As we write this text to you, we have already received hundreds of calls. The number one question that most companies in the current Corona crisis are concerned about is: How do I lead my company safely through the crisis?
To enable you to act quickly and reliably in the current situation, we have summarized the 8 most important recommendations and measures to secure your business in a compact file:
We offer you structured methodological construction kits, IT tools and action plans for all eight recommendations for action presented. This enables us to reduce set-up times virtually to zero, which in turn enables the fastest results. Currently, we are already implementing these measures for nearly all our current mandates. We are also experienced in assisting in the securing of alternative financing options.
So, what applies in particular to medium-sized companies like yours?
Until government measures can take effect and legal certainty is established, companies must protect themselves consistently and act immediately. The action plan we have drawn up can roughly be divided into eight steps, although, due to the high time pressure, as many fields of action as possible must be dealt with in parallel as possible, while keeping clear responsibilities. In order to give you an outlook on our guide, we will go into the first two steps in more detail below:
Step 1: Rapid Action
Many companies have already had to implement this first step in the first two weeks of the corona crisis, sometimes without any significant preparation. These include:
- the effective protection of employees
- the rapid establishment of task forces to ensure the maintenance of business operations, at least in a limited "emergency mode.”
- the development of a crisis plan
- the timely and targeted internal and external communications: The need for coordination with customers, suppliers and above all, banks and authorities is enormous during the crisis.
While large corporations often have established essential mechanisms and structures, such as risk management, crisis management teams, globally networked collaboration platforms, etc., and thus have them ready for short-term use, the situation is often quite different for smaller companies:
- Home-Office work environments are partly not available.
- Remote access to legacy systems is not possible or not secure.
- essential functions and responsibilities are only partially filled.
The list of past omissions – often due to economic circumstances – is unfortunately long. In recent weeks, for example, available laptops have become scarce on the market because many companies still had to quickly increase the number of mobile workstations and thus home office applications and had to procure hardware and software at short notice and make them operational.
Step 2: Creating transparency
This step also currently presents companies with massive challenges due to time pressure and the frequent lack of active control processes. The all-decisive characteristics for securing the company's existence in the crisis are liquidity and stable financing. It is true that numerous changes, including in civil and insolvency law, are currently creating the conditions for short-term liquidity protection, as well as, other stabilization measures. KfW will be the main facilitator of the short-term liquidity supply. However, various aspects have to be taken into account here:
- As things stand at present, even the modified KfW programs provide for only partial risk assumption by the KfW, between 70% and a maximum of 90%.
- Access to the programs is therefore only available to those companies that also have access to private external capital.
- For companies that were already in trouble before the Corona crisis, there is also the fundamental question of eligibility. According to current regulations, only those companies that were not in financial difficulties on 31 December 2019 can apply for a loan.
- This must therefore be demonstrated by the company through means of a financial status and planning comparison with/without crisis effects. Crisis scenarios are to be described and simulated, contributions of the shareholders in the past and possibly in the future are to be proven.
- A confirmation from a neutral party that the business model is viable is also required. This can be done, for example, by external service providers (auditors, restructuring consultants, etc.).
Since time is extremely pressing for many companies, especially when "pre-existing conditions" in the figurative sense are present, full transparency and the best possible simulation capability regarding financial and liquidity planning is now required above all as quickly as possible. These include:
- 13-week liquidity forecast with and without crisis effect
- all open items in the accounts payable and receivable
- Evaluation of legal contracts
- Transparency with regard to ongoing projects and related short-term expenses
- possible effects of deferrals, e.g. sales tax, social security contributions, bills of exchange, loan repayments, interest expenses, rents
- Effects of personnel measures, e.g. short-time work, termination of fixed-term employment contracts, etc.
- Quantification of possible financing gaps and resulting financing requirements.
Here you will find the complete overview of our guide:
Do you have any questions? With the experience of over 900 successful projects, we are proven restructuring and turnaround experts and would be happy to assist you at any time with all our expertise. Please contact us!
