The outbreak of a full-scale war has significantly affected cooperation between Ukrainian businesses and their foreign suppliers. Most vendors have revised their terms of cooperation, which has further complicated the financial situation of Ukrainian companies. This was reported in an exclusive comment to UNN by the Retailers Association of Ukraine (RAU).
"Many suppliers have begun to revise the terms of cooperation, increasing requirements for financial stability and risk insurance. In addition, some companies have focused on developing direct contacts with Ukrainian entrepreneurs to minimize risks," the EBA noted.
Most foreign suppliers, including hardware and electronics vendors, started working with Ukrainian retailers only on the condition of full prepayment. At the same time, until February 2022, almost all equipment vendors provided goods for sale. This requirement became an additional burden for entrepreneurs who already faced a shortage of liquidity and the need to quickly restore supply chains due to the hostilities.
Other suppliers have reduced or stopped providing credit lines altogether, which has also further complicated the financial situation of Ukrainian companies.
This resulted in retailers being forced to look for alternative financial solutions to support their operations in addition to responding quickly to security challenges.
Context
The onset of the full-scale invasion had a profound impact on Ukraine's economy, and businesses faced a number of problems that needed to be addressed quickly. The retail sector, which was heavily dependent on imported goods, was no exception .
Business is business and, of course, everyone is fighting for their own good first and foremost. Foreign companies were no exception, and some of them did not plan to make concessions to their Ukrainian partners and set rather strict conditions for further cooperation. This, in turn, increased the financial costs of Ukrainian retailers, and some of them were unable to overcome these challenges without attracting additional financing, loans and installment plans.
Some Ukrainian companies have had to resort to forced solutions in order to keep their business alive. For example, Eldorado, a hardware and electronics retailer, initiated an out-of-court reorganization procedure to settle debts to suppliers incurred as a result of the hostilities in Ukraine. At the end of April, the Kyiv Commercial Court approved a pre-trial rehabilitation plan, according to which Eldorado is guaranteed to repay 30% of the debt within five years, 30% is subject to write-off and the remaining 40% will be received by the creditors after compensation for the damage caused by Russia.