The crisis at the enterprise means the occurrence of bankruptcy risk, which is a specific manifestation against the backdrop of the market space and reflects the restructuring of the economic structure. In the conditions of modern financial instability, more and more problems arise, which economic recovery helps to solve. The financial condition of a company, bank or enterprise is established by analysis and diagnosis of a competitive position in the market and economic instability in a situation of redistribution of capital. Such studies identify the initial periods of bankruptcy and determine the application of the crisis program.
The loss-making or profitability of the enterprise in practice is characterized by a characteristic feature in the balance sheet structure. Symbolic funds are reflected in cash and settlement accounts, while significant amounts are placed in the articles of receivables and payables overdue debts. If accounts payable exceed receivables, then the company operates at a loss, and vice versa.
The arbitral tribunal shall decide on the commencement of the monitoring procedure. After graduation, the first meeting of creditors is held, by the decision of which the effective procedure for improving the economic situation at the enterprise is determined:
- financial recovery;
- organization of management from the outside;
- production in a competition.
During the above stages, full or partial amicable agreements may be established between the parties to the judicial review.
The essence of financial recovery
Improving the financial sector of an enterprise consists in providing an opportunity to establish shaken economic stability. But it does not always come to the full procedure. Sometimes a production or other company initiates a process without creating an observer system. To do this, representatives go to court.
If the amount of the company's debt on payments is less than the value of the assets of the company, then a bank guarantee is not needed. An organization with liabilities in excess of the market value of its property requires bank guarantees only for the difference in funds. And the court does not accept applications in such conditions, therefore, a five-year installment plan for the repayment of debts is agreed upon, coordinated only with a fourth of creditors.
Installment payment of obligations allows unscrupulous debtors to gradually withdraw assets. They still carry out production or business activities, which creates new debts. Legal restrictions are powerless against a company that does not want to give property at the request of creditors. Financial recovery measures are designed to restore the solvency of the debtor and pay off obligations in accordance with the approved schedule.
By the decision of the arbitral tribunal, on the basis of the conclusions of the meeting of creditors, a rehabilitation procedure is introduced. The following documents are attached to the decision:
- recovery procedure plan;
- a schedule with specific maturities;
- minutes of the meeting;
- a list of debtor founders who applied to the meeting with a proposal to introduce recreational measures;
- data on the expected repayment of debts in accordance with the proposed schedule.
An application for the performance of obligations is sometimes filed by third parties. Payment of debts according to the schedule is carried out with a mortgage, bank or state guarantee, guarantee of a legal entity. The term for financial recovery is set for a period of not more than two years, and the procedure is carried out by an administrative observer.
Administrative Supervisor - Manager
The official implements a set of measures for the transparent conduct of the health procedure. Be sure to keep a list of creditors and claims. The observer's duties include organizing a meeting of creditors. At the intermediate stage, the administrative manager reviews the debtor's reports on the payment of debts in accordance with the schedule and transfers the data to the interested creditors.
The observer controls the recovery, financial changes in the state of solvency and timely payments. The administrative manager requires the head to timely repay debts and provide information about these transactions. If the debtor makes an inventory of the property, then the observer is present without fail.
He controls the conduct of transactions by the debtor, provides information on this issue to other creditors. If the head of the debtor does not fulfill his obligations, the administrative manager applies to the arbitration court with a motion to change the head of the company. The observer is removed from his position by the arbitral tribunal after the petition of the organization of arbitration managers in which he is a member.
Bank recovery and rehabilitation
The financial recovery of the bank consists of comprehensive measures to solve the bankruptcy problem. Targeted measures bring the institution back to normal. The procedure involves state executive committees, institutions of other banks, various commercial and law firms.
The refinancing procedure is the issuance of a loan to stabilize the debtor institution against a pledge of bank assets. The loan is provided on a preferential basis. A prerequisite for the use of the received earmarked funds is their application for making the required payments and maintaining economic stability. The use of amounts for lending to other persons is not allowed.
To restore the functionality of the bank, a complete restructuring of overdue debts is carried out. The Bank works with customers, and the lack of funds for payments to individuals and legal entities pays off by the fact that payments on credit obligations are suspended and are postponed according to the developed schedule. This prevents the outflow of depositors from the bank and the creation of unhealthy excitement.
The scheme of staff reduction and the elimination of departments in the structure of the organization is used. A reduction in the amount of remuneration for the work of bank employees is made. Sometimes there is a union of units. The dissatisfaction of the staff, of course, is taken into account, but the forced measures of financial recovery significantly reduce the item of expenses.
Measures to eliminate company insolvency
Bringing the company to solvency is carried out by operational measures that are non-standard from the point of view of the usual situation. The main difference between managing a crisis enterprise is the legitimate admission of any losses and loss of profit in the present and in the future, if this restores the solvency of the company today.
A shortage of money becomes apparent when expenses exceed the flow of funds. At this point, problems arise with existing company creditors. The financial recovery of the organization consists in the distribution of financial flows to reduce the difference between the amount of expenses and revenues.
