You don‘t always have to act economically, but you do have to know the effects of your actions. Transparency is the key to a clear view of your company’s net assets, financial position and results of operations. Transparency shows the opportunities and risks in your company.
Transparency is one of the key factors in successfully managing a company. This applies equally to economically good and economically challenging times. The only difference is that a lack of transparency in economically challenging situations makes corporate management significantly more difficult and its absence can have far-reaching consequences. When company management acts on the basis of facts and figures, it creates a foundation for a future-proof organization. Ultimately, management based on facts and figures is an elementary component of good corporate governance.
Public funding supports small and medium-sized enterprises in their development. But which funding programmes are suitable for your own company? And how can the right funding be identified, or several funding programmes be combined? Entrepreneurs who deal with this topic quickly realise that getting an overview and making the right choice for their own company is a task that cannot be accomplished in passing. Finding one’s way through the funding jungle is not always easy.
Do you have a majority shareholding in other companies? Are there economic interdependencies between parent companies and subsidiaries? Then your group of companies has reached a level of complexity where it is worth considering consolidated financial statements for the group of companies. Viewing all the companies in the group as one company (consolidation) shows the economic situation at a glance. This makes it easier to control the group of companies. In many cases, banks or investors demand more comprehensive reporting in the form of consolidated financial statements when the group of companies reaches a certain level of complexity, since individual observations are time-consuming and can lead to incorrect assessments without detailed information. And if a group of companies reaches a certain size, § 290 ff. of the German Commercial Code (HGB) applies. German Commercial Code (HGB), the obligation to prepare consolidated financial statements applies.
In the vast majority of cases, the financing of SMEs through bank loans is linked to the personal liability of the owners or managing partners. This is a standard collateralisation of commercial banks and savings banks, which is often justified with “If you don’t believe in your company, how can we as a bank? For the guarantor, the scope of liability resulting from the legal form of the company extends to the private sphere. If this constellation is not actively shaped, experience shows that there will be far-reaching consequences for the guarantor, but also for the company. In addition to liability for the company’s debts, there may also be restrictions on succession planning. The focus is on a clear financing strategy that includes the structuring of the liabilities side of the company as well as the conditions of the debt capital – including interest, collateral and covenants. Read more
“Financial communication” – many SMEs see it primarily as a task of listed companies. But it is of great importance, especially for small and medium-sized enterprises. Especially when a company is in a difficult economic situation. Companies that proactively implement transparent bank communication and thus build up a good relationship with their bank (creditor relationship) have a much better standing with their bank. Targeted financial communication with regular reporting improves capital access and conditions. It strengthens the bank’s confidence in its own company and can pave the way for better support overall.
The press releases are piling up: small and medium-sized companies are increasingly experiencing economic difficulties – many have concrete closure plans and are implementing them. The offers for sale are increasing. Energy shock, brittle supply chains, shortage of skilled workers and inflation are the reasons. Price increases are not only hitting their own profit and loss statements, they are also causing customers to hold back and lower sales. An analysis by the information service provider CRIF sees an increased risk of insolvency for around 300,000 companies in Germany. That is around 10% of the companies in Germany. The industries that are particularly energy-intensive have already shown significant increases in insolvency cases. This situation calls for attention and caution.
The planning of a company succession, the sale of the company or the departure of a shareholder: The company valuation can become relevant for very different reasons. Basically, the company value is an important criterion when a company is up for succession. The company value provides important guidance at all stages of the succession process: If an entrepreneur knows the company value at an early stage and if it turns out to be lower than desired, he may have sufficient time until the time of the planned sale to take suitable measures to increase the value. If the entrepreneur is weighing up various succession options, the company valuation is an important factor in the decision-making process. For example, in order to clarify whether the sum would be sufficient as retirement provision. Or to ensure fair distribution within the family succession. Or to discuss what tax effects an internal family succession would have. When it comes to a concrete sale, the company valuation is a critical decision-making basis for the negotiation talks.
No figures again? No up-to-date evaluations again? In many medium-sized companies, things are not running smoothly in the accounting department. The effort required to enter, print and check incoming invoices and receipts is often high and involves a lot of manual work. Staff shortages add to the stress. It is not uncommon for accounting to lag behind what is happening in the company. Then the entrepreneur lacks an overview of the economic development of his company – which makes decisions more difficult and involves risks. Every entrepreneur is familiar with the modern and sustainable solution, the digitalization of processes. However, the concrete implementation is lacking in many places. The digitalization of the accounting system is not a free skate for companies, but a duty, otherwise the company cannot be actively managed.
Digitization of accounting aims to automate routine activities and simplify individual process steps. And it succeeds quite pragmatically. Whether it’s invoice receipt, invoice approval, archiving or invoice issue, reminders or automatic account assignments: With the right tools, accounting processes can be managed efficiently, on a daily basis and transparently. To do this, the first step is to revise the processes: What needs to be changed, what needs to be redone and what can be retained? This is the core of digitalization in accounting, because if only the manual path of a paper invoice is digitalized, this does not lead to an improved process. In the course of digitalization, the opportunity should be taken to really improve processes and structures. Subsequently, based on the requirements, it can be clarified which tools can be used for the respective company. For example, this could be new accounting software, a document management system with font recognition. The right, GoBD-compliant tools significantly simplify the workflow through automated processes and can also be implemented as a first step as an isolated solution with manageable effort.
Digitized accounting works quickly, avoids errors and reduces the use of human resources. Cooperation with tax advisors, auditors and banks can be noticeably facilitated. On the other hand, management has an overview of the status of liabilities, receivables and its own liquidity through up-to-date evaluations. With a custom-fit solution, medium-sized companies can achieve efficiency gains and information advantages.
When THE MAK`ED TEAM supports its medium-sized customers in the digitalization of their accounting, pragmatic recommendations for action are developed on the basis of the individual starting conditions and the company’s goals. We have a high level of expertise in the establishment of new structures and the transformation of accounting and finance and know the decisive parameters for a successful and efficiently implemented digitalization.
Read more about accounting and digitalization here:
Accounting Compliance as a Basis for the Annual Financial Report
Ever thought of setting up a “bank”? That can be a smart move for medium-sized companies, too! There is a long tradition of companies setting up their own “bank” in the form of a lump-sum funded provident fund (pdUK). Legally, of course, it is not a “bank” in this case, but from a business point of view it is. This is why the pdUK is also known as the “entrepreneur’s bank” and was initially an instrument of large-scale industry for company pension schemes. But this model can also make sense for SMEs with 10 or more employees. If a company decides to set up its “own bank”, this brings many advantages for the workforce – and for the company itself. That’s why it’s becoming increasingly popular among small and medium-sized businesses.
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. […]
