Corporate bankruptcies in Germany: Wake up and stop blaming politicians!
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Published on: September 12, 2025 / Updated on: September 12, 2025 – Author: Konrad Wolfenstein
Corporate insolvencies in Germany: Wake up and stop blaming politicians! – Image: Xpert.Digital
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Insolvency figures in Germany are skyrocketing, painting a bleak picture for the economy. With over 21,000 corporate insolvencies in 2024 and a further increase forecast, calls for political bailouts and blame games are growing louder. The usual suspects are quickly identified: high energy prices, the interest rate turnaround, and paralyzing bureaucracy. But this one-sided view falls short and obscures a far more uncomfortable truth: a large proportion of the bankruptcies are home-made.
While external factors undoubtedly increase the pressure, it is often years of internal failures that erode a company's foundation until it collapses under the weight. Strategic shortsightedness, a stubborn refusal to adapt to a digital world, and a deep-rooted fear of change are the real accelerant of the current crisis. Many companies were left behind long before interest rates rose or energy prices became more expensive.
This article puts its finger on the sore spot and sheds light on the structural deficiencies that are crippling many German companies from within. From fundamental management errors such as a lack of controlling, to outdated sales strategies from the last millennium, to the haphazard implementation of artificial intelligence—the list of corporate failures is long. It's a wake-up call that shows that responsibility for success cannot be placed solely on the shoulders of politicians, but begins first and foremost within the company.
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Corporate insolvencies in Germany: Between misguided policies and entrepreneurial failures
The debate surrounding the rising number of insolvencies in Germany is often oversimplified and presented as a result of political missteps. While macroeconomic factors undoubtedly play a role, another perspective deserves greater attention: Many companies failed to adapt to changing market conditions in a timely manner and have thus become inferior to their competitors.
The figures are alarming: In 2024, over 21,000 companies filed for insolvency, an increase of more than 22 percent over the previous year. Further increases to up to 25,800 cases are forecast for 2025. While politicians and business associations primarily attribute this development to external factors such as the interest rate turnaround, energy prices, or bureaucratic hurdles, a more in-depth analysis reveals structural deficits in the entrepreneurial management and strategic orientation of many German companies.
Management errors as the main cause of corporate insolvencies
A comprehensive study by the Center for Insolvency and Restructuring at the University of Mannheim identifies management errors as the most common cause of corporate insolvencies. The three most critical areas are a lack of controlling, financing gaps, and inadequate receivables management. These factors are not the result of external circumstances, but rather of direct business decisions and omissions.
Lack of controlling is the leading cause of self-inflicted insolvency. Many entrepreneurs neglect the systematic planning, coordination, and management of their business processes, especially when they are overwhelmed by day-to-day operations. This strategic shortsightedness leads to problems only being recognized when it is already too late. Regular goal setting with clearly defined timeframes could prevent many insolvencies.
Receivables management represents another critical area. Companies that fail to professionally monitor their incoming payments jeopardize their liquidity and thus their very existence. Particularly problematic is the often half-hearted payment practices of business customers, which can lead to significant liquidity bottlenecks. Outsourced, professional receivables management could significantly reduce these risks.
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Digitalization deficits as a barrier to competition
A particularly serious area of corporate failure is the lack of digital transformation. Germany shows significant lags in digitalization, which directly impact the competitiveness of companies. In the Digital Economy and Society Index, Germany ranks only 13th out of 27 EU countries. This position is all the more worrying given that countries like Lithuania, Slovenia, and Estonia achieve better digitalization scores despite their weaker economies.
The reasons for this backwardness are complex. A study by the European Center for Digital Competitiveness shows that 95 percent of executives see Germany as lagging behind in digitalization. The main reasons are strategic deficits, fragmented responsibilities, and insufficient investment. Small and medium-sized enterprises in particular struggle with budget constraints, a lack of expertise, and a severe shortage of IT specialists.