Maneuvering is the use of existing money, assets and those funds that will arise in the future if the company copes with the crisis. The policy of maximizing revenues and minimizing the item of expenses is being implemented:
- creating a new payment calendar or improving the old schedule;
- the use of low liquid assets of the enterprise for sale in order to obtain funds or repayment with their alienation of the company's short-term debts;
- restructuring short-term liabilities into long-term payments.
Enterprise recovery
The financial recovery process is carried out according to the standard scheme approved by order of the Ministry of Trade and Economy of the Russian Federation. A title page is drawn up, an executive summary is attached. The document begins with a table of contents. The following are its typical points.
General characteristics and company description
The section covers the type of main activity, the name of the form of government. The share distribution of packages between large shareholders is indicated, state ownership is determined as a percentage. The number and name of the structural departments of the enterprise, the number of employees, and the payroll are set.
The composition of production, types of products and volumes of output are indicated. The amount of revenue for the year from the sale of goods in monetary and other equivalent terms is determined. The mass of exports is calculated in the total share of output in monetary terms.
Financial recovery in the description procedure involves a census of fixed assets, construction in progress, the percentage of completed volumes. Social objects are entered on the balance sheet of the company, annual expenses for maintenance and servicing, costs of servicing state capacities and mobilization reserves are taken into account.
Data on the state of the business and the sale of commercial products
Types of products are registered, data on annual production for the past and forecast periods are provided. The share of each type of product in the total volume of sales is indicated, revenue is calculated by type of product. The financial recovery of the enterprise involves the submission of planned indicators for each product, the calculation of production capacity utilization, a comparative analysis of the utilization during a crisis and a year of effective work.
Suppliers are described with data on the supplied basic materials, the calculation procedure with them is indicated, and purchase prices are compared. Lists of consumers, sales prices by domestic and foreign markets are separately compiled, data on methods of payment for goods are provided.
Analysis of the state of finance of the company
This section is important for establishing the reasons for bankruptcy. Financial recovery is impossible without an analysis of economic indicators. The document presents the calculation of liquidity, business activity, economic stability of the company, indicates the total costs for each product and the financial indicators obtained .
Provides data on the share of equity in the working capital, provides data on the total mass of working capital and borrowed money. The structure of funds and the division into those in production and the estimated indicators are determined. The possibility of covering current expenses at the expense of current assets and the average terms of settlements with organizations for the shipped goods is indicated.
Financial recovery will require the company's data on the possibility of payments for all current liabilities, the structural state of borrowed funds, moreover, the division into debts to banks and direct creditors to fiscal services and internal obligations. The calculation is made, and its structure for compiling the cost of production is given, data are compared in a stable year and for the same period of the crisis.
Key profit parameters are calculated; for this, data on profit and loss from sales, taxation, ordinary activities, and an emergency are presented; the net profit indicator for the past period is calculated.
Marketing Surveys
The marketing component of the document is necessarily included in the financial recovery, as it contains the main measures for the sale and speedy sale of goods. The section consists of a brief description of industry organizations and the company's place in the mass. Advantages and disadvantages of the enterprise in comparison with competitors are given. An objective characteristic of market relations in this area, target masses of consumers and the share of goods in the implementation process are given. It describes the dynamics of increasing and decreasing demand for products, depending on various factors, provides recommendations for improving sales.
An effective marketing strategy is being developed, an action plan is being drawn up to saturate the market with the company's products, channels are described for distributing product flows, advertising moves and customer exposure in order to increase demand. Based on the data obtained, it is proposed to develop a new or improved type of product and measures to promote goods on the foreign market.
Activities for economic recovery
The section presents specific activities for which the debtor is financially rehabilitated. Specific actions to transform the activities of the enterprise. As a result of effective measures, the following results are obtained:
- there is a monetary increase in revenue of the organization;
- costs and expenses of all kinds in the enterprise are reduced;
- optimized and streamlined management of cash flows of the company;
- prerequisites are created for timely settlement of obligations.
Production plan
This section defines the role of production changes in the financial operations of the company. The production program, combined with the sales plan, the cost of manufacturing goods and selling prices, is covered on points. The need for fixed assets, personnel and resources is calculated, the salary fund is specified. It also indicates the positive or negative impact of external causes on production, and stipulates possible risks.
Financing plan
The section is characterized by the given objective evidence of the effectiveness of the chosen path of financial recovery. The estimated distribution of financial flows and upcoming payments of obligations is made taking into account the material and technical needs of the enterprise. Be sure to take into account barter transactions, offsets for goods and cash.
An actual forecast is made of the financial results of the enterprise after the procedure of economic reforms, as a result of which the forecasted balance sheet of the company is obtained, which clearly shows the improvement in the financial condition and economic indicators.
In conclusion, it should be noted that there are many ways to improve the economic situation in a crisis enterprise, but to successfully solve them, an immediate analysis of economic activity is carried out taking into account all of the above indicators. If this is not done on time, then the decline in production and exacerbated insolvency will have a very detrimental effect on the financial condition of the company and lead to its inevitable collapse.