COVID-19: Short-term liquidity

19. March 2020 | Reading Time: 3 Min


The coronavirus is posing huge challenges for the entire global economy. It is obvious that the measures taken by the Austrian Government (along with all other countries within the EU and across the world) to restrict every day and working lives will very shortly affect business activities. The fact that both the Austrian Government and the European Union are offering – and will indeed continue to offer – rescue packages is both laudable and absolutely necessary.

However, it must be made clear to every company- irrespective of whether they be a single-personbusiness, a middle-sized business or a large company – that the current sales and profit forecasts can probably not be sustained as they are. And above all the topic of short-term liquidity, whatever industry, is becoming a great challenge, as, in order to express it with a medical term, “Liquidity is the bloodstream of every company”.

What can be done?

On the one hand, wait and hope for the rescue packages from the Government. This is understandable and correct, but it can be too late. In addition, it is not yet clear which specific lost revenues are to be, and can now really be, covered by the Government’s rescue packages. Therefore, a very short-term analysis of the expenditure and revenue is necessary, and this analysis should flow into a short-term financial forecast including liquidity planning.

Financial forecast: secure fast liquidity in case of emergency!

Some important key points of such an analysis can and/or should be:

  • Rapid analysis of the sales and profits that have been planned until now
  • Rapid analysis of the liquidity and all liquidity buffers, which can be implemented at short notice –
    how long will these last in an emergency?
  • Rapid analysis of the order backlog / the order level / the status of services booked – what of these
    can wait, which have to be done, what can also be dealt with by a reduced staff, which customers
    can, if necessary, provide (additional) advance payments?
  • Rapid analysis of the supply chains – is there a risk that the orders cannot be implemented
    if the input factors are not received?
  • Review of outstanding outgoing invoices and active demands for payment
  • Can the issuing of outgoing invoices be accelerated so that faster receipt of payment is ensured?
  • Are there enough personnel resources guaranteed for the next few weeks –
    Keyword: short-time work – who will work reduced hours and who not?
  • Effect of short-time work on the liquidity / personnel costs
  • Review of one’s own liabilities. Where can payments be deferred?
    Which supplier has perhaps a greater buffer and can show some understanding?
  • Which payments to authorities can be suspended, deferred or reduced
    (VAT, Corporate Tax, Income Tax, Social Security, Chamber Contributions, etc.)?
  • Which of the planned investments can be postponed?
  • Can the rent for business premises be temporarily deferred or paid in instalments?
  • Are there outstanding credits from authorities – e.g. for research premiums or repayments
    for advance tax payments?
  • Are there possibilities to structure ongoing loans in a more favourable way – e.g. to reduce or defer interest?

TPA can assist you to prepare your financial forecast

The questions regarding the ensuring of liquidity are certainly far more complex depending on the industry. But as soon as the significant points and questions have been discussed, these results can be entered into a financial forecast with integrated liquidity assurance and so help ensure the continued existence of the company. This documentation can then also help if financial discussions with banks and investors become necessary.

Furthermore, every entrepreneur and/or every company must clarify which opportunities can arise
from the current situation. This should be a further step in the comprehensive company analysis.
Your TPA advisors are glad to offer you support in the analysis and preparation of your financial
forecasts and liquidity assurance, and they are here to assist you with any financial discussions.

Stay healthy!





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