Insolvency filing obligation in force again!
Since May 1, 2021, the obligation to file for insolvency applies again without exception. Companies should take an honest look at their finances so that they know where they really stand. But that is not the end of the story. To prepare well for the end of the pandemic, further measures are necessary.
The restructuring and insolvency consulting association Bundesverbands Deutscher Unternehmensberater e. V. (BDU), headed by Burkhard Jung, has issued a statement on this matter in the past few days. The five central building blocks for a successful restart after the pandemic are:
1. Cash review and planning
For an entrepreneur, it is necessary to analyze the own situation appropriately. In particular, it is important to ask whether, for example, your liquidity is only positive because tax offices, social security agencies and/or landlords have deferred their claims. If this is the case, it is important to know when these amounts are due. And don't forget sound planning: If you want to make sensible changes to what you have, you need to know where you stand and how you will develop without and with measures.
2. Manage restart
When the economy gets back on track, working capital requirements will initially rise and liquidity will be drawn down as a result. The situation could be exacerbated by the fact that suppliers tend to have short payment terms due to cautious trade credit insurers (WKV). Caution: the WKV's protective shield expires on June 30, 2021. You should therefore work out solutions for this potential bottleneck at an early stage.
3. Approach reorganization
Even if the outlook is not yet clear for all sectors of the economy: You have to tackle the „new start“ now. By next year at the latest, even the sectors particularly affected by Corona will have to show market rates of return again in order to remain financially viable.
4. Transformation despite but also because of the pandemic
The transformation of the economy, and therefore of business models, has been accelerated by the COVID 19 pandemic. Even if your main focus in recent months has been on the survival of your business: Now you need to widen your gaze again and consider what you can do to make money in the future. Megatrends, such as changes in mobility or purchasing behavior or operating in platform economies, are already influencing business activities. You should be able to answer the question of a digital workflow or adapting to digitized business models. This is where the future viability of your company will be decided.
5. Invest now
As entrepreneurs, you have rightly tended to keep your money together in recent months and secured your liquidity in part through corona financing. There was - actually or supposedly - a lack of money for investments. But beware: This should not lead to you not or not consistently carrying out investments that support the transformation or are even necessary for it. On the contrary: Conduct targeted discussions with your principal bank or alternative financiers in order to be able to make the investments that are currently necessary.
Burkhard Jung and Stefan Weniger talk about the most important measures to ensure that you can really get going again with your company.