Turkey’s Economic & Credit Risk Outlook – 2025

Turkey remains a key economic player, ranking 11th globally and 4th in Europe (PPP-based GDP). However, inflation and high interest rates continue to present challenges.

Key Economic Indicators

Impact on Credit Risk:

• High borrowing costs reduce investment and liquidity.
• Inflationary pressure increases operating costs for businesses.

Foreign Trade & External Credit Risks

Turkey’s Import & Export Performance (Million USD)

Observations

• Exports increasing, imports declining, signaling lower domestic demand.
• Lira depreciation (-55% in 2024) affecting import costs & inflation.

Payment Methods in Turkey

Most Common Payment Methods

Trend of Dishonored Checks in Turkey (2023-2024)

Key Observations:

• Dishonored checks tripled (⬆210%) in 2024 vs. 2023.

Key Observations

• Cheques (60%) remain the dominant payment method, but dishonored cheque rates have significantly increased.
• Open account payments (15%) expose creditors to higher non-payment risks.
• Secure transactions (IBAN, EFT) are recommended to reduce default risks.

Rising Bankruptcies & Credit Risks

Key Trends in Business Insolvencies

Most Affected Sectors

• Textile Industry: High production costs, competition, export struggles.
• Construction Sector: High debt levels, project delays, expensive materials.
• Retail & SMEs: Liquidity struggles, reduced consumer demand.

Credit Insurance Market in Turkey

With rising credit risks, companies are increasingly turning to credit insurance to protect against defaults and financial losses.

Market Overview

Leading Credit Insurance Providers

• Euler Hermes (Allianz Trade)
• Coface
• Atradius
• Türkiye Sigorta AŞ
• Turk Eximbank

Number of policies issued

Industry Reforms & Growth Projections

• The Insurance Association of Turkey (TSB) is leading reforms through the “Vision 2024” project to increase insurance penetration.
• Aimed at raising financial literacy and expanding risk coverage for businesses.

Why Credit Insurance Matters Now

• Protection against rising bankruptcies & insolvencies
• Reduced exposure to payment defaults
• Improved financial stability & investor confidence

• Consider credit insurance to mitigate non-payment risks

Debt Collection in Turkey

Given the increase in payment defaults, businesses need effective debt collection strategies.

How Debt Collection Works in Turkey

Debt collection in Turkey follows a structured process combining amicable settlements, legal enforcement, and bankruptcy proceedings when necessary.

Pre-Legal Collection (Amicable Settlement Stage)

Before legal action, creditors attempt to recover debts amicably to avoid court expenses and delays.

• Payment Reminders & Negotiation: Businesses send reminders via email, phone, or SMS to request overdue payments.
• Structured Payment Plans: If a debtor cannot pay in full, installment-based repayment plans are offered.
• Third-Party Collection Agencies: Many companies outsource recovery efforts to professional agencies that specialize in Turkey’s legal system.

Legal Debt Collection (Through Enforcement Offices)

If amicable efforts fail, creditors can start legal proceedings through the Turkish Enforcement and Bankruptcy Law (İİK).

• Debt Claim Filing: Creditors file a claim with the Enforcement Office (İcra Dairesi), and the debtor is notified.
• Debtor’s Right to Object: If the debtor disputes the claim, the creditor must initiate a lawsuit in a commercial court.
• Asset Seizure & Bank Freezing: If the debt is confirmed, the creditor can request the seizure of the debtor’s bank accounts, property, or wages.

Alternative Dispute Resolution (ADR): Mediation & Arbitration

If both parties prefer to avoid long legal processes, they may resolve debt disputes through:

Mediation (Mandatory for Commercial Disputes Since 2019):

• Court cases must first go through a mediation process.
• If mediation fails, legal action can proceed.

Arbitration (For Large Business Contracts):

• Used in international trade disputes.
• Faster and more private than courts.

ADR Benefits:

• Faster resolution (1-3 months).
• Lower legal costs.
• Flexible settlement options.

To avoid lengthy court cases, businesses can opt for:

• Mediation: Faster and cost-effective alternative to court disputes.

• Arbitration: Common for international trade disputes, ensuring quicker

Bankruptcy & Liquidation in Turkey

If a company is insolvent, creditors may file for bankruptcy proceedings under Turkish Commercial Law.

• Bankruptcy Filing: Creditors petition the court to declare the debtor bankrupt.
• Asset Liquidation & Debt Repayment: Business assets are sold to pay creditors in order of priority resolutions.

Legal Process Duration:

• Uncontested cases: 2-6 months
• Contested cases (court involvement): 1-2 years

Navigating Turkish Business Culture: Key Considerations

• Negotiation Practices:
  • Bargaining is a customary aspect of Turkish business dealings. It’s expected that initial offers are negotiable, and engaging in this process demonstrates respect and interest.
• Building Trust:
  • Establishing personal relationships is vital. Turks prefer to do business with those they trust and feel comfortable with, often requiring multiple meetings to build rapport before finalizing deals.
  • Payment Terms:
  • Standard payment terms typically range from 30 to 90 days, depending on the industry and mutual agreements. Flexibility and clear communication about payment expectations can foster stronger business relationships.

Conclusion & Risk Management Outlook for 2024-2025

Key Takeaways

Stay ahead of risks in 2025! For tailored credit risk solutions, reach out to our experts at Farosol network.

Contact Us: www.farosol.com