consequences coronavirus

Business economic considerations regards the coronavirus

Business economic considerations regards the coronavirus

11 March, 2020

It seems that the consequences of the coronavirus on the worldwide economy and Noord-Brabant region will be enormous. These consequences will be having its impact on the financial results and the development of the liquidity of businesses. To prevent that liquidity pressures will arise because of stagnating revenues, it is recommended to take action now. We provide you with an overview of the business economic considerations of the coronavirus.

Areas closed because of coronavirus

Huge parts of China and South Korea are completely halted and borders are closed hermetically. Italy has closed areas and calls all residents to stay at home. Also in the Netherlands we experience the consequences. The measures against the spreading of the virus follow each other in rapid succession. By now, in Noord-Brabant the advice is to work at home as much as possible, especially in case of symptoms of a cold. Current news can be found here.

Consequences for revenues and production capacity

This will have impact on the revenues of businesses in the region of Eindhoven. Production capacity decreases because of forced sick leave, unproductiveness of those who stay at home, the standstill of international trade or the absence of the necessary supplies from Asia, Italy or Germany.

Measures to take as a company

For most companies, the above will have its impact on the financial results and the development of the liquidity. It is possible to anticipate on the potential developments by, for example, taking (one of) the following measures:

  • Scale back of the flexible layer of personnel;
  • Application for the regulation for working time reduction;
  • Building up strategic stocks, possibly financed with alternative financing methods when bank financing is not possible. Also when your business stays profitable, it is likely that the working capital requirement increases by longer order lead times;
  • Starting consultation with your financiers to discuss the consequences of stagnating revenues for the financing agreements. It might be possible to agree on suspension of repayment obligations.

 

Financing by holding company

When you are considering to finance the operating company by the holding company, make sure that there is made sufficient documentation of the agreement(s) including the provision of security by the operating company.

Application for regulation for working time reduction due to coronavirus

To qualify for the regulation for working time reduction and to obtain a permit in this respect, you must have 20% less work for a minimum of 2 weeks for the total business compared to the usual situation. You apply for the permit at the Dutch Ministry of Social Affairs and Employment (SZW). In case you meet the conditions for the regulation for working time reduction, you obtain a permit for the maximum period of 6 weeks. The permit could be extended three times up to a maximum of 24 weeks.

A sufficient substantiation of the need for the working time reduction is of great importance for the smooth processing of the application. We will be happy to assist you with the substantiation and the application in general.

Are you looking for a discussion partner with regard to the measures your company could take? Please contact one of our recovery advisors:

Ronny Buiting | +31 (0)40 240 9415 | rbuiting@joanknecht.nl
Frank Driessen | +31 (0)40 240 9438 | fdriessen@joanknecht.nl
Christian van der Heijden | +31 (0)40 240 9422 | cvdheijden@joanknecht.nl
Georges de Meris | +31 (0)40 240 9476 | gdmeris@joanknecht.nl



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