Your company is in a financing crisis if it does not have enough funds for its payments and it is unable to get new funding on time. You should constantly review your company's accounts so that you can notice any signs of a financing crisis. If there are signs of a financing crisis, you should take immediate action to prevent the crisis. If your company finds itself in a financing crisis, you should seek help as soon as possible.
One of the signs of a financing crisis is that your company cannot pay its invoices on time. Your orders and the demand for your products may also decline. Competition for customers may get tougher and the prices may go down.
The inward cash flow may not be at the same level as before, profitability may weaken and your company may post a loss. When other parties notice your payment difficulties, they may shorten the payment periods of their invoices and take more effective debt collection measures.
When your company is threatened by a financing crisis it may no longer be able to manage its liabilities in the same way as before. You may run into deeper solvency problems and the situation may become critical. Your company's collateral may also lose some of its value and getting extra funding may become difficult. You company may post a loss.
Weak prospects in your sector and the fact that your company is become less competitive may also be indications of a financing crisis.
Your company may never face a financing crisis if you keep its finances in good shape.
You should actively monitor your company's accounts and make cash flow calculations on a regular basis. You should also use other calculations and indicators when monitoring your company's financial situation. You should watch your company's liquidity, solvency and profitability with particular care.
Make sure that your company has funds for at least three months’ payments. This allows your company to manage unexpected expenses and fluctuations in revenue.
You should constantly watch whether there are any signs of a general financing crisis in your company and its sector. React to any problems without delay. The earlier you take corrective action, the better are your chances of avoiding a crisis.
Advice for preventing a financing crises is available in the Talousapu service of Enterprise Finland and in your regional business development company.
If your company is in a financing crisis, you should take a close look at its finances. Examine the adjusted balance sheet to determine what your company really owns and how much debt it has to different parties.
Review the profitability of your company with the help of the latest financial statements and the accounts of the financial year in progress. It may be necessary to make changes to prices or the product range so that you can improve your profitability.
In a crisis situation, you may first ask more time to pay your invoices, taxes and employment insurance contributions. You may also agree with your bank on instalment-free months for your loans.
You can also ask your customers to pay their invoices more quickly. You should sell items in your inventory as quickly as possible. If necessary, you should convert your company's assets into cash. You may also have to lay off your staff if the situation so requires.
If nothing else helps, you may file for corporate reorganisation or seek other debt arrangements.
Advice for dealing with a financing crises is available in the Talousapu service of Enterprise Finland and in your regional business development company.