In response to current events, we are giving you a few pieces of advice and tips on how you can secure or optimize the liquidity of your company despite (or perhaps because of) the Corona crisis. We wish you safe business and above all: Stay healthy!
COVID-19 package of measures by the Federal Council
As we now know, “social distancing” - washing your hands regularly and disinfecting them - are central measures to protect our health and that of our fellow human beings from the new coronavirus. But how do you behave in crazy times like these in order to navigate your own company as safely as possible through the Corona crisis?
Admittedly, for the companies directly affected by the official lockdown or travel restrictions and for freelancers, the situation is dramatic, in fact simply a nightmare. There are no patent remedies either. With such an extent of event cancellations, booking cancellations and general operating bans, nobody could really expect and prepare for it, especially since even proven experts played it down for too long.
Cash
In addition to short-time work allowances, the Federal Council currently has around 400 applications or 000% of all employed persons, a third of which are from the catering and hotel industry (as of March 8, 24.03.2020), with one Package of measures to cushion the economic consequences Promised those affected quick and unbureaucratic financial aid so that entire economic sectors and systems do not collapse due to a lack of liquidity. The aim of the currently discussed aid package totaling 40 billion francs is to maintain employment, secure wage payments and also support the self-employed.
In the Federal Council notification it says specifically: “Affected companies should quickly and easily receive loan amounts of up to 10% of sales or a maximum of CHF 20 million. Amounts of up to CHF 0,5 million are to be paid out immediately by the banks and 100% guaranteed by the federal government. Amounts in excess of this should be guaranteed by the federal government at 85% and require a brief bank check. The loan amounts of up to CHF 0,5 million should cover over 90 percent of the companies affected by COVID. " The corresponding modalities would be published this week, according to the announcement. It is best to contact your bank if necessary. Use this help!
Deferred payment of social security contributions
In addition, companies affected by the crisis can apply for a temporary deferred payment for social security contributions (AHV / IV / EO / ALV) without interest. If the total of the wages has decreased significantly, the amount of the contributions on account can also be adjusted to the AHV / IV / EO / ALV. Also applies to self-employed who have suffered a slump in sales. Applications must be sent to the AHV compensation office.
Liquidity buffer in the tax area
For value added tax, customs duties, special consumption taxes and incentive taxes in the period from March 21, 2020 to December 31, 2020, the interest rate will be reduced to 0,0 percent in order to be able to offer companies extended payment periods without default interest. Ditto for the direct federal tax (from March 1, 2020 to December 31, 2020). Ultimately, the federal government should provide its suppliers "... pay out as quickly as possible, without using the payment deadlines ..." to strengthen the liquidity of our own suppliers.
Eigene measures
The time should also be used to renew your own company. Now is the time to tackle work, modernizations or restructuring that is long overdue, and to develop and launch new concepts, new products and services. A chance to emerge stronger from the crisis!
Especially the affected restaurants, for example, shouldn't just stay idle and renew their restaurants, the menu cards or the kitchen if necessary. Not standstill, but innovation is required! Individual restaurants even reacted spontaneously and temporarily converted their restaurant into take-away's. Creative ideas are now in demand. Is the interior still contemporary? Could the place be made a little brighter and more inviting? Do the menus meet today's culinary wishes of the guests? Anyone who now and then follows the programs with the “restaurant tester” and star chef Daniel Baumann knows what is meant.
But let's not kid ourselves. Hard times are ahead of us. The word “recession” was a topic in financial circles even before the Corona crisis and that still seems to be the most harmless specter of all possible future scenarios. One thing is clear today: we will have to deal with the issue of crisis management long after this pandemic and many things will no longer be the same as they were before ...
Even for companies that are not confronted with the situation in such a drastic way, it is important to be extremely vigilant. Right now, in uncertain times, one of the most important measures for them is maintaining their liquid funds.
In normal times, careful liquidity planning or liquidity management is a central component of good corporate management with the main goal of ensuring the solvency of a company at all times. If a crisis threatens, financial experts warn to increase the level of liquidity.
So here are a few more tips:
Working capital and cash flow management
- Be sure to use discounts on supplier invoices, or always try to negotiate a discount and then pay within the discount period granted, even if you have to finance the payment with a bank loan, even with relatively high effective interest rates and despite processing fees or Bank commissions, in the vast majority of cases, are worthwhile for you and result in a profit.
- Reduce the capital tie-up within the value chain through an adapted warehouse and smaller intermediate stocks, thanks to a flow-oriented process of the production steps.
- If possible, agree shorter payment terms with your customers. Avoid high receivables and invoice your orders immediately after they have been fulfilled.
- Streamline your dunning process. Two reminders are more than enough these days and registered letters are usually a waste of time and money. In the case of large demands, a call can be more effective instead of issuing a warning. If only to find out the reason (or excuse) for not paying. However, it would be even better if you proactively call your customer immediately after the invoice has been delivered and clarify with them whether the order has been carried out to their satisfaction, whether they have received the invoice and whether everything is clear and thank them for a punctual transfer.
Just no false inhibitions! In this way, you gain an enormous amount of valuable time. And be consistent! Don't trust too much that you've known the customer for years. Especially in these days of general, total chaos, many of these "friendships" have already broken ... In case of doubt, especially if the credit check explained in the following point "Credit Management" is critical or even negative, ask for a deposit or the full prepayment.
Credit management:
Anyone who does not consistently check their customers for creditworthiness using online tools should not be surprised if they fail to make payments. Large business customers with recurring orders and ongoing outstanding debts should be subject to constant monitoring, also to see their payment habits. Like an early warning system, this enables you to recognize whether your customer is suddenly struggling with liquidity problems and whether he is increasingly paying his suppliers later. You will not experience any nasty surprises and you can take measures in good time instead of just having to take note of your customer's bankruptcy. Your creditors may do the same with you - your bank, for sure.
And yes, of course, professional debt collection, ideally through a specialized debt collection company, is part of profitable credit management.
We are at your disposal with words and deeds.
