The war in Ukraine is hitting large parts of the economy with full force. There is hardly a company that is not directly or indirectly affected by the consequences. “Cash is king” is especially true in crisis situations, and liquidity management is a vital instrument for making liquidity bottlenecks transparent or averting insolvency if possible. […]
Some companies take what feels like an eternity to prepare their annual financial statements. Other companies have prepared their annual financial statements one month after the balance sheet date – often also certified by the auditor. The “fast close”, i.e., the rapid preparation and – if necessary – the audit of the annual financial statements, provides stakeholders with timely information on the company’s assets, financial and earnings situation. Whether banks, suppliers, or management – up-to-date reporting is a competitive advantage and thus a real SME issue. How do you achieve high speed for your annual financial statement?
“Will the company continue? What do you mean? Yes, what else?”
This is a typical reaction of many managing directors when they are asked about the problem of whether a running business is to be assumed in a valuation of the company. The reason for this question may be overindebtedness or payment problems. In this case, the regulations of insolvency law give reason to assume that the company (GmbH, AG, GmbH & Co. KG) can no longer be continued. Therefore, in this situation, the management responsible for preparing the annual financial statements should not rely on the fact that it can continue to prepare the balance sheet at going concern values. It must first be ensured that the going concern premise is met, i.e., that it can be assumed in the evaluation of the company’s activities that it can be continued.
The new year marks the beginning of the annual financial reporting season. All companies that prepare financial reports have to deal with the issues surrounding the preparation of their annual financial statements. Even if many of those responsible are not aware of it: accounting compliance forms the foundation here. It ensures that all relevant accounting rules are recognized and applied, and that the company’s assets and liabilities are valued correctly, so that the annual financial report is prepared in accordance with the rules.
The topic of sustainability is gaining strength. The background is the EU Green Deal, with which the European states want to gradually make the EU climate-neutral by 2050. The financial markets have a decisive role to play in the implementation of the climate policy goals, as they promote and anchor the issue of sustainability. “Sustainable finance” is the new buzzword. It means that sustainable aspects of a company regarding the environment, social issues or corporate governance are included in the decisions of financial actors. Sustainable finance is synonymous with supervision and regulation of the financial markets towards more sustainability in companies – and that also in small and medium-sized enterprises. In the future, banks will give more weight to sustainable aspects when granting loans, regardless of the size of the company, and make sure that their loan portfolios are in line with the EU taxonomy, which will come into force in 2022 and place greater emphasis on environmental aspects.
… and how that can be prevented with active account management!
Many companies are not aware that account management is the reflection of the company’s overall situation.
In difficult times – such as a tense overall economic situation – this can be a downfall. But: it doesn’t have to be that way if you pay attention to details.
Stay in control of your trade and preserve financing options!