Business and private assets are closely linked in many SMEs. Assets need structure to prevent a company from becoming a private risk. Careful liquidity planning will help you to make the best possible decisions for your company – even in uncertain times.
Key questions for entrepreneurs
The coronavirus crisis has hit companies hard in a variety of sectors. Liquidity planning is also affected by short-term slumps in revenue, while certain fixed costs remain inflexible.
In the current environment, managing net working capital is therefore of utmost importance. Whatever your situation, we recommend observing the markets closely and checking whether sales channels or suppliers should be called into question and possibly even replaced. This will allow you to avoid undesired disruptions to the value chain.
Obtaining a bridging loan may involve losing a degree of financial flexibility. Operating costs may have to be reduced, and investments and dividend payments may have to be sacrificed.
Foresight is essential for liquidity planning. To ensure optimal planning, it is therefore important to have detailed knowledge of liquidity flows (receivables, payables, stocks) for the months ahead. In addition, important scenarios should be played through, and strategic and tactical options examined.
Here, too, a detailed analysis of the value and supply chain and appropriate liquidity planning will establish the basis for increasing planning certainty and flexibility. You can use one of our specially designed tools, for example:
The rule is that bridging loans may only be used to cover running costs. They may not be used to pay out dividends, refund capital contributions or make new investments – with the exception of replacement investments.
The restrictions on investments are currently being debated by the Federal Council. In the future, it may also be possible to use bridging loans for investments, for example to expand production.
As a recipient of a bridging loan, you can therefore only make investments once the bridging loan has been repaid. This means that you should repay the loan as quickly as possible so that you can regain your entrepreneurial freedom.
For investments that you cannot postpone, you should consider using equity or traditional bank financing.
Check whether all your products help cover fixed costs and whether you can optimize rental and personnel costs. Other ways of conserving liquidity are:
- Leasing capital goods
- SERV loans
- Technology fund
- Adjustment of payment terms
- Partial sales
What next for COVID-19 loans?
Have you received a bridging loan due to the coronavirus crisis? UBS is standing by Swiss SME as a strong partner
Liquidity plan template
Gain an overview of your liquidity situation step by step and identify financing gaps at an early stage.