April 17, 2020 – In a survey by KSV1870, two thirds of around 1,100 companies speak of the strong or very strong effects of the corona crisis on their economic situation. The proportion of those who rate their business situation as good or very good has halved within a few weeks. In every second company, cash is sufficient for three months or less.

The corona crisis had a “strong” impact on their business in 41 percent, and “very strong” in 27 percent, be it in terms of the economic situation, loss of sales, internal processes, short-time work or a changed business model. Just under three percent said they were not affected by the current situation at all.

This is the result of a survey carried out by the Credit Protection Association of 1870 (KSV1870) from April 7th to 9th across Austria among around 1,100 companies. Members and business partners of different company sizes, mainly EPUs and SMEs from industry, trade, commerce, service sector, were surveyed.

A month after the start of the “shutdown”, survey data shows “a dramatic deterioration in financial stability within the domestic economy”: A few weeks before the crisis, 63 percent of the KSV1870 survey found their business situation to be “very good” or “ good ”- now only 31 percent do it.

Endless cash

Just yesterday, the KMU Research Austria published an analysis of the question of how long domestic SMEs have liquid funds in the event of a total loss of income and without state aid (Insurance Journal April 16, 2020).

In its survey, the KSV1870 specifically asked about the current situation: “How long will your liquid assets, if the crisis continues, be sufficient to continue to be able to meet payments?”

Result: 30 percent stated that the liquid funds are currently only sufficient for a maximum of three months. At 14 percent, the current financial reserves seem to have been used up in a maximum of four weeks, at just over five percent in a maximum of two.

However, no detailed question was asked as to whether this information relates to stamina with or without state aid.

Only 14 percent do not expect long-term problems

The situation is particularly “serious” for four percent of Austrian companies, where all financial resources have already been used up, reports KSV1870. From today’s perspective, only 14 percent expect no problems in the long term.

Nine percent of those surveyed have already received financial aid from the state. 24 percent have already applied but are still waiting for the support to arrive. A further 28 percent are still looking for financial help. From today’s perspective, 34 percent will not claim such support, according to KSV1870.

Investment projects are often cut back

The current situation also depresses the willingness to invest: at the beginning of the year, around every second company had planned to make investments in a similar dimension to 2019, and just under a quarter wanted to invest even more.

Now almost 13 percent want to invest fully as planned. According to the survey, 22 percent sometimes have to make significant cuts, but at least want to make individual investments as planned. Another 21 percent said they had to forego investments entirely this year. Around 29 percent have not yet made a final decision.

Uncertainty about the time after the crisis is worrying

What are the biggest concerns and dangers right now? Up to three answers could be selected. At the forefront is the uncertainty of how to proceed after the Corona crisis (47 percent).

“In addition, the issue of short-time work (40 percent) is a major headache for companies. Likewise, the concern that business partners can no longer meet their payments (32 percent) and that their own liquidity will falter.

Other possible answers were loss of business base, financial padding and debt.

A first change in customers’ payment behavior is noticed by 46 percent. This is most often the case of late payment of invoices and business partners who, at least in part, do not settle outstanding claims.

“Start developing visionary strategies now at the latest”

The package of measures to support companies is a “good basis” for them to make ends meet at short notice, says Ricardo-José Vybiral, CEO of KSV1870 Holding AG.

But as an entrepreneur, just relying on it “would be the completely wrong approach”. The companies, Vybiral believes, “must now begin to develop and implement visionary strategies at the latest in order to ensure economic survival in the long term”.

What does that mean specifically? “As a company, I may now have to find out more about my strengths and what I want to focus on in the future. And what it takes to achieve my defined goals, ”Vybiral told the Insurance Journal.

“Are the working conditions still up to date, do I have to drive digital development internally and externally even faster than before? Does this mean that internal processes and structures have to be adapted so that I can subsequently make my products or services available more quickly? Do I cover customer needs with my services? “

The question of funding

Austria’s economy has been doing well overall in recent years and has continuously increased the equity ratio. The companies are now benefiting from this. “Many companies try to finance investments using equity capital and cash flow,” says Vybiral.

“At the same time, however, alternative options should also be considered: for example, whether I get investors on board or whether I want to enter into cooperations that may make it possible to cover changing customer needs.”


Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.