The effects of the coronavirus on companies cannot be estimated. The uncertainty is great. In times of crisis, a functioning controlling system is needed. Our fiduciary experts will be happy to show you the possibilities.
The effects of the coronavirus on companies cannot be estimated at this time. The earnings situation and liquidity of many companies will suffer. The uncertainty is great. It can be assumed that many sectors will come under pressure or are already under pressure. In such times, a functioning controlling system is required.
Controlling instruments are indispensable in times of crisis
The planning, management and control of all corporate divisions is essential for survival. With professional controlling, which shows business figures in detail, the management has a good management tool, not only for the current crisis period but also for the future. In practice, so-called "best case", "worst case" and "normal case" variants are often developed.
Good controlling is a decisive success factor
A functioning controlling system should show the management operational options for action. The business and financial areas are to be continuously examined and the consequences for the company as a whole are to be presented. Effective controlling, from budgeting to meaningful reporting, is essential for the success of your company.
Decide on crisis measures
A budget forecast as a control element
We recommend that you decide on crisis measures as quickly as possible and present them in a reliable budget forecast. Make this forecast for the next 12 months. With the implementation of a budget forecast, you introduce a control instrument in your company that will take you through these turbulent times calmly.
Nobody today can predict when the pandemic will subside or how long it will last. Past events have taught us that the economy will suffer for some time. "Liquidity is the oxygen of your business": this is the motto you should follow and take appropriate precautions, because liquidity is the crucial element to keep the business going. The most common cause of bankruptcy for an SME is a temporary liquidity problem. In this regard, we refer you to the various government aid programmes.
Accept liquidity assistance from the Swiss Confederation
As of today, companies in distress will receive bridging loans guaranteed by the Swiss Confederation of up to 10 percent of their turnover, or a maximum of CHF 20 million. See the following provisions on the Swissbanking website:
- Covid 19 credit: Amounts of up to CHF 0.5 million per counterparty will be paid out by the banks without complications and 100% guaranteed by the Confederation via guarantee organizations. The interest rate is currently 0 percent.
- Covid 19 Credit Plus: Amounts of over CHF 0.5 million to CHF 20 million are 85 percent guaranteed by the Confederation via guarantee organizations. This is subject to a prior, more comprehensive examination of the application by the bank. The maximum amount of the credit facility is CHF 20 million per counterparty. The interest rate is currently 0.5 percent on the loan secured by the Confederation.
The best way for companies to apply for liquidity assistance is to contact their house bank. All information on COVID19 bridging assistance can be found on the website of the Federal Department of Finance. Unfortunately only available in German, French and Italian.
Define crisis management team
It is also important that you set up a crisis management team in your company.
- Together, identify the interruptions and restrictions in production, sales or administration.
- Be prepared in case employees fall ill and have to stay at home.
- Talk to strategic business partners. Can you help each other out if necessary? If so, clarify which contractual obligations would then have to be fulfilled.
- Get in touch with your software partner. Perhaps your planning tool can easily be adapted to the changed circumstances.
Commercial law options for extraordinary situations
Article 960a para. 4 CO as well as Article 960e para. 3 item 4 CO offers the possibility to create a provision to ensure the long-term prosperity of the company.
If you have not yet completed your annual financial statements for 2019, consider the possibility of this provision. By creating the provision, the net profit is reduced. In accordance with the current practice of the cantons and the Confederation, this provision does not constitute a business-related expense. However, given the current situation, it cannot be ruled out that tax practice will also change. Another proven means of securing liquidity is to waive the payment of a dividend.
We see the current crisis situation as an opportunity. Our economy is thus - hopefully - experiencing a digitalization push. Let's use the opportunity to use electronic planning tools in the company. So let's remain optimistic and set the right course to emerge from this crisis stronger.