Survey: Few Expect Long-Term Problems



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

The crown crisis had a “strong” impact on his business by 41 percent and a “very strong” impact by 27 percent, be it in terms of the economic situation, loss of sales, internal processes, short-term 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 7 to 9 in Austria among some 1,100 companies. Members and business partners of different sizes of companies, mainly UPRs and SMEs from industry, commerce, and the service sector were surveyed.

A month after the start of the “shutdown,” the survey data shows “a dramatic deterioration in financial stability within the national economy”: a few weeks before the crisis, 63 percent of the KSV1870 survey found that its commercial situation was “very good” or “good”, now only 31 percent do.

Assessment of the business situation (data: KSV1870, graph: Lampert)

Endless cash

Just yesterday KMU Research Austria published an analysis of the question of how long national 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 paying?”

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

However, no detailed questions were asked about whether this information relates to resistance with or without state aid.

Only 14 percent don’t expect long-term problems

The situation is particularly “dire” for four percent of Austrian companies, where all financial resources have already been exhausted, reports KSV1870. From the current perspective, only 14 percent do not expect long-term problems.

Nine percent of respondents have already received financial aid from the state. 24 percent have already applied, but are still waiting for support to arrive. Another 28 percent continue to seek financial aid. From the current perspective, 34 percent will not claim such support, according to KSV1870.

Investment projects are often scaled back

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

Now almost 13 percent want to fully invest as planned. According to the survey, 22 percent sometimes have to make significant cuts, but at least they want to make individual investments as planned. Another 21 percent said they had to give up investments entirely this year. About 29 percent have yet to make a final decision.

Uncertainty about the time after the crisis is worrying

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

“Also, the issue of short-term work (40 percent) is a huge headache for companies. Also, the concern that trading partners can no longer meet their payments (32 percent) and that their own liquidity will falter.

Other possible responses were the loss of the commercial base, the financial fill and the debt.

46 percent noticed a first change in customer payment behavior. This is usually the case for late payment of invoices and business partners who, at least in part, do not resolve pending 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 in the short term, says Ricardo-José Vybiral, CEO of KSV1870 Holding AG.

But as an entrepreneur, just trusting him “would be a completely wrong approach.” Vybiral believes that companies “must now begin to develop and implement visionary strategies at the latest to ensure long-term economic survival.”

What does that mean specifically? “As a company, I may have to find out more about my strengths now 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 adapt so that I can later make my products or services available faster? Do I cover the customer’s needs with my services? “

The question of financing.

The Austrian economy has performed well overall in recent years and the equity index has continuously increased. Businesses are now benefiting from this. “Many companies try to finance investments using their own capital and cash flow,” says Vybiral.

“At the same time, however, alternative options should also be considered: for example, if I get investors on board or if I want to establish cooperations to meet the changing needs of clients.”

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