The new Business Crisis and Insolvency Code, which came into effect on July 15, 2022, has brought a breakthrough in business crisis management. The main goal of the new decree is to safeguard companies in liquidity crisis and prevent greater damage to businesses that are beginning to show such signs.
What is meant by business crisis?
A state of crisis, occurs when a company has difficulty generating cash on an ongoing and irreversible basis due to a reduction in its economic capital or theabsence of cash flow. Business crisis can affect any type of company.
It may be due to:
- Endogenous causes
- Exogenous causes
What changes with the new enterprise code
The new law provides a series of measures to bring businesses out of the state of economic emergency. Also term bankruptcy, is replaced with judicial liquidation.
What are the warning signs according to Art. 3(4):
- Payroll overdue by 30 days amounting to more than half of the monthly payroll amount;
- Accounts payable 90 days past due and greater in amount than payables not past due;
- Bank and financial exposures 60 days past due, or more (by 60 days) than the credit limit if more than 5% of total exposures;
- One or more debt exposures referred to in Article 25-novies, paragraph 1 of the Ccii.
How to predict business crisis:
Companies will need to equip themselves with systems to detect the signs of crisis before it is too late. In a special way, the entrepreneur must organize to take timely actions necessary for rehabilitation.
Companies need to have information systems and platforms in place to properly monitor all financial data, and they need to set up the right strategies in a timely manner to resolve any issues, restoring economic, asset and financial balance.
The tools used make it possible to:
- detect any imbalances of a financial or economic-financial nature, related to the specific characteristics of the enterprise and business activity carried out by the debtor;
- check for unsustainable debts and no prospect of going concern for the next 12 months and warning signs;
- derive the information necessary to follow the detailed checklist and to carry out the practical test for the verification of the reasonable pursuit of remediation.
ContractSuite’s solution
A centralized system available on web, mobile, desktop, integrated with your accounting software (or that of your accountant) that can manage all business activities related to costs and revenues.
It is the only business management tool platform that processes contract data and monitors them throughout their lifetime; it transforms them from simple paper documents into dynamic tools that are essential for predicting the future and making strategic decisions for your business.
It offers a unique and innovative experience that is totally different from traditional models and efficiency-oriented.
It manages to give you insight into the performance of your business, highlighting everything that directly impacts business sustainability and success.
All receipts and disbursements are monitored and interconnected with commitments, ensuring effective coverage of all short- and medium-term needs.
The advantages of this approach:
- The ‘company is easier to manage
- The workforce is more efficient and accessible
- Provides detailed knowledge of the market and customer needs
- Accelerates decision-making processes
- Increase corporate liquidity
- Provides more services to customers, employees and suppliers
Conclusions
ContractSuite focuses on the fundamental elements-numbers and deadlines-to plan commitments, manage budgets, and control costs and revenues. In other words, it performs many of the daily manual tasks for you and takes charge of organizing cash flow, current and future.
We promise, it will make you sleep soundly!
Consider ContractSuite as a valuable contributor, simplifying many of your daily tasks by automating them and reducing manual tasks.
