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Credit management in 2021: What to expect?

What developments are to expect for 2021? How reliable are the forecasts and how should credit management position itself against this background of uncertainty?
Blog Post
03.01.2021, Prof. Dr. Matthias Schumann

What should credit managers expect in 2021?

The Corona Pandemic

This will continue to affect us economically in 2021. The increased lockdown measures will be with us until at least February – with a dismal outlook for industries such as hotels and restaurants, fitness and leisure facilities, tourism etc.

What will be the effect of the financial measures?

The suspension of the obligation to file for bankruptcy for more than ¾ of a year is a catastrophe and has camouflaged the real situation. It is damaging well-positioned companies because competition from companies that are actually insolvent still persists.

The short-time working allowance conceals overcapacities or capacities that need to be redirected in many companies. Adaptation processes are therefore slowed down. This could cause the competitiveness of internationally active companies to be reduced.

The financial help for small and medium-sized companies has been largely random. It helps some but not others. Performance artists and the entertainment industry have suffered particularly badly.

The € 30 bn guarantee for credit insurance companies is intended to continue to secure credit limits from suppliers. This is certainly the case in part. But in the long term every credit insurance company will discontinue its involvement with companies that are almost bankrupt.

The large companies are being supported by the ECB under Christine Lagarde with an immense bond buying programme. It will be interesting to see what happens when it ends. Will the companies be able to pay back this volume or refinance it?

What else will happen in 2021?

In Germany, national elections will take place in September 2021. Until then, the politicians will attempt to cover up the problems by handing out vast sums of money. In the medium and long term this will be very damaging.

We are forced to see how certain regions of Europe and the world continue to be in the grip of the virus – with all the economic consequences, also affecting the activities of our strongly export-dependent companies in these regions. The risky dependence on the Chinese market will therefore become even greater.

There are also industries that will be affected later than others – for example the building industry. The high level of government debt will reduce government construction projects. Uncertainty of private investors will lead to authorized construction planning applications not being realized. It remains to be seen what the outlook for the building industry, which is currently still an economic motor, will be like in autumn 2021 and beyond.

The pandemic is accelerating economic changes

A residual proportion of the increase in online trade due to the pandemic will remain. This will result in a further weakening of the traditional retail trade. Here, there will be significant changes: those who offer neither multi-channel sales nor experiential retailing will have difficulty surviving.

The reorganization of the automobile industry and the changes for the component supply industry connected with it will continue.

Town centres will change very rapidly. Commercial rents will have to be drastically reduced. This will put pressure on owners of commercial property. The town centre of the future will become a meeting place rather than remaining a shopping location.

Some industries are facing radical changes. Travel agencies are not only "old economy" they are dying economy. Conference hotels will still be needed but not in the same numbers. Equally, some meetings will continue to be held online instead of face-to-face.

The aviation industry will need several years to recover to its old level. It is questionable whether the previous level of business travel will ever be reached again.

Life in rural areas will become more attractive due to increased working from home. Especially for young families, this will mean new alternatives to living in cities.

The Brexit has happened

This will also cause economic difficulties and costs for business operations, which will be another source of problems for our economy.

And then there is the USA:

We will see that with Biden's new government there will be a better relationship with the EU and a commitment to NATO, but protectionism has never been alien to the Democrats. In export relations we will continue to see American demands and barriers.


For credit managers, 2021 will be a challenging year. It will be essential to determine which customers and suppliers will remain competitive with their business model in the medium and long term. Deferred payments or extended payment terms will only be successful measures for continuing to do good business in a few cases.

And overall: The successful companies will be those that begin the necessary processes of change without delay and adapt themselves to the new conditions.

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About the Author
Prof. Dr. Matthias Schumann

Since 1991, Prof. Dr. Matthias Schumann has held a professorship in Business Administration and Information Systems (Chair of Application Systems and E-Business) at the University of Göttingen. He also heads the joint computing center of the Faculty of Economics and the Faculty of Social Sciences. He is a shareholder of Prof. Schumann GmbH.

Prof. Schumann's research interests include information systems at financial service providers and systems for credit management, as well as issues related to knowledge and education management. Prof. Schumann has a wide range of experience in consulting companies, extensive lecturing activities and more than 350 publications.

University of Göttingen

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