The practical effects of these digitalization deficits are measurable: Twelve percent of employees lack access to stable internet, and 17 percent are not optimally equipped for working from home. These technical deficiencies not only hinder internal efficiency but also worsen the competitive position against more digitally advanced competitors.
Outdated sales and marketing strategies
Another critical area is the fact that many B2B companies are stuck in outdated sales and marketing approaches. Despite advancing digitalization, many companies still primarily rely on traditional cold calling and trade show appearances. However, these methods are becoming increasingly less effective due to fundamental changes in the purchasing behavior of business customers.
The Millennial generation, who are now making important purchasing decisions, expect an "Amazon experience" in B2B as well. They prefer to research and conduct business without human interaction. According to a Harvard Business School study, 81 percent of customers try to solve problems themselves before picking up the phone. Companies that ignore these changing expectations systematically lose market share.
The problem is exacerbated by the nature of corporate websites. Many B2B companies still view their website as a digital business card or a replacement for glossy brochures. This static approach squanders the website's potential as an interaction platform and lead generation engine. Instead of regular, valuable content, many B2B websites only offer sporadic updates that offer no real added value and are also very impersonal and even anonymous.
Dysfunctional content strategies and approval processes
The quality of corporate communications suffers from overly bureaucratic approval processes that stifle any spontaneity and authenticity. Many companies have established approval procedures that meticulously review every sentence and every word before content is published. The result is sterilized copy without any discernible motivation or vision, written in interchangeable, glossy marketing jargon.
These bureaucratic hurdles lead to significant delays in content production. Studies show that marketing teams spend an average of 33 percent of their productive time on coordination and approval processes. Seventy-eight percent of B2B marketers experience content delays at least weekly due to unclear approval processes.
Many B2B companies misunderstand social media as a mere "we're in too" activity, rather than using it as a channel for genuine content value. Lack of strategy, irregular activity, and fear of negative feedback characterize many companies' presence on social networks. Instead of fostering authentic communication, they often publish the same overly regulated content that has already failed on other channels.
Artificial intelligence between hype and confusion
The implementation of artificial intelligence clearly reveals the strategic weaknesses of German companies. Although 38 percent of B2B companies already use AI and 74 percent are increasing their investments in this area, there is often a lack of planning when it comes to practical implementation.
The biggest barriers to AI adoption are a lack of human resources (62 percent), a lack of data (62 percent), and insufficient financial resources (50 percent). However, these obstacles are largely self-inflicted and result from a lack of strategic planning and investment in digital infrastructure.
Particularly problematic is that only 14 percent of companies are driving AI at the management level. This lack of leadership support leads to fragmented, isolated measures without strategic alignment. Many companies implement AI solutions without clear goals or measurable success criteria, resulting in costly failures.
Structural deficits in the digitalization strategy
The problems with digital transformation go beyond technical aspects and are rooted in fundamental strategic deficits. Only about one-fifth of medium-sized companies have a comprehensive digitalization strategy. This strategic lack of direction leads to inefficient individual measures without discernible synergies.
The lack of readiness among decision-makers and employees is particularly serious. While managers recognize the strategic benefits of digitalization, they often shy away from the necessary investments and changes. At the same time, many employees lack the motivation or understanding of new technologies, leading to a gradual erosion of competitiveness.
Organizational structures further exacerbate these problems. Traditional hierarchies and outdated processes hinder digital transformation. Instead of developing cross-departmental solutions, investments are often made ad hoc and without strategic direction. The focus is on short-term goals rather than a long-term digital transformation.
Industry-specific challenges and solutions
The challenges of digitalization manifest themselves to varying degrees in different industries. Traditional industrial and craft businesses are particularly affected, as they are hesitant to challenge their proven business models. These companies often struggle with integrating new technologies into existing processes and organizational structures.
A systematic approach to digitalization should begin with a thorough analysis of the current situation. Companies must evaluate their current processes, identify weak points, and set priorities for digital transformation. The selection of suitable technologies should be based on specific requirements and available resources, not on current trends or marketing promises.
