The use of predictive models based on artificial intelligence processes and automated collections are some of the changes that companies are already applying in this new reality to reduce operating, management and risk costs.
The spread of covid-19 changed the rules in almost all markets and business models, a situation that has affected the collections departments of companies, whose work teams are currently facing complex challenges.
In the last two years, 100,000 loans that were up to date became arrears, and bankers attribute this mainly to the increase in unemployment and the decline in economic activity.
The slowdown that the Costa Rican economy has suffered in the last two years is taking its toll not only on businesses and families, but also on the banking sector.
Figures from the General Superintendence of Banks and Financial Entities (Sugef) detail that "...
The deterioration of the economy and rising unemployment are the main reasons behind the difficulties faced by companies and individuals in Costa Rica in paying back their bank loans.
According to figures from the General Superintendence of Financial Entities, between January 2017 and July 2018, the percentage of loans in defaults for more than 90 days or in judicial collection, went from 1.65% to 2.51%, showing an upward trend in recent months.
From June 2017 to May 2018, the average default rate of the Costa Rican financial system's credit portfolio increased from 1.36% to 2.14%.
According to figures from the General Superintendence of Financial Institutions (Sugef), between April and May of this year, Banco Nacional de Costa Rica (BNCR) saw an increased in its arrears of greater than 90 days and judicial collection from 2.65% to 4.18%, thus surpassing the 3% that is established as the prudent maximum limit.
The National Registry of Costa Rica has announced that it will dissolve companies that have not paid tax to legal entities for a period equal to or greater than three years.
From a statement issued by the College of Accountants:
August 2017.Next Friday, September 1, the collection of the Tax on Legal Entities will be reactivated, this tax applies to all types of commercial companies, such as Limited Liability Companies, limited partnerships, collectives, individual limited liability companies, and others.
The legislative opposition in Costa Rica has once again submitted a replacement text for the law against tax fraud, eliminating from the project the seizure of bank accounts of companies suspected of tax evasion.
With the motion filed by the opposition deputies are aiming to prevent the Directorate General of Taxation from having the capacity to seize or ask a judge to seize bank accounts of taxpayers suspected of tax evasion.
In Costa Rica the majority of MPs are opposed to the bill which would give the Treasury the ability to penalize delinquent taxpayers, a measure considered unique to the judiciary.
The Government will have to amend the draft law to improve the fight against tax fraud if it wants the Legislature to approve it. The opposition is mainly relted to the fact that the project would grant the ability to make charges and put in place embargoes without a court order, and there are also "... objections to tax advisers being made to pay part of the taxpayers debts, if the Administration considers that they gave the wrong advice."
A passive base rate in excess of 12% would be problematic, affecting the behavior of borrowers and is likely to cause an increase in defaults.
The Passive Base Rate (PBR) reached 10% on May 9, a level not seen since October 2009. The banks set their interest rate according to the PBR and charge an additional margin. It is estimated that there are 400,000 public bank transactions related to this indicator, reported Elfinancierocr.com.
The Department of Taxation in Costa Rica will send a list of tax defaulters to banks every month.
Francisco Villalobos, director of the entity, said that both banks and credit bureaus are not required to incorporate this information into their systems.
However, the move was seen as favorably by the banking sector, Franco Naranjo, President of the Costa Rican Banking Association (ABC), said, "We have not thoroughly analyzed the issue, but any information that is risk-related is welcomed by the guild. "
There have now been seven consecutive months during which the default rate of borrowers from the Banco Nacional de Costa Rica has increased, having exceeded the normal limit of 3% over the past three months.
The increase in defaults is due mainly to problems with real estate projects in Puntarenas and Guanacaste, said Bernardo Alfaro, deputy general manager of the bank’s risk management office.
The Economy Ministry presented the quarterly survey on credit and debit cards, through October 2010.
Regarding credit cards during for this period, there were 29 issuers with 403 types of plastic.
If debt was distributed equally among the economically active population, it would represent a per capita debt of $ 837, which is almost double the minimum wage.
Costa Rican legislators condoned the debt a group of farmers had with the State without much justification.
In the Costa Rican Congress, a wide majority of representatives approved debt condonation for a group of farmers who benefit from highly subsidized credit programs, basing their decision on "social solidarity" grounds.
The editorial by Nacion.com points out the lack of technical foundations on the Legislative's decision, by asking: "Which is the objective criteria, technical basis, cost-benefit considerations, effect weighting, situational analysis for each farmer, verification of their real needs and the general public spending priority scheme on which this gift is justified? The answer is simple: none".
By July, 2.215 of all loans outstanding are more than 90 days behind in their payments, according to Sugef data.
Even though since November 2008 delinquency has shown an upward trend, it is currently below 3%, a level considered "normal" by the Superintendence of Financial Institutions (Sugef).
Journalist Patricia Leitón wrote in her article in Nacion.com: "The increase in delinquency has been mostly caused by nonpayment problems in Banco Nacional, the bank with the largest credit portfolio. At Banco Nacional loans with over 90 days of non payment or at judicial collection represented 3.21% of their total credit portfolio".
The crisis has rapidly increased the levels of delinquencies, and getting paid on time and in form may be vital for an SME.
Maintaining liquidity has become a golden rule for businesses and one way to keep cash on hand is to simply stop paying suppliers. Of course, those who suffer most are companies that do not have bargaining power due to their size to recover unpaid debts and to devote resources to an adequate analysis of the risks of extending credit to each buyer.
In January, 2009, 15% of the payments in real estate and tourism loans were late, more than double the amount in August, 2008.
The figures reported by the Superintendent of Financial Institutions indicate that in August of last year, 7% of the payments on loans to the hotel and restaurant sector were late, whereas they were 15% in January of this year.
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