How medium-sized companies can secure their liquidity
The economic slump is causing cash flow bottlenecks for many SMEs. A large percentage of SME’s have to re-finance their business in order to remain solvent.
Around 45 percent of German SMEs are under threat of closure. Restaurants, travel agencies, exhibition stand builders etc - almost all industries are affected. According to a study by Munich Strategy, 35 out of 100 businesses were already in difficulties before the Corona crisis, but now the lockdown is forcing another ten percent of them out of business.
"In these coming weeks, every cent counts for small and medium-sized entrepreneurs," says Katrin Grunert-Jäger. Never before has the saying „Cash is King“ been more important. According to the Katrin, a financing expert and a Management Angels interim manager, companies have to plan ahead: "If you have meaningful reports on your inflow and outflow of cash on a daily basis, you can take the right measures and plan a financing strategy. Agreements with customers and suppliers are one of the key factors in solvency, It also makes sense to finance the purchase of goods through a financing company, and it is advisable for managers to waive all forms of dividends and bonuses.
Entrepreneurs also gain liquidity by exhausting credit lines and new sources. "If things get tight, talk to your bank quickly about an increase in your overdraft facilities and other financing options," says adviser Fuat Akar, head of Prozessreich's SME consultancy.
"Since the beginning of the COVID-19 crisis, SMEs have been increasingly asking for financing experts to help them get through the troubled months safely," says Erdwig Holste, Managing Director of Management Angels, a member of the WIL Group who provide executive interim managers. Holste says „what is needed now is transparency of the current financial situation and external know-how to build a survival strategy“: "Interim managers have the knowledge and expertise because they have experience through many varied situations, such as during the dotcom crisis in 2000/2001 or the financial crisis in 2008/2009"...
Katrin Grunert-Jager is an Executive Interim Manager from Management Angels Hamburg.