies is expected to grow by two percent next year, excluding Fortum. However, growth would remain below inflation, so there would be no real growth," says Lehtonen.

"It is interesting that the forecasts do not paint as gloomy a picture of the future of listed companies as one might assume based on the current world events. However, I would not be surprised if profit forecasts are adjusted downward in the future", adds Lehtonen.

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Data helps in reviewing the business

Karjalainen encourages micro-enterprises to talk with their accountants about their own profitability in relation to competitors. With the help of data, especially large accounting firms know very precisely how the various industries are doing and whether a company is profitable or not. The accountant can also advise what measures to take in a situation where the company is doing worse than the industry average.

There are many ways to increase profitability. For the acute need for cash flow, Karjalainen advises micro-enterprises to invoice smaller amounts at a more frequent pace. With it, the cash flow situation improves faster.

"I can see from our statistics that the turnover of sales receivables is already slowing down. It is important to have a cash buffer in case of late payments from customers. It may make sense to introduce invoice financing."

Product-specific profitability calculations are also good for small companies.

"For large, listed companies, the most important thing in defending profitability is refining the strategic focus. What is the core that is being protected and what is the area in which you can do cutbacks," says Lehtonen?

With the help of data, companies, regardless of size, can themselves draw conclusions about the state of their own industries and avoid serious business mistakes. Accountor's analyses are now available to all Finnish companies. Accountor also offers professional help in analysing your company's finances as well as offers cash flow and other financial services.