Successful digitalization also requires a gradual implementation with continuous success measurement. Companies should start with smaller projects, evaluate the results, and then adjust measures accordingly. This iterative approach minimizes risks and enables organizational learning.
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International competitiveness and market realities
The consequences of these corporate failures become particularly clear when compared internationally. While German companies are often still stuck in traditional mindsets, competitors from other countries have already completed the digital transformation and are benefiting from greater efficiency gains and better customer reach.
The coronavirus pandemic has accelerated these developments and ruthlessly exposed the weaknesses of many traditionally managed companies. Companies that had already invested in digital infrastructure and modern sales channels before the crisis were able to adapt significantly better to the changed conditions. Companies that were not adequately prepared, however, came under enormous pressure and are still struggling with the consequences.
Globalization and easier access to international markets further increase competitive pressure. German companies no longer compete solely with local suppliers, but also with globally operating firms that often operate more cost-efficiently and with a greater customer focus. Without appropriate adjustments, they systematically lose market share.
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Human resources management and organizational development
An often overlooked aspect of corporate crises is inadequate human resources management and a lack of organizational development. Many companies fail to adequately prepare their employees for digital transformation and develop the necessary skills. This neglect of human resources takes its toll, especially in times of accelerated change.
The shortage of skilled workers is further exacerbating these problems. Companies that cannot offer attractive jobs and development opportunities are losing qualified employees to the competition. The situation is particularly dire for IT specialists, where six-figure shortages are expected by 2024.
Corporate culture plays a crucial role in this. Companies with hierarchical structures and a low willingness to innovate have greater difficulty attracting and retaining talented professionals. This lack of willingness to change and experiment is particularly discouraging for younger workers who prefer dynamic and future-oriented work environments.
Financial management and investment decisions
Incorrect financing decisions and inadequate liquidity planning also contribute significantly to the rising number of insolvencies. Many companies increased their debt during the low-interest-rate phase without building up adequate reserves for changing market conditions. The interest rate turnaround since 2022 has hit these businesses particularly hard, as follow-up loans have suddenly become significantly more expensive.
The investment policies of many companies also reveal strategic deficiencies. Instead of investing in future-proof technologies and business models, many companies cling to outdated structures. This conservative approach may save costs in the short term, but leads to competitive disadvantages and market losses in the medium term.
Particularly problematic is the often inadequate measurement of investment success. Many companies are unable to accurately assess which measures actually contribute to business success and which represent a waste of resources. This lack of transparency leads to suboptimal allocation decisions and inefficient use of resources.
Customer orientation and market adaptation
A fundamental problem of many insolvent companies lies in their lack of customer focus and failure to adapt to changing market demands. While customer needs and purchasing habits are rapidly evolving, many companies cling to traditional business models without critically questioning their relevance.
The B2B landscape has changed fundamentally. Business customers today expect the same user experience as in the B2C sector: easy navigation, comprehensive product information, rapid availability, and personalized communication. Companies that fail to meet these expectations systematically lose business to better-positioned competitors.
This shift is particularly evident in information gathering. 85 percent of all B2B decision-making processes today begin online, long before the first contact with sales. Companies with inadequate online presences are completely ignored during this crucial phase and thus have no chance of being shortlisted.
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Innovation management and future viability
The lack of innovative strength among German companies contributes significantly to their weakened competitive position. While other countries systematically invest in research, development, and new technologies, many German companies display a conservative attitude toward innovation. This lack of innovation leads to a gradual erosion of competitiveness.
Particularly problematic is the often lacking systematic market monitoring and trend analysis. Companies that fail to recognize market developments in a timely manner or misjudge them miss important turning points and fall behind. Digitalization has significantly accelerated the pace of change, making such failures more quickly a threat to their existence.
In many companies, innovation management is limited to sporadic, individual measures without strategic anchoring. Instead of establishing systematic processes for idea generation, evaluation, and implementation, many companies rely on chance or individual, committed employees. This unstructured approach leads to missed opportunities and suboptimal results.
