Customer with a loss-making financial statement or negative net equity: grant a credit line and payment terms?

In brief: a loss for the year on its own is not enough to refuse a credit line: what counts is how much it has eroded net equity. If losses exceed one third of the capital, the obligations of arts. 2446 and 2482-bis c.c. are triggered; if net equity is negative, the company owes more than it owns. Look at several financial statements, their date, and calibrate the payment terms.

Loss for the year, reduced or negative net equity: what is the difference?

The loss for the year is the negative result of one year; net equity is what the company owns less what it owes, accumulated over the years. A loss absorbed by reserves leaves the capital intact; a loss that eats into it beyond one third triggers obligations under law; negative net equity means debts exceeding assets.

For the same review from the purchasing side, see how to read a supplier's financial statement.

What must the company do when losses exceed one third of the capital?

The directors must convene the shareholders' meeting without delay and present it with a report on the financial position. If by the following financial year the loss has not fallen below one third, the capital must be reduced in proportion to the losses ascertained; failing that, the court orders the reduction.

This is provided by art. 2446 c.c. for spa and by art. 2482-bis c.c. for srl.

The reduction of capital for losses is an accounting adjustment: no money comes in or goes out. For a creditor the signal is the losses that made it necessary; a recapitalisation, by contrast, brings new resources.

And if the losses bring capital below the legal minimum?

The shareholders' meeting must be convened without delay to reduce the capital and simultaneously increase it at least up to the minimum, or to transform the company. If this does not happen, reducing the capital below the legal minimum is a ground for dissolution of the company (art. 2484, first paragraph, no. 4 c.c.).

For spa, art. 2447 c.c. applies (minimum of 50,000 euros, art. 2327); for srl, art. 2482-ter, which refers to the minimum of art. 2463. Art. 2484 expressly preserves these two articles: if the shareholders recapitalise or transform the company, dissolution does not occur.

Do the Covid-period losses still count in October 2026?

Yes, for a practical reason: for losses arising in financial years in progress at 31 December 2020, 2021 and 2022, art. 6 of d.l. 23/2020, extended year by year, suspended the obligations to reduce capital and the grounds for dissolution, deferring the deadline to the fifth financial year after. For the 2022 losses, this takes us to the 2027 financial statement.

The text in force on Normattiva excludes for those losses arts. 2446 (paragraphs 2 and 3), 2447, 2482-bis (paragraphs 4, 5 and 6), 2482-ter and the ground for dissolution of art. 2484, no. 4, but requires them to be shown separately in the explanatory notes, with their origin and the movements of the financial year. A customer with eroded capital that has not been recapitalised may therefore be in compliance: check the explanatory notes.

What to look at beyond the single financial statement?

The trend across several financial statements, the date of the latest one filed, and the most recent signals in the statement itself. An isolated loss after years of profit is not the same as three consecutive losses, and an old statement photographs a situation that may have changed.

• Trend of net equity: compare at least two or three financial statements. Net equity that falls year after year matters even before it reaches the legal thresholds.
• Date of the latest financial statement: the financial statement must be submitted to the shareholders for approval within 120 days of the close of the financial year, or 180 in the cases permitted by the articles of association (arts. 2364 and 2478-bis c.c.), and filed with the Registro Imprese within thirty days of approval (art. 2435 c.c.). For a calendar financial year, in October 2026 the 2025 financial statement is normally available: if the latest one is older, ask why.
• Explanatory notes: suspended losses, shareholder payments, significant events after the close.
• Signals after the financial statement: protests, insolvency proceedings, worsening rating, late payments. See the warning signs of a customer's insolvency.

How to calibrate credit line and payment terms for a loss-making customer?

By proportioning the exposure to what remains of the net equity and to what you can afford to lose, shortening the terms and using standard contractual tools. There is no statutory percentage: these are prudential criteria, and the decision remains yours.

• Shorter terms and staggered due dates, so that open credit remains contained.
• Down payment or advance payment upon order confirmation, and staged deliveries: the next part is delivered only after payment of the previous one.
• Cautious initial credit line, to be reviewed with each new filed financial statement and after each delay.
• Personal guarantee from a shareholder or the director, as is done with a minimum-capital srl.
• Documents from the customer: an up-to-date statement of financial position or the resolution to recapitalise.

What does the Veryfy report flag about a loss-making customer?

The Verifica report (19€) flags, with source and date of the latest filed financial statement, net equity below two thirds of the capital (arts. 2446 and 2482-bis c.c.), negative net equity, the capital of a spa below 50,000 euros, and a latest financial statement more than 18 months old.

It also shows protests and insolvency proceedings, any worsening of the rating over the last 12 months, and the comparison between your exposure and the estimated operating credit line. The reclassified financial statement is in the Decisione tier (49€). A missing data point remains absent, never estimated.

The micro-product Rating and operating credit line (9.90€) shows only rating and estimated credit line, without the alerts on net equity: for this reason, with a loss-making customer, the Verifica report is the better choice. To read the rating see how to read a company's credit rating. Neither of the two says whether the customer will pay.