Quality management and process optimization
Deficiencies in quality and process management further exacerbate the problems facing many companies. Inefficient processes, high error rates, and a lack of standardization lead to excessive costs and dissatisfied customers. These operational weaknesses add up to significant competitive disadvantages.
Many companies fail to regularly analyze and optimize their processes. Digitalization offers significant potential for improvement through automation, data analysis, and continuous monitoring. Companies that fail to take advantage of these opportunities operate with unnecessarily high costs and lower productivity.
Quality control is often limited to final inspection rather than implementing systematic preventive measures. This reactive approach leads to higher costs and longer lead times. Modern quality management systems enable continuous monitoring and improvement of all process steps.
Supply chain management and partnerships
Weaknesses in supply chain management and partner selection also contribute to corporate crises. Many companies have not sufficiently diversified their dependencies on individual suppliers or markets, making them vulnerable to disruption. The coronavirus pandemic and geopolitical tensions have painfully exposed these vulnerabilities.
The digitalization of supply chains is lagging significantly behind in many German companies. Modern supply chain management systems enable greater transparency, predictability, and risk minimization. Companies without such systems work with incomplete information and can only react reactively to disruptions.
The selection and evaluation of business partners is often still based on traditional criteria, without the use of modern analytical methods. Digital tools today enable significantly more precise risk assessment and continuous monitoring of partner relationships. However, these opportunities remain untapped if companies fail to invest accordingly.
Sustainability and social responsibility
Considering sustainability aspects and social responsibility is also becoming increasingly important. Companies that ignore these trends risk not only reputational damage but also the loss of customers and skilled workers. Younger generations place great value on ethical and sustainable business practices.
Regulatory requirements in the area of sustainability are continually becoming more stringent. Companies that fail to adapt to these developments in a timely manner risk compliance issues and additional costs. A proactive approach, however, can create competitive advantages and open up new business opportunities.
Integrating sustainability aspects often requires fundamental changes in business models and processes. Companies that embark on this transformation too late face higher transition costs and lower prospects for success. Early investments in sustainable technologies and practices pay off in the long run.
Legal compliance and risk management
Failure to comply with legal requirements and inadequate risk management also lead to corporate crises. The regulatory landscape is becoming increasingly complex, particularly in the areas of data protection, IT security, and sustainability. Companies without adequate compliance structures risk significant fines and reputational damage.
In many companies, risk management is limited to traditional areas such as credit and insurance risks. New risk categories such as cyberattacks, supply chain disruptions, or regulatory changes are often inadequately addressed. These gaps can become existentially threatening if such events occur.
The documentation and monitoring of compliance measures is often still manual and unsystematic. Modern software solutions enable automated monitoring and reporting, which reduces risks and increases efficiency. Companies without appropriate systems operate with higher risks and costs.
Wave of insolvencies in Germany: Digital transformation, strategic reforms and entrepreneurial responsibility as antidotes
An analysis of the rising number of insolvencies in Germany reveals a complex picture of external factors and corporate failures. While political decisions and macroeconomic developments undoubtedly play a role in the crisis, the structural deficiencies in corporate governance cannot be overlooked.
Many of the identified problems are self-inflicted and result from strategic failures, a lack of willingness to innovate, and a refusal to critically examine proven business models. Digitalization offers significant opportunities for efficiency gains and new business opportunities, but only companies willing to invest and transform can take advantage of them.
International competition will continue to intensify, and the pace of technological change will increase. Companies unwilling to adapt their structures, processes, and mindsets will increasingly lose market share and ultimately lose their raison d'être.
The responsibility for creating better framework conditions lies not solely with politicians. Entrepreneurs must take the initiative to position their businesses for the future and actively address the challenges of digital transformation. Only through a combination of political reforms and entrepreneurial responsibility can the German economy regain its competitiveness and ensure sustainable growth.
The time for structural reforms and strategic realignment is running out. Companies that fail to act now risk contributing to the insolvency statistics of the coming years. Digitalization and the associated cultural change are not optional extras, but essential necessities for survival in the modern market environment.
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